Glasswing Ventures sees many of its portfolio companies take off amid pandemic

The Boston firm's investments in collaboration, automation and cybersecurity have seen significant revenue growth since the start of the year. The positive news comes as the firm is in the market for a second fund.

Glasswing Ventures, a seed-stage investor in artificial intelligence start-ups, is seeing substantial revenue growth for many of its portfolio companies amid the covid-19 pandemic.

“Cybersecurity, automation, productivity and collaboration have been an important theme for us,” said Rudina Seseri, co-founder and managing partner of the Boston firm that invests on the East Coast and is in the market for a second fund.

Now that a big part of the country is working from home, a solution in these areas is becoming a “must-have” for enterprises, Seseri explained.  

More than half of Glasswing Ventures’ 14 portfolio companies have seen an acceleration in their top-line since the start of 2020, according to Seseri.

For example, ChaosSearch, a Boston company that developed a solution for searching data stored in the cloud, has increased its revenue by 300 percent this year. “Bringing down the cost of data mining is important because everyone is working remotely now,” Seseri said.

Another Glasswing Ventures’ investment that registered an almost three-fold revenue increase since January is Verusen, an Atlanta start-up that uses AI to predict the need for production parts in a manufacturing process. “The company helps produce the highest amount with lowest costs,” Seseri said.

One of Verusen’s customers is a toilet paper manufacturer that used the company’s solution to keep production up by 25 percent during an unprecedented surge in demand over the last couple of months, Seseri said.

“Maintenance repair and operations market has not seen much innovation since the late 1990s and is now ripe for disruption,” Seseri said, adding that Verusen can solve supply chain data problems for all types of manufacturers.

While many of Glasswing’s investments have had an uptick in usage in the wake of the coronavirus crisis, two of its start-ups came to a “screeching halt,” Seseri said.

One such company is Boston-based Armored Things, which develops predictive software for keeping people safe in physical spaces, such as large stadiums and schools.

Armored Things made a quick pivot and is now marketing its solution as a tool for crowd control and facilitation of safe reopening in universities and offices after the lockdown ends. “They flipped the model on its head without changing the product,” Seseri said.

Glasswing Ventures is currently investing from its $112 million debut fund, which closed in 2018. Investors in the inaugural fund include the California State Teachers’ Retirement System as well as foundations, endowments and funds of funds.

The firm is seeking to raise $150 million for its second fund, according to a regulatory filing.

Seseri declined to discuss fundraising, but she said that Glasswing Ventures does not intend to change its seed-stage, AI-focused strategy and the firm’s organizational structure is already set up for the long haul.

Glasswing Ventures has seven investment professionals, including co-founder and managing partner Rick Grinnell and managing director Sarah Fay. The firm’s portfolio companies are also supported by 33 exclusive advisors, including leading AI experts and executives in the industry.

The firm continues to be an active investor during the shelter-in-place orders and just closed a deal, which has yet to be announced, Seseri said.

“We write checks that are $2 million to $3 million for concentrated ownership in the companies. We tend to own 10 to 20 percent of the cap table,” Seseri said.

She admits that one of the bigger current challenges for the firm is conducting due diligence during the lockdown. “We have an internal task force focused on this issue. We think about things like, ‘how can we be a fly on the wall in a company’s virtual meeting?’” Seseri said.

Seseri said that the firm has reviewed every company in the fund’s portfolio with its LPs recently. Not only did more than half of Glasswing’s investments grow their revenue amid the pandemic, but it was also determined that about 90 percent of the firm’s portfolio companies have a runway of over 18 months, Seseri said.

“We don’t want to sound tone-deaf, but we are incredibly proud of how our portfolio has been performing during the crisis,” Seseri said.