Bain Capital Ventures, the venture capital division of the eponymous Boston-based investment firm, said it has raised a new $1 billion fund to invest in startups, adding to a year of big-dollar fund-raising by tech investors.
Bain Capital Ventures, which has backed LinkedIn and Jet.com, told Reuters that $650 million would go into a fund used mostly for early-stage investments, backing young startups with unproven business models, the firm’s sweet spot.
“We’ve invested from PowerPoint slides,” said Enrique Salem, a managing director at Bain Capital Ventures who invests in cyber security startups. “You have to have conviction with very little data.”
Another $250 million will be used for larger investments in growth-stage companies. Separately, the firm’s partners put in $100 million.
This is Bain’s eighth fund. Recent successful initial public offerings by Bain-backed companies helped the venture firm attract more than enough interest from investors to round out the $1 billion fund, Salem said.
Those IPOs include DocuSign’s $629 million debut in April and SendGrid’s $131 million offering last year. DocuSign’s stock price is up 47 percent from its IPO, and SendGrid, which has agreed to be acquired by Twilio for $2 billion, is up nearly three times from its IPO price. Bain first invested in DocuSign when it was valued at $1.6 billion; the company went public with a $4.4 billion valuation.
Bain joins a spate of venture fund raising this year, with $32 billion raised across 230 U.S.-based funds through the third quarter, putting 2018 on pace to beat last year, according to data firm PitchBook Inc. And firms are investing these funds at a faster pace — VCs invested more than $83 billion in the first three quarters this year, more than any full year of investment going back a decade, according to PitchBook.
Venture funds are growing larger, too, as investors face stiff competition from SoftBank Group Corp’s Vision Fund, a $93 billion investment vehicle that has rattled the venture world.
Salem says Bain has rebuffed that strategy and the $650 million fund is consistent with previous fund sizes. However, Bain introduced its additional growth fund in 2014, just as competition grew for tech deals. That fund helped make Bain among the most active late-stage investors in the third quarter, according to PitchBook.
Bain raises money from university endowments and large family offices in the United States and Europe. While it is an affiliate of Bain Capital, the private equity firm co-founded by one-time Republican presidential hopeful Mitt Romney is not an investor.