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Illustration: Aïda Amer/Axios

TinySeed, which runs an accelerator program for very early-stage business software startups that are largely bootstrapped, has raised $25 million for its second fund, the company tells Axios exclusively.

Why it matters: The news comes at the heels of the recent shuttering of Indie.vc, an experiment from O'Reilly AlphaTech Ventures in backing revenue-generating startups not seeing heaps of venture funding.

The big picture: While buzzy multibillion dollar acquisitions and IPOs tend to hog all the headlines, tons of software companies quietly sell for around $100 million—and generate healthy returns for shareholders, explains TinySeed co-founder Einar Vollset.

  • TinySeed's focus on business-to-business software companies means that the startups it backs are capital efficient, and can quickly get on a path of growing revenue thanks to the accelerator program.
  • Its investors include Bloomberg Beta, Eric Ries, Patrick McKenzie, Steli Efti, and Rand Fishkin.

Behind the scenes: While Indie VC failed to attract the necessary interest of limited partners who back traditional venture funds, TinySeed mostly struggled with another problem: a regulatory limit of 99 investors for a fund larger than $10 million, Vollset says.

  • To go along with its larger fund size and investor limit, TinySeed had to raise its minimum investment. Its first fund was only $5 million.
  • But this meant that a number of its existing investors, who are largely software entrepreneurs and executives, could not afford to participate in this new fund.
  • On the other end of the spectrum, institutional investors who do back micro-VC funds, were uncomfortable with TinySeed's index-like investing strategy. They prefer to back small, concentrated portfolios, they told the firm.

The bottom line: Alternatives to traditional venture capital want to exist, but they're still facing various challenges when it comes to assembling the necessary capital.

Go deeper: Venture capital platform Indie.vc is shutting down

Go deeper

Super typhoon Surigae explodes to Cat. 5 intensity

Super Typhoon Surigae seen on satellite imagery Saturday morning east of the Philippines. (CIRA/RAMMB)

Super Typhoon Surigae surged in intensity from a Category 1 storm on Friday to a beastly Category 5 monster on Saturday, with maximum sustained winds estimated at 190 mph with higher gusts.

Why it matters: This storm — known as Typhoon Bising in the Philippines — is just the latest of many tropical cyclones to undergo a process known as rapid intensification, a feat that studies show is becoming more common due to climate change. It weakened slightly, to the equivalent of a strong Category 4 storm, on Sunday.

3 hours ago - World

Biden adviser warns "there will be consequences" for Russia if Navalny dies

The Biden administration warned the Russian government "that there will be consequences" if jailed Russian opposition leader Alexei Navalny dies, National Security Adviser Jake Sullivan told CNN on Sunday.

The big picture: Sullivan also defended President Biden for not mentioning Navalny in a Thursday speech about Russia or in a Tuesday call with Russian President Vladimir Putin, saying the White House aims to deal with the issue "privately and through diplomatic channels."

3 killed, 2 wounded overnight in Kenosha bar shooting

Three people died and two were hospitalized with serious injuries after a gunman entered bar in Kenosha County, Wisconsin, the police department said in a statement on Sunday. Police responded to the shooting at around 12:42 a.m. and the suspect has not been found.

The big picture: The midnight shooting is the latest in a string of deadly mass shootings to hit the U.S. since March, fueling a debate in Washington about how to regulate the weapons.