The House Fund, a venture capital firm rooted in the University of California, Berkeley’s entrepreneurial ecosystem, has emerged as a key investor in some of the most valuable AI companies in the world, including Perplexity AI and Databricks. The firm’s strategic positioning has allowed it to secure coveted spots on the cap tables of these rapidly growing startups at a time when AI investment competition has reached fever pitch.
Perplexity AI, a two-year-old startup developing an AI-powered search engine built from scratch, has become one of the hottest investments in Silicon Valley. The company has raised multiple funding rounds in quick succession over the past year, with reports indicating it’s in talks for a fourth round that would value the startup at $8 billion. Perplexity’s CEO, Aravind Srinivas, is a Berkeley alumnus, exemplifying the university’s strong pipeline of AI entrepreneurial talent.
Founded in 2016 by tech investor Jeremy Fiance, The House Fund was established specifically to invest in startups with ties to top-tier public universities, particularly Berkeley. Operating from an office across from the College of Computing, Data Science, and Society, the firm leverages its deep connections to students, faculty, and alumni to identify promising ventures early.
The firm received a significant boost in 2022 when Zachary Hargreaves, formerly of Founders Fund where he worked with companies like SpaceX and Stemcentrx, joined as managing partner. Since Hargreaves came on board full-time, The House Fund has deployed over $125 million into companies and raised over $330 million from backers including the Berkeley Endowment Management Company, UC Investments, and Ahoy Capital.
Beyond Perplexity, The House Fund has also backed Databricks, one of the world’s most important data science firms with a private valuation of $43 billion. Databricks was founded by a group of seven Berkeley researchers and has become essential infrastructure for AI and machine learning applications.
According to PitchBook data, Berkeley has produced more alumni entrepreneurs who have raised venture capital than any other public or private school worldwide in the last decade. Hargreaves predicts this trend will accelerate as artificial intelligence makes it cheaper and faster for students and alumni to launch new businesses. “You can actually be three kids in a garage and launch pretty fierce products,” he noted. The firm can now write checks up to $10 million and positions itself as “a shortcut to anything Berkeley” for founders on its cap table.
Key Quotes
There are only so many companies that matter every year, full stop, in venture. Each year, more firms are ‘birthed out of Berkeley.’
Zachary Hargreaves, managing partner at The House Fund, emphasizes Berkeley’s outsized role in producing significant venture-backed companies, particularly in the AI sector where both Perplexity and Databricks originated from the university’s ecosystem.
You can actually be three kids in a garage and launch pretty fierce products.
Hargreaves explains how artificial intelligence is lowering the barriers to startup creation, enabling small teams to build sophisticated products quickly and cheaply, which he predicts will lead to even more Berkeley-affiliated entrepreneurs launching AI companies.
If we are on your cap table, we are a shortcut to anything Berkeley.
Hargreaves describes The House Fund’s value proposition to portfolio companies, highlighting how the firm’s deep integration with UC Berkeley’s network provides founders with unique access to talent, research, and resources from one of the world’s top AI research institutions.
Our Take
The House Fund’s success story reveals a sophisticated arbitrage opportunity in AI investing: positioning at the source of academic AI research before ideas become companies. While mega-funds chase late-stage AI deals at astronomical valuations, The House Fund’s embedded approach provides early access to founders like Aravind Srinivas before Perplexity becomes an $8 billion phenomenon. Hargreaves’s move from Founders Fund—one of Silicon Valley’s most prestigious firms—to a university-affiliated fund signals that smart money recognizes where AI innovation truly originates. Berkeley’s dominance in producing venture-backed entrepreneurs isn’t coincidental; it’s the result of world-class AI research programs producing both breakthrough technology and entrepreneurial talent. As AI development costs plummet and small teams can build transformative products, the university-to-startup pipeline will only accelerate. The House Fund has positioned itself as the essential bridge in this ecosystem, and its portfolio—featuring two of the most valuable AI companies globally—validates this thesis convincingly.
Why This Matters
This story highlights a critical shift in the AI investment landscape, where university-affiliated venture capital firms are gaining unprecedented access to the most competitive deals in artificial intelligence. Berkeley’s emergence as the top producer of venture-backed entrepreneurs globally signals that the AI talent pipeline extends beyond traditional powerhouses like Stanford and MIT.
The rapid fundraising pace of companies like Perplexity AI—potentially reaching an $8 billion valuation in just two years—demonstrates the extraordinary capital flowing into AI infrastructure and applications. This reflects investor conviction that AI-powered search and data analytics represent transformative opportunities worth tens of billions in potential returns.
The House Fund’s strategy of embedding itself within Berkeley’s ecosystem provides early access to AI researchers and entrepreneurs before they become widely known. As Hargreaves notes, AI is lowering barriers to entry for startups, enabling small teams to build sophisticated products quickly. This democratization of AI development could lead to an explosion of new companies, making early-stage access through university networks increasingly valuable. For the broader AI industry, this suggests that the next generation of AI unicorns may emerge from academic research labs faster than ever before.
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Source: https://www.businessinsider.com/the-house-fund-uc-berkeley-perplexity-databricks-2024-10