.406 Ventures Closes Fifth Fund at $265 Million

.406 Ventures
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Boston-based venture firm .406 Ventures has concluded its fifth fund, securing $265 million in capital commitments. Established by Liam Donohue, the founder of Arcadia Partners, along with Maria Cirino, co-founder of Guardent, a managed-security services company, and former Razorfish CFO Larry Begley, .406 Ventures focuses on investing in enterprise-focused startups primarily in healthcare, data and AI, and cybersecurity sectors.

The latest fund has garnered support from both new and existing limited partners, comprising university endowments, foundations, pension plans, and strategic investors. With this addition, the firm, now in its 18th year, has amassed over $1.4 billion across its five core funds and three opportunity funds.

According to Liam Donohue, the firm’s focus remains consistent, centered on investing in healthcare, data and AI, and cybersecurity sectors while capitalizing on the vibrant Boston tech ecosystem. Although .406 Ventures maintains its strong ties to the Boston area, it also actively pursues investment opportunities on a national scale. In a recent conversation, Donohue noted a notable trend: an increase in repeat founders seeking new investments, signaling a growing interest among entrepreneurs in partnering with .406 Ventures for their ventures.

“We aimed to establish a partnership where founders would return to us for their subsequent ventures,” Donohue explained to the sources. “In our initial funds, we saw a few repeat founders. In more recent funds, I’m pleased to note the increasing number of exceptional repeat partners returning, with around a third of the fourth fund comprising repeat founders, a trend we expect to continue in fund five.”

Over the past two decades, the firm has curated a portfolio of 87 companies, many of which have either been acquired or gone public. Recent examples include Iora Health, acquired by OneMedical in 2021 and now part of Amazon Health, and AbleTo, a behavioral health company now under Optum Health. Additionally, Carbon Black and CloudHealth Technologies are now part of VMware, while cybersecurity insurance firm Corvus was acquired by Travelers in 2023.

Already, .406 Ventures has invested in four companies from the new fund, including Portrait Analytics, a developer of a generative AI platform for investment research and thesis creation. Donohue anticipates investing in more than 20 companies with the new fund.

When evaluating startups in the healthcare, data and AI, and cybersecurity sectors, the firm assesses various factors, particularly the infrastructure plan, especially given the pervasive nature of AI. It also leverages the expertise of executive councils consisting of over 100 C-suite operators from Fortune 500 companies.

“We contemplate, ‘What are the emerging technologies that will either require protection or will revolutionize and alter threat landscapes?'” Donohue explained. “We constantly anticipate potential vulnerabilities three to five years ahead and identify those who are developing the safeguards for them.”

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