Maria Montero

2019 US Equity Funds Take a More … Approach

More posts from this contributor

Over the past year, we’ve written a lot about the rise of supergiant venture capital funds. Since the launch of the $ 100 billion SoftBank Vision Fund, established VCs have been outperforming each other to raise ever greater funds.

But let’s not write the epitaph in smaller funds. The US venture fundraising data for 2019 reveals a large number of smaller, more targeted funds that are closed on equity. Newcomers are launching new early-stage funds, and even established VCs are choosing in many cases to keep the fund size constant or even slightly smaller.

The influx of small and medium funds serves as a reminder that supergiant funds are somewhat of an aberration to the venture capital industry. While VCs compete to support massively scalable startups, the common wisdom is that the venture capital industry itself doesn’t scale up especially well. Adding more capital to the pot is thought to be more likely to inflate valuations than to encourage big companies.

Silicon Valley stalwart Kleiner Perkins is one of the last to jump on the smaller is better bandwagon. Three weeks ago, the 47-year-old firm closed $ 600 million for its eighteenth flagship fund, touting a plan to “go back to the future” and focus on the early stage with the philosophy that “the company is a non-scalable company.” craft boutique “.

Of course, $ 600 million is by no means a small fund. And Kleiner’s most prominent investment partner, Mary Meeker, left to start her own company. Nonetheless, it is one step away from Kleiner’s last major fundraiser in 2016, which raised $ 1.4 billion for a growth-stage vehicle and an early-stage fund.

Meanwhile, fundraising data from Crunchbase shows a large amount of US funds of $ 200 million or less closing in 2019, as well as several more that are apparently still in fundraising mode. So far, funds of more than a billion dollars are quite scarce.

Next, we take a look at the 2019 class of hedge funds, including newcomers, as well as follow-up funds from established companies. We also focus on the rising stars, the newer companies that have raised new bigger funds.

Newcomers

No matter how many existing venture companies are looking for startups, there is always a niche that some newcomers will identify as underserved. So far, 2019 has been no exception.

At least five U.S. venture companies have announced closures of their inaugural funds this year.1

Probably the highest-profile new entrant this year comes from a well-known Silicon Valley investor, Steve Jurvetson, 34-year-old founder and former managing partner of VC DFJ firm. Jurvetson closed this month with $ 200 million for Future Ventures, which will focus on early-stage deals in areas including space exploration, quantum computing, artificial intelligence and synthetic biology.

Another prominent newcomer is Motley Fool Ventures, which is a technology-focused venture fund in its early stages and is linked to the investment platform The Motley Fool. In a twist on the typical venture capital model of raising capital from large institutional investors, contributors to the $ 146 million fund are primarily members of the Motley Fool.

The largest funds

Established VCs have also been raising new funds. So far this year, we have not seen a pure investment venture capital firm close a US fund of $ 1 billion or more.2 However, we have seen a number of fairly large funds from well-known VCs.

Last week, Menlo Ventures, a longtime Valley firm that led one of Uber’s rounds in its early stages, closed with $ 500 million for its first Inflection Fund, which will focus on growth-stage startups. .