New Enterprise: NEA Seeks up to $2.5B Again

It looks as if 2012’s VC fundraising figures will be pretty robust—at least if New Enterprise Associates has its way.

The firm that backed mega-startups Fusion-io, Gilt Groupe, Groupon and (for oenophiles) Lot18 is looking to raise between $2 billion and $2.5 billion, sources confirmed to peHUB.com, and is wrapping up its premarketing. Bringing in a fourteenth fund would mean that New Enterprise Associates—with a 34-year track record—has generated about as many spin-off vehicles as Captain Kirk’s initial voyage.

We have CalSTRS to thank for a bounty of returns data. Given NEA’s track record (more hits than misses) it is no surprise LPs (among them pensions and major institutional investors) are coming back for a fourteenth fund.

Combining Thomson Reuters data with CalSTRS, peHUB found:

  • NEA Fund VI, $230.8 million in 1993, generated an IRR since inception of 65.60%;
  • NEA Fund VII, $310.58 million in 1996, generated 63.71%; and
  • NEA Fund VIII, $565.6 million in 1998, generated 31.6%.

Then, things start to get a little less amazing (correlating with VC returns’ broader trends):

  • NEA Fund IX, $879.5 million in 1999, generated an IRR since inception of -7.46%;
  • NEA Fund X, $2.3 billion in 2000, generated 2.79%;
  • NEA Fund VIII-A, $156 million in 2001, bagged -3.61%, data show; and
  • NEA Fund XI, which brought in $1.11 billion in 2003/2004—data disparity—returned 8.93%.

The VC raised its first fund, not specified, in 1978, according to Thomson Reuters data. Recent funds for NEA have hit the $2.5 billion range, and it is expected that NEA’s returns on more recent funds will skew closer toward its heyday in the ’90s. In 2006, the VC firm’s twelfth fund raised $2.525 billion and its 2009 thirteenth fund reeled in $2.482 billion, Thomson Reuters data show. CalSTRS data does not reflect the anticipated success of these funds, as the figures are still premature.

“It is expected they will raise $2.5 billion,” one source told peHUB, for the fourteenth vehicle.

In addition to CalSTRS, investors in prior NEA funds include UTIMCO, CalPERS, the University of Virginia, Invesco, PennSERS and Amherst College. It was not disclosed to peHUB whether NEA would employ any substantial strategy shifts different from prior funds.

The VC firm, which invests across multiple sectors and stages, has seen big bets on the consumer Internet space pay off big-time.

How big? Well, when Groupon went public, NEA’s repeated rounds paid off in its stake in the biggest online coupon provider with a valuation of more than $2 billion.

New Enterprise Associates did not respond to a request for comment by press time.

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