Instacart cofounder and then CEO Apoorva Mehta had seen the obits piling up for his grocery delivery startup back in June 2017. His biggest customer and investor Whole Foods had just been snapped up by Amazon for $13.7 billion, and now his five-year-old startup had to plot a new path.
Then he got a ping from an unlikely source. Kris Fredrickson, a managing partner with hedge fund Coatue, which was still early in its push to back private startups, wanted to arrange a meeting. He had a thesis that Instacart could become the “Android for grocery” sector and wanted to invest.
“This was not a time when Instacart was popular,” said Mehta, who had already built the startup to a $3.5 billion valuation before Whole Foods, which accounted for nearly 10% of its sales, was acquired. “Kris’s investment was a big deal because it was a signal to the industry, our employees and our investor base that we were executing.”
Instacart would go on to land deals with American grocery giants like Walmart, Kroger and Albertsons in the wake of the Amazon buyout and Coatue would lead a $350 million round at a $4 billion valuation in February 2018. Mehta stepped down as CEO in 2021. Two years later, in September 2023, Instacart listed at a $11 billion valuation. These days it trades with a stock market valuation of around $12.5 billion.
Now the tables have turned with Mehta as one of the first backers for Fredrickson’s new fund, Verified Capital.The former Coatue partner has raised a $175 million debut fund from founders like Mehta, Coinbase’s Brian Armstrong, Harvey AI’s CEO Winston Weinberg and investors like Elad Gil, and institutions like Adam Street Partners, Commonfund and Northwestern University’s endowment.
Verified Capital is taking a different approach from many venture capital investors with a focus on just eight to 10 investments rather than spreading around 20 or more startup bets. “Because I’m going to be so selective about the quality of the company, I have to be flexible on everything else,” says founder Fredrickson. “So no ownership requirements, no board constraints, and I will be stage and sector agnostic.”
Fredrickson has already made a trio of investments. He invested in legal AI startup Harvey AI’s Series B in 2023 ; luxury credit card and concierge service Atlas which raised a $27 million Series B round in December; and AI search engine Perplexity’s April 2024 round when the startup was valued at $2.5 billion. Perplexity was reported to have been in talks to raise $500 million at a $14 billion valuation.
Verified Capital’s founder has also taken Emil Michael’s seat on the Perplexity board after the former Uber executive was appointed as an Under Secretary of Defense in May. “Kris is just extremely experienced and he’s been a thought partner on so many aspects,” said Aravind Srinivas, cofounder and chief executive of Perplexity. “I don’t have many people to call because AI is so competitive and you don’t know who is working with who but one of the aspects of Kris that I truly value is his integrity.”
At Coatue, Fredrickson worked on its growth stage strategy and had invested in Chime, Marqeta and Checkout.com before stepping down in 2022. Earlier in his career, Fredrickson had invested with Benchmark, and worked with Goldman Sachs on tech deals, and also cofounded prescription skincare startup Curology.
It was Fredrickson’s early startup experience with Curology and a short-lived food delivery player Munchery that was a draw for Harvey AI’s Winston Weinberg. He was looking for a tactical adviser for his company which provides AI legal tools for law firms A&O Shearman and investment funds like Bridgewater and KKR.
“He started helping really fast and one of the first things he did was introduce us to our CFO,” said Weinberg. “Kris has helped tremendously on big company decisions like whether we should buy another company and if we did what was the process.” Fredrickson has since invested in Harvey, and now Weinberg is one of the backers of Fredrickson’s new fund.
Read the full article here
