Canaan Partners raises $675M for tenth fund

Steven Loeb · October 16, 2014 · Short URL: https://vator.tv/n/39bf

Canaan focuses on early stage information technology and healthcare companies

Venture capital firm Canaan Partners has raised $675 million for its tenth fund, entitled Canaan X. This brings Canaan's total capital under management to over $4.2 billion.

With the new fund, the firm says it will continue to focus on early and seed stage companies in the information technology and healthcare spaces, with a focus on fintech, travel, big data, cloud, enterprise, SaaS, and consumer internet. 

Canaan puts 80% of its funding toward Seed and Series A rounds, Maha Ibrahim, who is a general partner at Canaan, told me in an interview. 

"We have a thesis driven  approach, where we invest generally across and landscape and  deep in  certain sectors," she said. "We tend to pick areas that are ripe for distruption, where big companies can be made, and we can get in early, get to know the executives and enterprentuers  and market ourselves to gives us a leg up."

Given the emphasis on early stage companies, Canaan tends to look for some product and some market traction, but not a lot, when deciding to invest. Instead, it chooses companies where they "believe the market timing is right."

"Over the next several years they can build a product that will power into a very large market," said Ibrahim.

The strategy has paid huge dividends over the past year, and especially the last six months, where the company saw 12 exits: Ebates was acquired by Rakuten for $1 billion; Labrys Biologics was acquired by Teva Pharmaceutical for up to $825 million; Civitas Therapeutics was acquired by Acorda Therapeutics for $525 million; Dermira went public; Durata Therapeutics was acquired by Actavis for up to $800 million; Skybox Imaging was acquired by Google for $500 million; Metacloud was acquired by Cisco; and PrimeSense was acquired by Apple.

These exits, said Ibrahim, was one of the reasons that the firm was able to raise the new fund in a "record amount of time."

Founded in 1987, Canaan’s current investments include Kabam, Lending Club, onefinestay, SOASTA, The RealReal and Zoosk.

Women in tech

One thing that separates Canaan from other venture capital firms is its emphasis on diversity, especially when it comes to women. The firm has two female general partners, and, in its last fund, 22 had female co-founders and 12 of them had CEOs that were women.

"This is not something we went into consciously, but to have that diversity at the GP level is starts to reflect what we’re doing," Ibrahim told me. "There has been such talk about, not tolerenace, but going a step further than that to acceptable to a variety of compsitions in the entrprentrual pool. It is not resitrcted to  white males, any background, ant ethenity, any age, we want to make sure that Canaan is reflecting tat kind of diversity, and we want to see in our founders."

When Ibrahim joined Canaan 14 years ago, such a discussion about diversity would have have been possible. In fact, she said, its only even started to be discussed in the last couple of year.

"When you restrict yourself,  even if it not done consciously, you are narrowing the field and its ultimately going to be restricting the to amount of deals you see."

Diversity, especially when it comes to women in tech, has been a hot issue for a long time, but has become especially important this year, with CEOs and co-founders of various companies having found themselves caught up in scandals, usually involving misogyny or sexual harassment of some kind.

There was the sexual harrassment claim made against GitHub, which forced the resignation of co-founder and former CEO Tom Preston-Werner. There was also RadiumOne CEO Gurbaksh Chahal who was forced out by the company's board of directors after he pled guilty to two misdemeanors for domestic violence and battery, paying a $500 fine after he was caught, on videotape, beating his girlfriend 117 times.

Rap Genius co-founder Mahbod Moghadam resigned his position after he made a series of tasteless annotations to the text to the manifesto left behind by Elliot Rodger, the man who shot and injured 13 people, while killing seven others, including himself, in Santa Barbara. One of the notes made reference to Rodger's supposedly “smokin’ hot" sister who, according to Moghadam, must have played a part in him wanting to kill a bunch of people.

And who could forget the leaked e-mails from Snapchat CEO Evan Spiegel from his time in college, in which he refers to women as "bitches" and "sluts." A sample e-mail read, "“LUAU FUCKING RAGED. Thanks to all of you. Hope at least six girl [sic] sucked your dicks last night. Cuz that didn’t happen for me.” Signed affectionately, “fuckbitchesgetleid. Spiegel.”

"We will always see those kinds of stories, but I am heartened by people actually chiming up about it, saying, 'We won't tolerate this,' and railing  against it," said Ibrahim."You didn’t  see that years ago, people kept their mouths shut. Now they are empowered to communicate the view that this is not acceptable conduct."

Along with with the announcement of Canaan X, the firm also announced the promotions of the following investors: Tim Shannon to general partner; Hrach Simonian to venture partner; and Brendan Dickinson, Julie Papanek and Roseanne Wincek to principal.

(Image source: observer.com)

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Canaan Partners invests in entrepreneurs and works alongside them to turn visionary ideas into valuable companies.  Since 1987, the firm has catalyzed the growth of disruptive technology startups and healthcare companies revolutionizing the practice of medicine.  With $3.4 billion under management and more than 95 acquisitions and 55 IPOs to date, Canaan has funded companies such as Acme Packet, Associated Content (acquired by Yahoo), CommerceOne, DoubleClick (acquired by Google), ID Analytics (acquired by LifeLock), Match.com (acquired by IAC), SandForce (acquired by LSI), SuccessFactors (acquired by SAP) and Virsto Software (acquired by VMware).  Current technology investments include Blurb, Kabam, Lending Club, Performance Marketing Brands, SOASTA, Tremor Video and Zoosk in the U.S.; BharatMatrimony, Loylty Rewardz and UnitedLex in India; and PrimeSense and LiveU in Israel.  Canaan maintains a presence in the global innovation hubs of Silicon Valley, New York City, India and Israel.    For more information visit www.canaan.com orwww.facebook.com/canaanpartners. Follow us on Twitter @canaanpartners.

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Maha Ibrahim

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Maha has been in the venture capital and technology industries for over 15 years. She currently sits on the boards for ClusterHQ, Cuyana, Kabam, Komprise, Koolbit, The RealReal, Twenty20 and UNIFi Software.