Defy closes Fund II at oversubscribed $262 mln, about 75 pct larger than Fund I

Early-stage investor Defy Partners closed its sophomore fund at an oversubscribed $262 million, nearly 75 percent larger than Fund I.

The Woodside, California, firm in late 2017 quietly raised $151 million for its maiden fund to make Series A deals on the West Coast. The majority of its investments are in the Bay Area; Defy has portfolio companies in Seattle and San Diego, too.

Co-Founders and Managing Directors Neil Sequeira and Trae Vassallo formed the firm around the idea that a proliferating bunch of seed-stage companies needed to raise Series A money.

“We’ve delivered on that thesis and it feels good that we told our LPs that and to see it come to fruition,” Vassallo said.

LPs, including endowments, foundations and nonprofits, weren’t identified. But Defy said most of the Fund I investors re-upped for Fund II and new LPs were added.

The partners said their focus is not sector-specific, as the portfolio is split evenly between consumer and enterprise deals.

The firm likes to invest in market sectors undergoing disruption, including software companies in such areas as commerce, logistics, marketing platforms, media, education, network infrastructure, real estate, IoT and fintech.

Defy looks at industries that are traditional offline but ripe for innovation. For instance, Agentology of San Diego operates a platform on which real estate agents can manage sales leads. Defy led the company’s $12 million Series A round last year.

“We called ourselves Defy because it is what we stand for,” Vassallo said. “We like to push back against common thinking and go after new markets and seek out entrepreneurs who change the way we live, work and play.”

Other investments include Airspace, Elevate Security, Nifty Games, Owlcam and Securly.

In addition to raising a new fund, the firm launched Defy Sage, a program that brings the full-time CEOs Brian Lee and Sujal Patel to the firm.

Lee is a repeat entrepreneur and current co-founder and CEO of the Art of Sport. He previously was CEO of LegalZoom, ShoeDazzle, and Honest Co.

Patel was CTO of Real Networks before founding Isilon, which EMC bought. He is currently co-founder and CEO of an early-stage company in stealth.

Sequeira and Vassallo said they’re longtime friends with Lee and Patel. And although they’re not called venture partners or advisers, they will be compensated to help portfolio companies grow.