Fund News


Sequoia Capital surpassing fundraising goal

2012 has been a good year for venture capital; on pace to raise most since 2008

Innovation series by Steven Loeb
August 21, 2012 | Comments
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2012 has been a good year for venture capital. Not only are firms raising money at higher rates than they have in years, but they are investing it at the same rate.

Venture capital firm Sequoia Capital has surpassed its goal of raising $975 million for three early-stage funds, Bloomberg reported Tuesday.

The funds will focus on the United States, China and Israel, with a different fund for each country. The stated goals were $450 million for its U.S. fund, $325 million for its China fund and $200 million for its fund in Israel, called Sequoia Capital Israel V LP, which is focusing on information technology.

Creating a separate fund for Israel is standard practice for the firm, but splitting the remaining money among the remaining countries is not how the firm operated with its previous funds for the U.S. and China, called Sequoia Capital 2010 LP, which raised over $1.3 billion last year.

Founded in 1972, and celebrating its 40th anniversary this year, Sequoia has funded companies including Apple, Aruba Networks, Google, YouTube, PayPal, Cisco Systems, Oracle, Electronic Arts,Yahoo!, NVIDIA, Navigenics, Cotendo, Atari, Ameritox, Kayak, Meebo, Admob, Zappos, Green Dot and LinkedIn.

2012 VC funding

There have been a slew of recent funds since the beginning of the year.

Kleiner Perkins Caufield & Byers closed a $525 million fund In May. In April, early-stage venture capital firm First Round Capital announced that it was going to raise its fourth fund, with a target of $135 million, while Berlin-based Earlybird raised a $100 million fund.

In March, Groupon investor NEA filed with the SEC to raise $2.3 billion, while DST, one of Facebook's biggest investors, was looking to raise $1 billion.

Andreessen Horowitz, also based in Menlo Park, secured a $1.5 billion fund in January, announcing it had raised $2.7 billion in three years. While it has only been around since 2009, Andreessen Horowitz is already a top VC firm, raking in siginificant management fees.

In June, Khosla Ventures announced a new fund for an undisclosed amount, while Madrona Venture Group closed a $300 million fund.

In the second quarter of 2012, 38 VC firms raised a total of $5.9 billion, according to the National Venture Capital Association.

Compared to the first quarter of the year, the number of funds declined by 22%, but the amount raised went up by 12%. With the $5.3 billion raised in the first quarter, VC firms raised $11.2 billion total for the first half of 2012. The first half of 2011 saw $10.1 billion raised. 

If the next two quarters continue the same pace, 2012 will see the most money raised since 2008.

VC firms are certainly raising a good amount of money, but they are also giving it back.

The same quarter saw VC firms pouring $8 billion into start-ups, a 37% increase in dollar amount raised, and 3% increase in deals compared to the prior quarter. Looking at year over year, funding and deals were up 5% and 4%, respectively. 

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