Correlation Ventures, a co-investing venture firm that uses analytic software to optimize its decisions, said today it has raised $200 million for its oversubscribed second fund. The firm, which has offices in San Diego, Palo Alto, and New York, said it now has $366 million in assets under management.
Investors in the fund include college endowment funds, pensions, funds of funds, and family offices, according to a statement from the firm.
The venture firm said it invested in 121 companies from its first fund, and has been investing out of Correlation 2. Correlation’s website lists 63 current portfolio companies in four categories—consumer, enterprise, fintech, and healthcare. Co-founder David Coats, who is based in San Diego, oversees the firm’s life sciences deals, and co-founder Trevor Kienzle, who lives in the Bay Area, leads the tech investments.
In a 2012 interview with Xconomy about the firm’s “Moneyball” strategy, Coats explained that Correlation never serves as the lead investor in a deal, and operates only as a co-investor. Moneyball refers to the use of baseball statistics and computer analysis to identify and recruit under-appreciated baseball players, a strategy pioneered by Oakland A’s general manager Billy Beane and brought to broader public attention through Michael Lewis’ 2003 book, Moneyball.
Correlation began investing in mid-2010, using a proprietary database of venture financing deals that tracks and itemizes a host of financing details, including investors, board members, advisors, founders, industry segments, and exits. The firm’s analytic software assesses the risk of a prospective deal by searching for variables that correlate with the details of successful outcomes in its database.
Coats, who is attending the J.P. Morgan Healthcare Conference in San Francisco, was not available for comment. In today’s announcement, Coats said the firm plans to maintain its strategy as a “dream” co-investor. “For example, we are committed to make investment decisions within two weeks or less, being flexible on investment size and being predictable in follow-on rounds.”
Correlation has had at least three exits: Virtualization giant VMware acquired Virsto Software in 2013 (financial terms were not disclosed); Chegg acquired the online tutoring network InstaEDU for $30 million in 2014; and AirXpanders, a medical technology company focused on breast reconstruction, raised about $30 million in 2015 when it went public on the Australian Securities Exchange.