Vermilion Cliffs Ventures Closes $25M Fund II for AI Infrastructure Investments

Vermilion Cliffs Ventures has closed a $25M Fund II to continue backing technical founders building AI infrastructure, cybersecurity, developer tools, and infrastructure software. The New York-based venture capital firm announced the fund in July 2026, with Founder and General Partner Ashley Smith continuing as solo GP and Meghan Murphy serving as Chief of Staff & Head of Platform.

The new vehicle matters because it signals continued LP confidence in a highly focused early-stage thesis. More than 95% of Fund I capital recommitted into Fund II, anchor LPs include LGT Capital Partners, Screendoor, and GEM, and the firm now manages approximately $38M across Fund I and Fund II. That is not a mega-fund headline. It is a focused bet on the infrastructure layer most AI headlines depend on but rarely explain.

Vermilion Cliffs Ventures plans to write initial checks between $500K and $1M into pre-seed and seed-stage companies, targeting at least 25 portfolio companies over roughly 2.5 years. Six investments had already been made at the time of the announcement, giving Fund II a running start in a market where technical founders are still trying to separate durable infrastructure from AI theater.

What Happened

Vermilion Cliffs Ventures closed Fund II as a $25M investment vehicle for pre-seed and seed-stage startups building for technical users. The fund remains focused on AI infrastructure, cybersecurity, developer tooling, and related infrastructure software, keeping the firm aligned with the markets where Smith built her operating career across Twilio, Parse, GitHub, GitLab, OpenView, and Buildkite.

The fund follows Vermilion Cliffs Ventures' $13M Fund I, bringing the firm's capital under management to approximately $38M across the two vehicles. SEC filings identify Vermilion Cliffs Ventures Fund II, LP as a Delaware limited partnership, while the firm's public positioning centers on providing first-check support for technical founders who need more than capital.

Why This Matters

Funding headlines usually reward size, but this one is more interesting because of focus. Vermilion Cliffs Ventures is not trying to become a generalist venture platform with a category for every market cycle. It is staying close to products built by technical founders for technical buyers, where go-to-market mistakes can quietly derail good software before the broader market understands the product.

That specialization is the real product behind the capital. Developer tools, security infrastructure, and AI infrastructure do not sell like generic SaaS, and founder-led technical credibility often matters long before a company develops a polished sales motion. Vermilion Cliffs Ventures is betting that operator-led go-to-market support can become a sharper advantage than broad platform services for the founders it wants to back.

Market Context

AI has pulled venture attention toward the application layer, but durable value often forms in the lower layers first. Model interfaces, enterprise AI agents, security systems, and automation workflows still need identity, observability, evaluation, deployment, orchestration, and developer workflows capable of surviving production use. The market may talk about intelligence, but the capital keeps flowing toward the infrastructure that makes intelligence usable.

That is why the firm's emphasis on AI infrastructure, cybersecurity, and developer tools is more than a sector list. These are the categories where AI adoption collides with software delivery, security reviews, compliance, and technical buyer trust. The less glamorous layers often become the commercial choke points, and investors who understand them early can gain a clearer view of where the next durable software companies are likely to emerge.

Competitive Landscape

Emerging venture managers often face pressure to broaden their mandates whenever a hot market appears, especially when every new AI subcategory arrives with fresh terminology and another fundraising deck. Vermilion Cliffs Ventures is taking the opposite approach by keeping its mandate narrow and its team lean. Ashley Smith remains the solo GP, while Meghan Murphy expands the firm's platform capabilities for founder support and technical go-to-market execution.

The LP signal also matters. Recommitting more than 95% of Fund I capital into Fund II suggests existing investors were not simply buying into the broader AI market. They were backing the firm's execution, sector discipline, and ability to help early technical founders turn specialized products into companies with real distribution.

What This Signals

Fund II points to a venture market that remains hungry for infrastructure conviction beneath the AI boom. The loudest products may sit at the surface, but technical founders are still rebuilding the rails underneath: security primitives, developer workflows, AI runtime tools, data systems, and infrastructure software capable of supporting increasingly sophisticated automation.

It also signals that founder support is becoming more specialized. Generic advice is inexpensive, and technical founders usually recognize when an investor is recycling a playbook from another market. Vermilion Cliffs Ventures is pairing capital with a narrower form of operating support aimed at helping founders sell technical products to technical buyers without sanding away what made those products valuable in the first place.

The Bigger Industry Shift

Every technology cycle creates the same argument in a different form. The visible applications attract attention first, then the market gradually remembers that infrastructure determines what can scale. Cloud, mobile, and SaaS all followed that pattern, and AI is already reinforcing the same lesson.

Vermilion Cliffs Ventures' $25M Fund II is a modest fund by late-stage standards, but it is aimed at a much larger structural question. If AI infrastructure, cybersecurity, and developer tools become the operating layer for the next generation of software companies, then early technical founders will need investors who understand both the product and the path to market. Fund II is Vermilion Cliffs Ventures' way of saying that is exactly where it intends to build.