Vice Ventures, a firm focused on investing in such categories as cannabis, alcohol, sextech, gambling, nicotine, psychedelics and addiction recovery, initially set out to raise a $25 million maiden fund.
In June, six months after its founding, the New York City-based firm closed on its initial target, but is fundraising still toward a $50 million fund, the Founding Partner Catherine Dockery told VCJ.
The idea for a fund focused on vices was born when Dockery was interviewing for a job at consumer venture capital firms, she said.
“I was asked to pitch a company, and I pitched Bev, a direct to consumer wine company,” Dockery said.
The response she got from most VCs was: “we like the idea but we can’t invest in alcohol.”
She was then asked what else she believed in and she answered that she liked “nicotine, gambling, and sextech companies,” explaining that these categories are not only lucrative, but are also recession-proof, Dockery said.
Many of the VCs agreed these could be good economic opportunities but said they could not invest in the companies she was proposing because their limited partner agreements have “vice clauses,” which prevent funds from investing in controversial businesses, explained Dockery.
This gave her an idea to launch a fund focused entirely on the moral gray areas traditional venture capitalists cannot invest in.
Dockery said that LPs in her fund are primarily founders and other individuals who have built successful companies. The list of investors includes Marc Andreesen as well as Bradley Tusk, who is also an advisor to Vice Ventures.
Dockery said she doesn’t expect to ever raise funding from institutions because most of them have strict vice clauses.
A surge of successful exits in the category proves that “vice” companies could grow without the backing of traditional venture funds. Vice Ventures provided VCJ with a decent-sized list of exits in every category the firm is targeting, including the $850 million acquisition of cannabis distribution and brand company Origin House and a $12.8 billion investment in JUUL by Altria.
Prior to launching Vice Ventures, Dockery managed private investments for Andy Dunn, an investor and a co-founder of Bonobos, a clothing company which was bought by Walmart for $310 million in 2017. After the Bonobos acquisition, she joined Walmart’s digitally native vertical brands M&A team.
Vice Ventures will write checks from $100,000 to $1 million and intends on leading some investments, Dockery said.
The firm has already invested in four companies, including Indose, a precise dosage cannabis vaporizer.
Although the impetus for Vice Ventures was investing in companies that are precluded by the “vice clause,” the firm is not looking to back every money-making category that falls under the exclusion criteria, explained Dockery.
“It is hard to draw a line in the sand,” she said, “but we definitely would not invest when the purpose of a product is harming others, like guns.”
• Current Fund: Vice Ventures I
• Fund Size: Targeting $50 million
• Notable LPs: Marc Andreesen, Bradley Tusk
• Point of contact for LPs: firstname.lastname@example.org
• Check sizes: up to $1 million
• What sets firm apart: investing in controversial, but lucrative fields.
CORRECTION: Bradley Tusk is an investor and an advisor to Vice Ventures, not Tusk Ventures.