Exclusive: Basis Set Raises $185 Million Third Fund, Doubling Down on AI & Automation
Founder Lan Xuezhao built a well-respected emerging fund as many other new VCs fret that their LPs might abandon them
It’s a hard time to be an emerging manager as limited partners reassess their investments in venture capital firms.
But Lan Xuezhao’s Basis Set is quietly executing amid the drawdown.
Xuezhao told Newcomer that her firm raised an unannounced $185 million third fund late last year, up from her $165 million second fund that was closed in 2021 during the peak frenzy for fundraising.
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She’s got several things going for her: Xuezhao leaned in early to artificial intelligence, making a key personal angel investment in Scale AI, the company that has been throwing humans at training self-driving cars and now language models. Xuezhao has a PhD in cognitive science, giving her credibility with founders and the capability to track down sophisticated startups working on neural networks and artificial intelligence.
Plus, she has her connections from working for three and a half years in corporate development at Dropbox, one of the most connected startup networks in Silicon Valley.
Over its past two funds, Basis Set has made promising investments in Path Robotics and Drata, which have both been marked up by more blue chip investors.
“We’re pretty careful with consistency and discipline on fund size,” Xuezhao said in an interview. “It’s the same thesis, the same fund construction since fund one.”
The third fund is composed of mostly the same group of early LPs as well, she said, two of which are Foundry and Melinda French Gates’ Pivotal Ventures.
Foundry’s Jaclyn Hester told Newcomer that she had met Xuezhao right before she had closed her first fund, and while she couldn’t participate that time, she was so impressed with her vision and drive that she made sure Foundry was top of mind for Fund II.
“She runs it like a company,” said Hester. “And she’s not raising too much money. We love that discipline.”