Technology Crossover Ventures Makes Fund Eight Official

Technology Crossover Ventures has made it official. Roughly six months after reports first surfaced that the Palo Alto-based firm had begun marketing its eighth fund, it has registered the vehicle with the SEC.

The filing says the first sale has yet to occur; it doesn’t list a target, and the firm’s public relations’ firm has yet to respond to requests for further information. But back in July, Bloomberg reported that TCV was marketing a $2.5 billion fund, down slightly from the $3 billion that the firm previously raised for its most recent fund in 2007 – the largest tech-focused fund of that year. (At the time of that seventh fund’s close, a TCV founding general partner, Rick Kimball, told TheDeal.com that the firm raised what it did to keep it out of the time-consuming business of fundraising “for two more years” than it was afforded when it raised $1.4 billion in 2005.)

If the Bloomberg report proves accurate, TCV’s eighth fund will give the firm, which lists 11 general partners at its site, roughly $10 billion in total capital under management.

There’s reason to believe the firm will assemble the capital quickly, too. As of March 2012, TCV’s seventh fund had an IRR of 12.6 percent; its sixth fund had an IRR of 11.3 percent; and its fifth, $900 million fund, raised in 2004, had an IRR of roughly 10 percent, according to the California State Teachers’ Retirement System, which is an investor in all three funds. According to CalPERS, which is also an investor in numerous TCV funds, including its third and fourth funds, TCV’s third fund had an IRR of 13.9 percent as of last June, while its fourth fund had an IRR of 8.6 percent. (Both funds closed in 1999.)

The 17-year-old, late-stage investor, which may remain best known for its early (and repeated) backing of Netflix, has a long history of making enormous bets in companies that might not be on the radar of its many competitive peers.

Last July, for example, TCV invested $136 million in Vienna-based Alarm.com, a company that sells home and business security systems. TCV is also a major stakeholder in JustFab, an El Segundo, Calif.-based company that sells subscriptions to women’s apparel and that has raised an astonishing $109 million in its two-year history, including from Matrix Partners and Rho Capital Partners.

And in 2011, the firm made a big bet on publicly traded K12 Inc., which sells a proprietary curriculum and online school programs to students ages 5 through 18, taking a minority stake for $125 million.

In recent years, TCV has also made some notable exceptions to its apparent mandate to back low-flying outfits. To wit, the firm made bets on both Facebook and Groupon, investments that have likely proved somewhat disappointing thus far. TCV reportedly acquired 1 percent of Facebook for $200 million from Accel Partners in 2010, when Facebook was valued at $35 billion. The firm also participated in Groupon’s notoriously ill-fated $1 billion late-stage round in January 2011.

Neither investment seems to have slowed down the firm, which continues to make investments apace, as well as to see its share of exits. In addition to the IPOs of Groupon and Facebook, for example, the firm last fall sold millions of shares of the interactive marketing software company ExactTarget, which went public last March. TCV was one of the company’s four largest shareholders.

Last fall, TCV also sold Embanet-Compass Knowledge Group to the publishing giant Pearson for $650 million. Embanet developed online academic programs; TCV became one of its biggest shareholders in 2007 under terms that weren’t disclosed publicly.

Image: Logo courtesy of TCV.

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