Vermilion Cliffs Ventures closes $25M second fund for AI infra and dev tools

Vermilion Cliffs Ventures closed a $25 million second fund on July 8, 2026, extending its bet on technical founders building AI infrastructure, security and developer tooling. More than 95% of Fund I capital was re-invested, with backing from LGT Capital Partners, Screendoor, GEM and 12 other LPs.

Why it matters: - Vermilion Cliffs Ventures is doubling down on an early-stage market where technical expertise and developer distribution can determine which AI infrastructure and tooling companies last. - The fund close signals continued LP support for a small, operator-led venture model in a selective fundraising market. - Fund II gives Vermilion more capital to back founders building for technical users across AI infrastructure, security and developer tools.

What happened: - Vermilion Cliffs Ventures closed its $25 million second fund on July 8, 2026. - The San Francisco-based pre-seed and seed firm focuses on technical founders building for technical users. - Fund II continues Vermilion’s thesis from Fund I on AI infrastructure, security and developer tooling. - Ashley Smith leads the firm and has an operating background that includes go-to-market roles at GitHub, GitLab, Parse and Twilio.

The details: - More than 95% of Fund I capital, measured by dollars, was re-invested into Fund II. - LGT Capital Partners, Screendoor and GEM anchored the fund. - The investor base also includes 12 other LPs made up of family offices, tech founders, venture firms and fund-of-funds. - Vermilion’s Fund I portfolio has already produced early outcomes across security, AI agents and developer tooling. - Keycard launched out of stealth in October 2025 with $38 million in combined seed and Series A funding. - Keycard’s Series A was led by Acrew Capital, after a seed round backed by a16z and boldstart ventures. - CopilotKit raised a $27 million Series A in May 2026 led by Glilot Capital, NFX and SignalFire. - Sequin was acquired by Notion, and Sequin’s founding team joined Notion to work on data and workflows.

Between the lines: - Vermilion is pitching itself as a high-conviction specialist rather than a broad-market seed fund. - Smith is leaning on operating credibility as a differentiator, not just capital. - The firm’s LP re-up rate suggests existing investors saw enough early traction to back the same strategy again. - In a crowded early-stage market, the message is that domain depth and hands-on founder support can still win commitments.

What's next: - Vermilion will use Fund II to keep backing pre-seed and seed companies in AI infrastructure, security and developer tooling. - The firm is likely to point to Fund I outcomes as proof that its thesis and founder network are working. - Ashley Smith said the raise marks an early durability milestone for the firm, while cautioning that the longer-term test will be whether Vermilion can keep compounding across future funds.

The bottom line: - Vermilion Cliffs Ventures has turned a tight technical thesis into a larger second fund, with most Fund I capital coming back for another round.