Sticking to small fund size in hyper fundraising market, EWC, after rancorous court battle, gets GA backing
In this fundraising environment, I assume firms are going to stretch for as much money as they can while still reasonably sticking to their target investment size. Fund sizes are jumping, firms are coming back earlier than expected to nail down commitments before the good times end, and many firms are launching new products and sidecar funds.
LPs are desperately searching for places to park their money and their most trusted GPs are more than happy to oblige – which is leading to the creation of new platforms.
That’s why this story by Rolfe Winkler in the Wall Street Journal Tuesday was so interesting. Venture capital firm Benchmark Capital, which has generated a 25x return on its 2011 seventh fund, will raise its next fund with a size similar to what it’s pursued since 2004, the article said. (Fund VII closed on $425 million in 2011, PE HUB previously reported. WSJ said the fund raised $550 million.)
The partners said at Benchmark’s annual meeting in June that sticking with a smaller pool of capital helps the firm stay focused on its strategy of backing companies early and reaping huge returns on companies that succeed, the article said. Some of its past investments include Uber, eBay, Red Hat, OpenTable, WeWork and Snap.
What do you think, Dear Reader? Is Benchmark wasting an opportunity, or does this strict control on fund size make perfect sense? Let me know at email@example.com.
Gorilla: I often write about how the U.S.’s biggest pension system, CalPERS, is not as important as it once was in the private equity world. However, the system is still putting out a ton of money into the asset class.
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