Solo general partner Ashley Smith just closed the second fund for Vermilion Cliffs Ventures, pulling in $25 million to back early-stage startups in AI infrastructure and security. The fund closure signals continued LP appetite for focused, thesis-driven micro-VCs even as broader venture markets remain cautious. Smith's doubling down on technical infrastructure plays comes as AI tooling and cybersecurity spending hit record highs across enterprise budgets.
Vermilion Cliffs Ventures announced Wednesday the close of a $25 million Fund II, marking solo general partner Ashley Smith's continued bet on AI infrastructure and security startups. The fund closure comes as venture capital markets show signs of stabilization after two years of compressed dealmaking and valuation resets.
Smith launched Vermilion Cliffs as a solo GP operation, joining the growing ranks of individual investors raising dedicated funds to back technical founders at the earliest stages. The $25 million war chest positions the firm to write initial checks ranging from $500,000 to $2 million, typically leading or co-leading pre-seed and seed rounds.
The fund's focus on AI infrastructure reflects where capital is flowing across the startup ecosystem. Enterprise spending on AI tooling, model optimization, and deployment infrastructure has accelerated dramatically over the past 18 months as companies race to integrate large language models and machine learning capabilities into core operations. Smith's thesis centers on the picks-and-shovels layer - the enabling technologies that make AI systems faster, cheaper, and more reliable.
Security represents the fund's second pillar, targeting startups building next-generation cybersecurity tools as attack surfaces expand with cloud adoption and AI integration. The convergence of AI and security has emerged as a particularly hot area, with startups developing AI-powered threat detection and autonomous security response systems attracting significant venture interest.
The solo GP model has gained traction as experienced operators and former partners at larger firms strike out on their own. These focused funds typically offer faster decision-making, direct founder access to the check-writer, and more hands-on support than traditional multi-partner firms. For limited partners, solo GPs represent concentrated bets on individual investment acumen and network strength.
Smith's ability to close a second fund at this size suggests strong performance or LP confidence from Fund I, though specific portfolio returns weren't disclosed. Raising a follow-on fund has become the critical test for emerging managers, with many first-time funds struggling to secure commitments for Fund II amid the broader pullback in venture fundraising.
The $25 million fund size sits in the sweet spot for micro-VC economics. It's large enough to build a diversified portfolio of 20-30 companies while maintaining meaningful ownership stakes, but small enough to generate attractive returns without requiring multiple billion-dollar exits. For founders, working with a $25 million fund means their investor has genuine skin in the game and strong incentives to support companies through follow-on rounds.
Vermilion Cliffs enters a competitive landscape for early-stage AI and security deals. Established firms like Andreessen Horowitz and Greylock Partners have doubled down on infrastructure investments, while a new generation of specialist funds has emerged to chase the same opportunities. Differentiation comes down to thesis clarity, network access, and the ability to add technical value beyond capital.
The fund announcement arrives as broader venture fundraising shows mixed signals. While mega-funds continue to struggle with deployment pace and LP skepticism, smaller, focused funds have found more receptive audiences. Institutional investors increasingly favor managers with clear theses and track records over generalist approaches.
Smith's timing capitalizes on two powerful tailwinds: enterprises allocating unprecedented budgets to AI transformation, and security spending becoming non-discretionary as breaches and regulatory pressure intensify. Startups solving real pain points in these categories are seeing faster sales cycles and more predictable revenue growth than consumer-facing AI applications.
For the broader solo GP ecosystem, Vermilion Cliffs' Fund II closure adds another data point to the emerging playbook. Successful solo managers are proving they can compete with traditional partnerships by offering speed, focus, and authentic founder relationships. The model works best when the GP brings deep domain expertise and can credibly help portfolio companies navigate technical and go-to-market challenges.
What remains to be seen is how Fund I companies perform through the current market cycle. The real test for any venture fund comes at exit time, when paper markups convert to actual returns. Smith's ability to raise Fund III will depend on demonstrating clear progress toward meaningful liquidity events.
Vermilion Cliffs Ventures' $25 million Fund II represents more than just another micro-VC fundraise. It signals that solo GPs with sharp theses and execution discipline can still attract capital in a risk-off environment, particularly when betting on infrastructure plays tied to undeniable enterprise trends. As AI infrastructure matures and security threats multiply, Smith's focused approach positions the fund to capture value in two of the most durable categories in enterprise tech. The real story will unfold over the next 3-5 years as Fund I companies either validate the thesis with successful exits or join the long tail of venture portfolios that never return capital. For now, the market is voting with dollars that focused beats broad, and solo can compete with partnership.
