DFJ Growth fund: DOA?

A year is a long time to take raising a fund. But after 12 months of solid year of fund-raising, Draper Fisher Jurvetson’s growth affiliate has finally crossed the halfway point in raising its first fund, closing on $128.6 million in commitments toward its $250 million target, according to a regulatory filing.

The growth effort is led by DFJ co-founder John Fisher, onetime America Online CEO Barry Schuler and venture capitalist Mark Bailey.

The partners have invested in two known companies to date. The fund participated in a $51 million financing round for Visto, a mobile email technology startup based in Redwood City, Calif. Schuler joined the board. The fund also backed commercial laser company Raydiance in a $15 million Series C financing alongside the DFJ core fund.

It’s not as though DFJ itself is floundering. The company had nine of its portfolio companies acquired during 2006, according to Thomson Financial (publishers of PEHub.com). In fact, the firm has launched fundraising for a $600 million ninth fund, which would be 50% larger than its current fund, according to a regulatory filing. That suggests that the firm is bullish about its core fund’s prospects at least.

Maybe investors are spooked about growth funds in general. DFJ is not the only noted early stage investor to trot out a growth-stage investment vehicle. Sequoia Capital closed on $861 million in May for its U.S. growth fund and, separately, closed on $400 million in September for its India Growth Fund. Meanwhile, New Enterprise Associates carved out $1.5 billion of its $2.5 billion 12th fund for later stage expansion deals.

So is DFJ’s inability to close a growth fund the product of:

(A) An overall industry slowdown in fundraising.

(B) Concerns about DFJ’s ability to invest the funds wisely.

(C) Concerns about growth funds in general. Shouldn’t the mezzanine PE guys do these deals?

(D) None of the above.

You tell us.

PE Week subscribers can read our story about the fund, including more info on its partners, here.