This morning, IVP announced a new $1.0 billion fund (IVP XIV) to invest in premier later-stage technology companies. We’ve come a long way since our founding by Reid Dennis in 1980, when we raised our first fund of $22 million. Over the last 32 years, we’ve invested in 300+ companies, 90 of which have gone public, and generated an IRR to our investors of over 43.2%.
We’re proud of our performance, but the real heroes are the entrepreneurs we back. We only succeed if they succeed.We’ve been fortunate to work with great CEOs like Dick Costolo (Twitter), Mike Lazerow (Buddy Media), Marten Mickos (MySQL and Eucalyptus), Mark Pincus (Zynga), Brian Sharples (HomeAway), and many more. Our new fund means we get to do more of the same – back great entrepreneurs who are building the next generation of great companies.
So why raise $1 billion?
The venture market is changing. In 2000, there were 1,022 active venture capital firms that raised more than $100 billion. Today, the number of active VCs has shrunk to 462 with only $15-$20 billion raised annually. Yet, at the same time, the opportunity for technology investing has improved by orders of magnitude. Entrepreneurs can now reach 10x more consumers while starting a company for 1/10th the cost. It’s now possible for premier companies to achieve over $100 million of revenue and/or reach hundreds of millions of users within a few years – especially as they take advantage of massive disruption in the cloud, social, and mobile markets. As the venture industry consolidates, a $1 billion fund gives us the flexibility to invest $10 to $100 million in these rapidly growing companies.
How are you going to invest the money?
Definitely not all at once! We’ll invest in about 10-12 later-stage companies per year and we’ll continue to follow the core principles that got us here:
- Focused: We’re not a “Swiss army knife” investor. We don’t invest in China, India, cleantech, biotech, seed, or even early-stage. We want to do one thing and one thing well – invest in the best later-stage opportunities each year. Our small team is 100% focused on finding and funding the most promising companies.
- Low-Ego: We know that without great entrepreneurs we don’t have a business. We care deeply about our companies, but they are the stars and deserve the spotlight. We believe in backing passionate founders, supporting them through good and bad times, and celebrating their achievements when they win.
- Active The Right Way: Our companies are our customers. We like to roll up our sleeves and help, but we also know that time is a precious asset and an investor shouldn’t slow you down. We try to think about what a late-stage company uniquely needs (M&A/IPO advice, C-level recruiting, scaling a sales force, etc.). We deliver on this and then we get out of the way.
It’s a great milestone to announce a billion dollar fund – but just like our CEOs – we know that fundraising is only a milestone, not the ultimate goal. Right now, there are founders dreaming of companies that will grow to be the next Twitter, Facebook, Salesforce, or Google. We’ll be there as partners on their journey and help them change the world.