Active Capital, a venture firm based in San Antonio, has successfully closed its third fund, raising $28 million to invest in early-stage enterprise AI and cloud infrastructure startups. This new fund elevates Active Capital’s total assets under management to over $100 million, which includes previous funds and Special Purpose Vehicles (SPVs) aimed at supporting promising companies.
Founded by Pat Matthews, who previously established Webmail.us, which was sold to Rackspace for $50 million, Active Capital operates on the belief that founders prefer to secure early funding from those who understand their journey. The firm has seen significant returns from its first fund, with nearly 70% of capital returned and a total value approaching four times the paid-in capital. Active Capital has invested in over 50 startups nationwide, including notable names like ProsperOps, Teleport, and Super Dispatch, with several portfolio companies having been acquired in recent years.
Key takeaways
- Active Capital closed a $28 million third fund for early-stage enterprise AI and cloud infrastructure, taking assets under management past $100 million.
- Founder Pat Matthews previously built Webmail.us, sold to Rackspace for $50 million.
- The first fund has returned nearly 70% of capital with total value approaching four times paid-in capital.
- The firm leads or co-leads pre-seed rounds with cheques of $500,000 to $1 million into deals of $500,000 to $3 million, and has backed over 50 startups including ProsperOps, Teleport and Super Dispatch.
- US pre-seed funding has contracted to $556 million across more than 600 deals so far this year, down from $733 million in the same period a year earlier.
Active Capital typically leads or co-leads pre-seed funding rounds, offering average check sizes between $500,000 and $1 million for deals ranging from $500,000 to $3 million. The firm focuses on startups with technical founders and has a network of limited partners who are entrepreneurial individuals or family offices.
As the U.S. pre-seed funding landscape has seen a decline, with $556 million raised across more than 600 deals this year compared to $733 million in the same period last year, Matthews remains optimistic about the opportunities in pre-seed investments. He emphasizes the unique relationships formed at this foundational stage and the potential for startups to thrive without needing subsequent funding rounds.
Matthews notes that AI is a dominant trend, influencing the development of new vertical software and SaaS companies. He highlights the importance of reshaping infrastructure and security layers to accommodate AI advancements, as well as a growing trend among founders to adopt more sustainable business practices and profitability-focused mindsets.
Based in Texas, Matthews believes that great companies can emerge from anywhere, and he actively invests across various regions, including Austin, Kansas City, and New York. He values strong founder relationships over geographic location and is committed to maintaining a focused approach to fundraising, prioritizing smaller funds that can deliver better performance.
In a challenging fundraising environment, Matthews has relied on building trust with his investors and ensuring that his firm remains disciplined in its fund size. He believes that small funds can outperform larger ones, and he is dedicated to staying true to this principle as Active Capital continues to support innovative startups in the AI and cloud sectors.
Frequently asked questions
Why deliberately keep a fund small?
Matthews argues small funds outperform larger ones, because returns do not need to be enormous to be meaningful. Discipline on fund size is central to how the firm positions itself to its limited partners.
What is Matthews seeing among founders?
AI shaping new vertical software and SaaS companies, a need to rebuild infrastructure and security layers around it, and a shift toward sustainable, profitability-focused business models rather than growth at any cost.
Does the firm invest only in Texas?
No. It is based in San Antonio, but Matthews invests across Austin, Kansas City, New York and elsewhere, prioritising founder relationships over geography.
