EXCLUSIVE: DFJ has ‘one and done’ close on $325 mln Fund XI — UPDATED

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Draper Fisher Jurvetson has closed its early-stage-focused Fund XI on $325 million after roughly two months in the market, the firm said on Tuesday.

The firm got a mix of existing and new investors into the fund, including new relationships with college endowments and a few chief executive officers and founders “in some of the biggest tech companies,” according to managing director Josh Stein. Stein declined to name the CEOs and founders.

The San Francisco Employees’ Retirement System, an existing LP, committed $25 million to the fund last month.

Fund XI, which officially launched in late November, hasn’t yet started investing, Stein said, but could make its first investment in the next month.

Fund XI is slightly smaller than Fund X, which DFJ closed in 2008 with $350 million in commitments, short of its $400 million target, according to data from Thomson Reuters (publisher of peHUB). DFJ closed on more than $650 million for its ninth fund in 2007 and more than $400 million for its eighth vehicle in 2004, which was an early-stage investor in Box, now in registration for an IPO.

Fund X is doing well. It had an investment multiple of 1.11x as of December 2012, according to the San Francisco Employees’ Retirement System. Fund X is one of the better performing funds in the LP’s portfolio with vintages from 2009 to 2013.

The size of Fund XI puts DFJ “squarely in the mid-sized- fund stratum, which is unique right now because what we’re seeing is real bar-belling — there’s a ton of seed guys, a bunch of mega firms … That will serve them well if they’re a nimble, right sized firm,” said Chris Douvos, a managing director with fund of funds Venture Investment Associates.

The smaller amount of capital in the new fund does affect the way DFJ invests, Stein said. For example, Fund XI will have a majority focus on opportunities in North America, different from past funds that had a more substantial international flavor. Along these lines, the firm has been winding down its offices in India and China, Stein said.

DFJ also is cutting out certain sectors like clean tech from its investment focus, he said.

“We’ve tried to focus the firm and our efforts on what we think we’ll be best at,” Stein said. “We wanted to have a smaller, more- focused team.”

Stein added: “The era of bigger is better in venture is coming to an end. A lot of top funds that could be raising a lot more capital are being very disciplined on the right amount for their strategies.”

The firm viewed the reception for Fund XI as a “vote of confidence,” Stein said, especially as LPs had questions about the future make-up of the firm.  Firm founders Tim Draper and John Fisher won’t be investment partners in Fund XI. However, both will serve on the management committee and remain significant investors in the funds, according to a blog post from the firm.

Draper is taking time to build up Draper University, which teaches entrepreneurship, while Fisher, who co-founded DFJ Growth in 2006, will be devoting his full attention to growth stage investments, the blog post said. Former managing directors Don Wood and Jennifer Scott Fonstad also are not part of the investment team for Fund XI, but they will managing existing investments, Stein said.

Other managing directors, according to the firm’s website, include Mark Bailey, Randy Glein, Steve Jurvetson, Barry Schuler, Andreas Stavropoulos and Stein. Stein, it should be noted, is on the board of Box, which is reportedly in registration for an IPO that is expected to reach at least $500 million.

In December, DFJ Growth and Capital Group’s SMALLCAP World Fund led a $35 million Series D funding round in mobile app Foursquare.

Note: This story has been updated with performance data, information about prior funds and additional comments by Josh Stein and Chris Douvos.

Photo courtesy of Shutterstock

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