Foundation Capital is announcing its seventh fund, Foundation Capital Fund VII. The VC firm has raised $282 million in new capital, bringing total capital under management to $2.7 billion over 17 years. We’re told the focus of this new fund will be primarily early-stage investing in the consumer internet, information technology and cleantech sectors.
We’re told the fund will be invested by firm partners Anamitra Banerji, William Elmore, Ashu Garg, Paul Holland, Charles Moldow, Ashmeet Sidana, Steve Vassallo and Warren Weiss. Banerji, who was previously a former Twitter product lead, is one of the most recent investment partners to join the firm. Missing from the group of investors are Paul Koontz, and Rich Redelfs, who are both listed as general partners on the firm’s website.
We’re told that Redelfs and Koontz are still actively involved at Foundation Capital and each serves on a number of boards from past investments but both have chosen not to continue to make new investments and “will focus their efforts on bringing their existing investments to liquidity.”
In terms of history, the firm’s last fund was raised in June of 2008 and totaled $750 million. Prior to that, Foundation raised $525 million in July of 2006. Fortune’s Dan Primack had originallyreported last year that the firm was planning to raise as much as $500 million for the fund.
Clearly, $282 million is a drop from the last two funds, but the firm’s general partner Paul Holland explains that the new landscape of startup generation and growth is centralized around now being capital efficient. He says that the average amount of dollars invested per company is down and it’s more capital-efficient to be able to start a company now more than ever. The firm didn’t need to raise more to support its entrepreneurs, so there was no need to make the fund larger.
“This is the right size fund for us, and we want to stay within a three-year horizon with the duration of the fund,” he adds.
Typically Foundation Capital, which Holland says is stage agnostic, makes an initial investment of $1- to $10 million and will follow that by participating in each subsequent round of financing.
Foundational Capital in general has seen around two-thirds of its investments in early-stage startups, with the firm being the first institutional investor. The firm also makes investments at later stages of a company’s lifecycle (i.e. Foundation backed Netflix pre-IPO).
The firm’s past investments include BoardVantage, Chegg, Coverity, Lending Club, MobileIron, Simply Hired, Sunrun, TubeMogul and Venafi. IPOs in the portfolio include Envestnet, Financial Engines, Netflix, NetZero, Responsys and Silver Spring Networks.
“Our team has strong operating experience and we’ve been through multiple IPOs. We’re pretty comfortable helping and working with entrepreneurs at the starting point up until right before an IPO,” Holland says.
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