Pear, one in Palo Alto, Ca. established company we’ve been tracking since its inception in 2012 looks set to hit its fourth fund with $410 million in capital commitments, a new SEC filing†
It would be a big step up from Pear’s first three funds, which were phased out with $50 million in 2013, $75 million in 2016 and $160 million in capital commitments in 2019, including from long-term limited partner, the University of Chicago.
Co-founder Pejman Nozad, who was asked for comment, emailed back: “I can’t comment!”
Nozad and co-founder Mar Hershenson have long been the first stop for prominent fledgling investors seeking emerging teams, as the company has been one of the first backers to a remarkable number of companies that have raised ever-larger rounds and higher valuations. , including the now listed companies DoorDash and Guardant Health.
Other startups to raise capital from Pear before almost every other company knew about their existence is the deep-linking startup Branch, which closed on $300 million in financing in February with a valuation of $4 billion; Gusto, valued at $9.5 billion last summer when it was picked up $175 million in financing; and Aurora Solar, a company that provides software services to the solar industry and was valued at $4 billion in February when it launched a $200 million round.
Like other companies, Pear is likely to see the valuations of its still private portfolio companies slide – possibly a lot – depending on how long this correction lasts.
Hershenson, who joined businesstraverse.com this week for a mobility-focused event, noted onstage that startups are in for a bumpy ride given how frothy the market had become.
Asked if the startup party is overHershenson replied, “Maybe it’ll be over for a while. † The problem is that in 2021 the market was overpriced, and we’re all adapting to that price change, and that’s changing the way companies raise money.
“Everyone knows that the stock market is collapsing,” she had said. “Software inventories have fallen by 80% in some cases. [Meanwhile] if you are a private company and you have been very lucky and you have raised money in 2021 then you may have gotten a multiple of 100x on your ARR. Today those multiples are 10x or 20x. That means if your business were $2 billion [at the time of your fundraise]your company is [now] worth $200 million.:
Even with a sharp price increase, Pear’s success so far is undeniable. It’s also unlikely.
Very famous, Nozad used to be a carpet dealer who insisted on bringing carpets to his customers’ homes where they would learn about the carpet during long conversations and he would learn about their business. He eventually became a scout for his boss and a trusted friend to some very powerful people.
“He has a good sniffer and I trust him,” says Doug Leone of Sequoia told Forbes back in 2012. “He’s like me, from Earth.” In fact, Sequoia has backed a number of companies that Pear has funded, including Guardant Health and DoorDash.
Meanwhile, his partner, Mar Hershenson, was also a major outlier ten years ago. Despite the fact that she has founded several companies before and although she has an M.S. and Ph.D. She has a degree in electrical engineering from Stanford University, was born in Spain and is more unusual in VC circles. She’s a woman who had never cut her teeth at someone else’s business before. While that may not seem so remarkable today, even ten years ago she was in a very rare company like VC.
Pear hosted an invite-only demo day earlier this week, which we’ll have for readers early next week. (Unlike Y Combinator, the outfit holds a demo day for a relatively limited number of companies each year — usually around 10.)
In the meantime, some of the other latest checks have gone to Sudozi, a two-year-old startup in Austin, Tex. $4.3 million seed round led by Peer.
Pear also recently wrote a follow-up check to Osmind, a two-year-old Bay Area-based startup that makes software to map and update patient information and records, with a focus on mental health. The outfit increased $40 million in Series B funding led by DFJ Growth, an announcement it also made earlier this month.
Correction: This story originally reported that Pear’s latest fund has closed, a fait accompli; we’ve updated the story to reflect that this isn’t the case.
