Betaworks Closes $66M Fund to Boost Early-Stage AI Startups with Focus on Agents and Interfaces

New York City-based Betaworks has announced the closure of its third fund, raising $66 million to invest in early-stage AI startups. The firm has been actively involved in the AI sector since 2016 and has supported companies like Hugging Face and Granola through its investment program, Betaworks Camps. Jordan Crook, a partner at Betaworks and former TechCrunch employee, explained that Fund III will concentrate on three key areas: agents, native AI interfaces, and application-layer AI. This strategic focus will guide both their seed investments and the ongoing Betaworks Camps program. "Fund III will enable us to invest in at least 25 pre-seed to seed stage companies," Crook said. "We also plan to make around 50 investments as part of the Betaworks Camps, which supports early-stage startups." To date, the firm has completed approximately 37 deals, with an average investment size of around $500,000. Crook described the current fundraising landscape as "frothy" for startups but "spiky" for investment funds, highlighting the volatility and selective nature of investor interest. Despite these challenges, many of Betaworks' previous limited partners chose to reinvest in Fund III. "Raising Fund III was particularly challenging in 2024, as the venture capital environment was tough, especially for firms looking to increase their fund size," Crook noted. "However, the strong support from our existing investors speaks to the confidence in our approach and track record." Previously, Betaworks raised $46 million for Fund II in 2020 and $48 million for Fund I in 2016. Since its launch in 2008 as a venture studio, Betaworks has become a key player in the New York City tech community, notably supporting successful platforms like Tumblr and Kickstarter. The firm's Betaworks Camps program, launched in 2016, has been instrumental in nurturing early-stage startups, particularly in the AI space. With the new funding, Betaworks aims to maintain and grow its leadership position in the AI industry, fostering innovation and supporting promising startups as they navigate the complex and rapidly evolving landscape.