Fidelity Takes VC Plunge, Raises $250 Million for Tech Investments

Fidelity raised $250 million for its first fund devoted to venture capital.

The Boston-based asset manager’s latest push into the private asset space — Fidelity Venture Capital Fund I — closed with support from investment advisers, family offices and high-net-worth investors, according to a Wednesday (Oct. 2) press release.

The fund will make minority investments in mid- to late-stage private companies in a range of sectors with a particular focus on the United States in technology, media and telecommunications, the release said.

It has already invested about $31 million in companies including SpaceX and cloud-based infrastructure provider CoreWeave, Bloomberg reported Wednesday.

“Where we are in the cycle, valuations are very attractive,” said Karin Fronczke, portfolio manager and global head of private equity at Fidelity, per the Bloomberg report. “We see very good companies at very reasonable valuations.”

Asset managers have in recent years made a major push into private markets, meeting growing demand among clients while also looking for higher margins than what can be found with public markets, according to the report.

Fidelity, which had $5.5 trillion in assets under management as of the end of June, has invested in private companies for more than 15 years but mainly through mutual funds, the press release said.

The company also manages $27.8 billion in alternative investment vehicles, such as private equity, private credit, real assets and digital assets, per the Bloomberg report.

The private credit market is undergoing a boom, showing the potential to reshape lending and risk in financial services.

“Generally and conceptually speaking, the private lending market, estimated by the International Monetary Fund to top $2 trillion at present, offers a capital ‘lifeline’ of sorts to a variety of borrowers, especially smaller firms that may have been, or still are, underserved as they seek capital from traditional channels,” PYMNTS reported Wednesday. “Private lending may also be extended to firms that are backed by private equity vehicles.”

The American Investment Council estimated that as recently as 2022, the median size of an enterprise receiving private credit — $500 billion of which went to American firms — has been a company with 150 employees.

The past week has seen bank-asset manager partnerships that are putting tens of billions of dollars to work in private credit.