News & Analysis

Former top Salesforce executive Keith Block has a new venture firm with big-name backers.

The firm, Smith Point Capital, is targeting up to $400 million for its first fund and just reached its first close. Smith Point will focus on enterprise software startups.

Cloud data company ServiceNow is one of the firm's strategic partners and anchor investors. It also has backing from The Hillman Company, Solamere Capital, and Carolina Panthers owner and billionaire hedge fund investor David Tepper.

"The venture industry really has not made a lot of innovation in the last 70 years," Block said. "It's kind of the time for a new model." During his tenure at Salesforce, the venture team reported directly to Block.

Block is leaning on his connections to executives at big tech companies to form an advisory network that will give hands-on guidance to founders. These partnerships with as-yet-unnamed executives are meant to help the nascent firm stand out.

Burke Norton, a former senior managing director at Vista Equity Partners, and Chris Lytle, former president of Longfellow LP, joined Block in founding Smith Point. The firm has invested in two startups, an AI and machine learning company and an electronic consumer goods marketplace.

Smith Point's first close comes amid a difficult time for first-time funds. The latest PitchBook-NVCA Venture Monitor tracked $382 million in capital commitments closed across 16 first-time funds during the first quarter of 2023. By comparison, $3.1 billion in capital commitments were closed across 30 funds in Q1 2022.

"Everyone understands that this is a difficult environment, period," Block said. "What we're hearing though from the portfolio companies that are working with us and want to work with us is that there is a flight to quality."

Block stepped down as co-CEO of Salesforce in 2020, ending speculation that he would succeed Marc Benioff as head of the company. Prior to Salesforce, Block spent 26 years at software giant Oracle in various roles, landing as the executive vice president of North American operations.

Salesforce's venture capital arm has been a big player in the startup space, investing in companies like 1Password, Airtable and DocuSign. It most recently launched a $250 million fund dedicated to investing in generative AI startups.

Block noted that Smith Point and its guidance-driven model is a chance to return to mentoring and guiding professionals.

"This is a time where more than ever, CEOs of these companies need advice," he said. "This really is an opportunity to return to my passion."