Mayfield goes big on AI with new fund, partner

Mayfield is making a major push into AI, setting aside $250 million of its existing funds for AI investments and hiring a veteran investor focused on AI start-ups.

The new effort, dubbed AI Start, will be led by newly added partner Vijay Reddy. He previously invested in a variety of AI companies, including AEye (Nasdaq: LIDR), BabbleLabs (acquired by Cisco), DataRobot, Joby (Nasdaq: JOBY), Lilt and SambaNova.

Mayfield managing partner Navin Chaddha told Venture Capital Journal that AI Start is not a new fund, but instead is “a new dedicated AI vehicle which will draw from the $955 million pool of capital we raised” in May for Mayfield Fund XVII and Mayfield Spring/Select III, as well as .other existing Mayfield funds.

LPs for Fund XVII and Select III include Alaska Permanent Fund, Illinois Municipal Retirement Fund, Orange County Employees Retirement System, Oregon State Treasury, San Francisco Employees’ Retirement System and Texas County and District Retirement System, according to Venture Capital Journal research.

Asked why Mayfield decided to create a dedicated AI fund, Chaddha said generative AI is “a once in a generation opportunity that requires a dedicated mindset, team and operational prowess that is as forward thinking as Gen AI itself. AI Start is the first seed fund in our history, which will partner with founders starting at Day Zero, and syndicate with angel investors and seed funds by being flexible on check size and ownership requirements compared to our main fund.”

Chadda, who has been a VC for more than 17 years, added that, “AI is a paradigm shift similar in magnitude to the PC, web, cloud and mobile eras and I expect many great iconic companies to be created.”

Mayfield is among a host of firms rushing to invest billions of dollars into start-ups building products and services based on artificial intelligence. AI companies pulled in $25 billion from VCs in the first half of 2023, or 18 percent of global funding in H1, according to Crunchbase.

At least one venture firm has raised a fund focused exclusively on AI deals this year. Sound Ventures, led by actor Ashton Kutcher, announced in May that it closed on nearly $240 million for Sound Ventures AI Fund, Venture Capital Journal previously reported.

Mayfield said AI Start will write checks ranging from $1 million to $4 million. Capital for the AI fund will come in part from Fund XVII, which raised $580 million for seed and Series A investments, and Select III, which raised $375 million for follow-on investments in Mayfield’s “breakout portfolio companies and new companies (primarily Series B) from outside our portfolio fund.”

Headquartered in Menlo Park, California, Mayfield has $3 billion under management. Since its founding more than 50 years ago, the firm has invested in over 550 companies, resulting in 120 IPOs and more than 225 acquisitions.

Iris Dorbian contributed to this story