Fund News: IVP raises $1B for late-stage fund

Investor in Zynga, HomeAway, Twitter, Buddy Media and more raises its largest fund ever

Institutional Venture Partners (IVP), one of the top later-stage venture capital and growth equity funds, announced Thursday that it's raised its 14th fund in the amount of $1 billion. 

Fund XIV is IVP's largest fund raised in the company's 32-year history. Altogether, the new round brings the firm's committed capital to $4 billion. IVP's partners include Todd Chaffee, Norm Fogelsong, Steve Harrick, Jules Maltz, Sandy Miller, and Dennis Phelps.  

IVP's focus is on Internet and digital media, enterprise IT and mobile and communications. 

"I’m incredibly excited about business models that are freemium and sell to the enterprise," said Jules Maltz, a partner at IVP, in an interview with me. "We think there’s a trend in consumerization of IT – companies with consumer business models selling to the enterprise. [For instance] Dropbox is a free product and then when customers need additional storage, they end up paying for it." Unlike traditional sales models for enterprise companies, Dropbox doesn't need a large salesforce. "You’re creating a product that’s easy to use from day one... and can be profitable in year one," said Maltz. "  

IVP has a "selective approach" to investing, with plans to invest $10 to $100 million in 10 to 12 companies a year. IVP has already made six investments this year, including Hipmunk and MobileIron. 

The company has invested in 300 companies, 90 of which have gone public. Some of its high-profile exits include the leading social gaming company Zynga, which went public in December, and HomeAway, a leader in matchmaking buyers or renters with home and vacation properties, which went public in in June 2011. IVP also invested in Buddy Media, which was just bought by Salesforce for $689 million earlier this month. (Note: Zynga founder and CEO Mark Pincus, HomeAway founder and CEO Brian Sharples both spoke at Vator Splash events. This December, we'll have Mike Lazerow, founder and CEO of Buddy Media speak at Vator Splash NY.)

Asked whether IVP portfoiio companies Kayak and LegalZoom will be able to get out in the public market this year, and Maltz said he couldn't comment on pending IPOs. Both Kayak and LegalZoom have filed their S-1 papers for an IPO, but public market skepticism after the Facebook IPO fiasco have put a crimp in the IPO plans for many companies. Maltz did add, however, that he believes the public market is healthy. 

"A lot of people called the Facebook IPO a disappointment," he said. "We see it as a validation. Here’s a company in eight years that's worth $70-$80 billion and it touches a billion people. We feel a lot more companies are following along the same path."

Like Facebook, Maltz also expects many private companies to continue to forgo the public markets and tap into later-stage venture rounds despite the enactment of the JOBS Act, which encourages private companies to go public by lessening the regulations around audit requirements and financial disclosures.

The JOBS Act is a "good step in reducing expenses" for companies that go public, said Maltz. "[But] I think it’ll modestly improve the ease of companies [going public]. I don’t see a wave of 10 times more IPOs." 

 Other funds raised this year

Just last week, Peter Thiel, best known as the investor who wrote the first check to Facebook when Mark Zuckerberg was a young 21 years old (and who's also Vator's largest investor), announced a $402 million for a late-stage fund called Mithril Capitlal Management. 

In mid-June, Index Ventures announced that it raised $442 million for its sixth fund.  

Other large funds raised this year include a $525 million fund closed by Kleiner Perkins Caufield & Byers last month; a $135 million fund started by early-stage venture capital firm First Round Capital, and a $100 fund raisclosededby Berlin-based Earlybird in April.

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.