Reach Capital closes $265M Fund V to back 'human potential' AI

Reach Capital announced Tuesday the close of a $265 million Fund V. The thesis of the 11-year-old San Francisco firm is to back founders building AI applications that can “expand human potential,” Tony Wan, the firm’s head of platform, told TechCrunch — specifically, founders building across three areas: learning, health, and work.

“We believe AI should serve human flourishing, not replace it,” Wan said. The firm’s previous investments include Replit, ClassDojo, and Coral Care.

The new fund will write checks of $1 million to $10 million, spanning pre-seed through Series A, into roughly 50 companies over the next three years. So far, no companies have been backed through Fund V.

Limited partners include Capricorn Investment Group, the Los Angeles Fire and Police Pensions, the LEGO Foundation, and College Board. General partner Jomayra Herrera told TechCrunch that fundraising went smoothly, with the team closing the new fund in less than six months — the vast majority of existing LPs re-upped, she said, and the firm added a few new marquee backers, which she attributed to LP interest in sector-focused boutique funds built around conviction-based investing.

The new fund is notable given the barbell shape the broader fundraising market has taken in recent years, with capital flowing overwhelmingly to giant, brand-name funds on one end and to sharply focused specialists on the other, leaving generalist firms in the middle struggling for LPs’ attention. Analysis by PitchBook and the National Venture Capital Association found that established firms captured more than 90% of the roughly $62 billion raised across U.S. VC funds through May of this year, leaving a smaller pool for first-time and mid-sized managers to compete over. Reach’s thesis, built on more than a decade in edtech and impact investing, fits the specialist mold that LPs have remained open to funding.

The firm previously raised $215 million for Fund IV in 2023 and $165 million for Fund III in 2021. One of its recent exits came in June, when Superhuman — the productivity platform formerly known as Grammarly — acquired GPTZero, the AI-detection startup co-founded by Princeton graduate Edward Tian. Terms weren’t disclosed, but GPTZero had grown to more than 19 million registered users and $30 million in annual recurring revenue on just $13.5 million raised; Reach was one of several investors in the company, alongside Uncork Capital, Footwork, and Jack Altman’s Alt Capital.

Why it matters

The raise shows LPs are still willing to back sector-focused specialists even as capital increasingly concentrates at the very top and very bottom of the venture market.