Digital media-focused Lerer closing in on Fund IV: VCJ

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Michael Kim is a big fan of Lerer Ventures. So much so that Kim, founder of venture fund-of-funds Cendana Capital, let it slip last week at the Venture Capital Investing Conference in San Francisco that the New York-based seed-stage venture firm is about to close a new fund of about $60 million.

Lerer Managing Director Eric Hippeau, who was on a conference panel with Kim, didn’t confirm the news while on stage.

In a late April SEC filing, the firm disclosed that it was seeking to raise $50 million for a planned fourth fund, called Lerer Hippeau Ventures IV. The firm raised $36 million for its third fund, which closed in 2012, and $25 million for Fund II in 2011.

Fundraising for the latest vehicle undoubtedly got a boost from some big up-rounds and exits for Lerer portfolio companies. Still-private companies the firm backed at an early stage include online eyeglass retailer Warby Parker, beauty products supplier Birchbox, and market communications app developer Sailthru.

Since last year, a number of Lerer portfolio companies have also sold to large-cap acquirers. GDGT, publisher of gadget-focused Web magazine Engadget sold to AOL last year. BlueFin Labs, a social analytics provider, was also bought by Twitter last year for a reported $90 million.

Lerer’s main focus is on early-stage digital media and software companies, with most of its investments in the New York area.

Looking ahead, Hippeau, former CEO of the Huffington Post, said last week that he sees several investment trends favorable to New York. One is that so many of today’s startups have a global orientation from the get-go.

New York City, where nearly 40% of residents were born in another country (including French-born Hippeau), is as international as it gets. Most entrepreneurs also want to live in a vibrant, area, and that favors New York, he said.

Then there’s valuation. New York companies tend to be valued somewhat less than similar startups in Silicon Valley. He said that he and his partners have turned down most Northern California deals they see “because of the crazy valuations.”

This story first appeared in Reuters Venture Capital Journal. Subscribers can read the original story here. To subscribe to VCJ and other venture-related research products, click here for the Marketplace.

Photo illustration of money tree from Shutterstock.

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