Kevin Hartz's A* adopts a 'less-is-more' strategy with its new $450 million fund.

      While peers in AI pursue megafunds worth billions, the venture firm founded by Eventbrite's co-founder is taking a different approach. Kevin Hartz, who co-founded Eventbrite and has been a long-time seed investor, has successfully closed a $450 million fund at A*, his venture firm in San Francisco, as reported by Bloomberg. This fund intentionally moves away from the massive AI fund model that has dominated venture capital fundraising in recent times.

      A*’s earlier vehicle, Fund II, secured $315 million in June 2024 and was oversubscribed. Fund I had a closing amount of $300 million in 2021. The new $450 million figure reflects a measured increase, aligning with Hartz’s vision of maintaining a thoughtfully limited portfolio focused on high-conviction investments rather than a vast array of smaller checks.

      The framing of this fundraising round, as cited by Bloomberg referencing Hartz, embraces a less-is-more philosophy: it features a smaller fund size compared to the large AI funds, a greater portion invested in each company, and a strict policy against pursuing overheated rounds at any cost.

      This strategy presents a contrasting narrative to firms that have recently raised funds ranging from $3 billion to $10 billion, with their investments increasingly resembling late-stage growth funding disguised as venture capital.

      A* was established in 2020 by Hartz, along with Gautam Gupta, a former Uber finance executive and Opendoor operator, and Bennett Siegel, an ex-partner at Coatue who invested in Peloton and DoorDash.

      The firm’s portfolio includes developer tools, AI infrastructure, consumer internet, marketplaces, SaaS, and CRM, with investment sizes between $100,000 and $10 million, typically around $3 million, placing it solidly in the seed and Series A stages.

      Hartz has spent the past year publicly supporting younger entrepreneurs, with a significant portion of the previous fund directed towards companies founded by teenagers.

      This strategy, along with A*’s inclination toward fewer investments and longer holding periods, has defined its unique position in a venture landscape that has increasingly favored growth-stage investments.

      The broader environment is challenging for the megafund approach. Earlier this year, Andreessen Horowitz raised $3 billion explicitly to bet against what its partners characterized as an AI bubble; other leading firms have raised even larger funds focused on singular company investments.

      A* is indicating that there is still a place for funds at the seed stage that prioritize pricing discipline over fund size.

      The effectiveness of this discipline will be tested ahead. Late-stage AI valuations remain high relative to their revenues, and a smaller fund cannot rely on follow-on investments to maintain its stake against well-capitalized competitors.

      A* will need to convince founders to offer more equity in the seed stage than is typically available on the market, or accept dilution that growth-stage firms might avoid. Hartz has navigated this calculation previously, believing that the math remains favorable if the entry price is appropriate and the investment is held long enough for compounding to take effect.

      Limited partners and rival investors will be keenly observing which companies A* directs its new fund towards. With Fund II already exhibiting early standout performers and potential losses from the forthcoming AI cycle yet to manifest, the argument for a smaller, more selective fund is being demonstrated in real time.