IVP raises $750M for late-stage fund

Deal flow for later-stage financing is the strongest it's ever been, says IVP

Institutional Venture Partners (IVP), one of the premier later-stage venture capital and growth equity firms, announced this week the closing of Institutional Venture Partners XIII, a $750 million later-stage venture capital and growth equity fund.

The firm, which has investments in high-profile startups, such as Twitter and Zynga, now has a cumulative committed capital of $3 billion. 

The new fund is targeting three sectors: Internet and digital media, Communications and wireless and Enterprise. The typical range will be between $10 million and $50 million, but in some cases, the investments can go as high as $100 million - an infusion of capital that is typically applied to roll-ups and acquisition strategies, said Steve Harrick, General Partner of IVP, in a release. 

The new financing comes only days after the Silicon Valley Venture Capitalist Confidence Index reported a dip in investor confidence in startup companies in the second quarter of 2010.  The report is based on the views of 32 venture capitalists in the San Francisco Bay Area.

They are polled to determine their outlook in the next six to18 months. Mark V. Cannice, a business professor at the University of San Francisco told the New York Times that the dip was by “a significant amount.” These concerns about long-term sustainability and the ability to exit, have been coupled with fears over new legislation. The proposed legislation would tax carried interest as normal income, raising the tax rates.

IVP's strategy of investing in established companies is one supported by the reports findings which stated, "While the total amount of investment into venture-backed-portfolio firms increased in Q2 from the year-ago level during the financial crisis, a larger proportion of that financing went to later-stage firms, leaving less for investments in new enterprises. This trend is consistent with commentary from some respondents of the Q2 survey."

Indeed, according to IVP's Sandy Miller, IVP's deal flow "has been the strongest it's ever been." 

And, though the IPO market doesn't appear to be back in full swing, IVP remains hopeful.

"The exit environment has improved in the last year and we believe there will be a good exit environment in the next couple of years," said Miller, in an interview via email. The same goes for M&A.

"As is always true with venture-backed companies the M&A market will be the primary exit vehicle," he said. "There is an unprecedented amount of cash in the coffers of the big tech companies and they are acquisitive now.  Exit valuations should improve as the big tech companies compete for the promising emerging leaders.  With our investment focus on emerging leaders, our portfolio should be well positioned for attractive exits."

As for recent exits, IVP saw its portfolio company Data Domain acquired by EMC for $2.1 billion, and Omniture acquired by Adobe for $1.8 billion. In 2008, IVP's ArcSight (ARST) was one of the few tech IPOs in that year. Other IPOs include Comscore (SCOR) and Synchronoss (SNCR). As for M&A deals, AOL acquired Quigo for $340 million, RH Donnelley acquired Business.com for $350 million, Microsoft acquired Danger for $500 million, and Sun Microsystems acquired MySQL for $1 billion.  

In total IVP has invested in over 300 companies, 85 of which have gone public. IVP has made venture capital investments in many well known technology companies such as ArcSight, Aspect Communications, At Road, Business.com, Clarify, ComScore,  Concur Technologies, Danger , Digital River, Form Factor , Foundry Networks , HomeAway, Juniper Networks , Kayak, Mobile 365 , MySQL , Netflix, Polycom, Quigo , Seagate, Synchronoss, Tivo, Twitter, Websense and Zynga.

The five general partners include:

 Todd Chaffee, former Executive Vice President of Visa International. He has previously been featured in the Forbes Midas List.

Norm Fogelsong, former computer programmer and systems analyst at Hewlett-Packard and general partner at Mayfield Fund. He holds both an M.B.A. from Harvard Business School and a J.D. from Harvard Law School.

Steve Harrick, former Vice President of Acquisitions for the Internet Capital Group. He was included in the AlwaysOn 2009 VC 100 List.

Sandy Miller, co-founder of Thomas Weisel Partners and Senior Partner with 3i. He has been included in the in the 2007, 2008 and 2009 versions of the Forbes Midas List.

Dennis Phelps , formerly of Battery Ventures and the Internet Capital Group. He was included in the AlwaysOn 2009 VC 100 List.

IVP specializes in venture growth investments, industry rollups, founder liquidity transactions and select public market investments.

IVP XIII is the successor to IVP XII, an oversubscribed $600-million fund which closed in 2007.

(All images from IVP website)