VC firm First Round looking to raise $135 million

Investor in Path, Fab, Mint, Stumbleupon set to raise fourth fund

Early-stage venture capital firm First Round Capital is about to raise its fourth fund, targeting $135 million, according to the company’s filing with the SEC on Monday.

In its third fund, raised in late 2010, First Round, which has four partners -  Josh Kopelman, Chris Fralic, Robert Hayes and Howard Morgan  - raised $126 million. That year, it was named the third largest investor in the United States, as measured by number of deals.

Founded in 2004, First Round Capital, which typically invests $250,000 and $500,000, is one of the original venture firms to institutionalize angel investing. You might call it the first super angel fund as it bet that start-ups would not require large sums of money to get traction.

Since then it has backed more than 70 companies. Its portfolio includes Fab, the fast-growing fashion retail site, photo-sharing site Path, which just raised another $30 million, Web hosting service Wikia, social media Web browser RockMelt; food search engine Yummly, game developer RockYou, and Schoolfeed, a site to help find high school friends, which recently raised $1.75 million.

First Round Capital has already seen many exits for its portfolio companies. Web search engine StumbleUpon was purchased by eBay for $75 million, financial management website Mint.com, which was bought by Intuit for $170 million, retail site Like.com, which was acquired by Google for $100 million, Chai Labs, which was bought by Facebook for $10 million, and GroupMe, a mobile group messaging provider bought by Skype for an undisclosed amount.

What does the VC market look like?

First Round’s $135 million goal is relatively modest when compared to the goals set recently by other top investment firms. The lower threshold is in large part due to First Round's philosophy of investing modest amounts at the early stages, an investment philosophy that doesn't require large capital raises.

Other recent fund raises include Andreessen Horowitz's $2.5 billion raised in January. Andreessen Horowitz also invests in early stages, but has a penchant for putting large amounts of money in later-stage deals. In recent months, 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. Also recent includes a $100 million fund raised by Berlin-based Earlybird. In the fourth quarter of 2011, the top five early-stage firms that raised funds include Khosla Ventures, which raised $1 billion in October, Founders Fund, which raised $625 million for early-stage investments, General Catalyst, which raised $500 million, Accel Partners, which raised $475 million and Redpoint Ventures, which attracted $400 million.  

(Image source: angelgroupnetwork.com)