Lightspeed Venture Partners raises $1.2B across two funds

The early stage investment firm now has $4 billion under management

By all accounts, 2016 is supposed to be a down year for the venture capital market, but we've already seen a few firms still able to raise big funds to continue their investment pace. General Catalyst raised an $845 million fund, and Battery Ventures was able to raise $950 million. 

Now it's Lightspeed Venture Partners turn, as the firm has raised $1.2 billion across two funds, the firm has revealed.

The first is the firm's eleventh fund, called Lightspeed Venture Partners XI, which closed at $715 million. Its previous fund was Lightspeed X, a $635 million fund.

The second is called Lights-peed Venture Partners Select II, and it closed at $500 million. 

The difference between the two new funds is that the main fund will be used to continue the firm's strategy of investing in early stage companies, while the second will be used for follow on in later rounds in its investments, Jeremy Liew, Partner at Lightspeed Venture Partners, told me. 

"We raised Lightspeed Select a few years ago as companies were increasing the size and frequency of financing rounds. For a lot of companies we invested in, as the pace of fundraising and sizes went up, that was a vehicle for us to hold up pro rata," he said. 

"It will be primarily used for really big rounds, where the pro rata was a much bigger number than we typically put in early stage."

The first Lightspeed Select was a $430 million fund, raised back in 2014.

Founded in 2000, Lightspeed has backed over 250 entrepreneurs. It typically invests across consumer, infrastructure and enterprise companies. That includes big data and machine learning companies, consumer facing apps, AR/VR, and second generation mobile native video companies, as well as e-commerce and maketplace companies. 

The firm is most famous for being the first investor in Snapchat, investing $485,000 in May of 2012, when the company was less than a year old. Liew talked about making that investment at Vator's annual Splash LA event in October.

Other big investments have included AppDynamics, Bonobos, Clever, Docker, Flixster, Giphy, GrubHub, Guardant Health, LivingSocial, Nest, Nutanix, Sidecar, TaskRabbit, The Honest Company, and Unity. 

The firm is based in Menlo Park, California with additional offices in Beijing, China; Shanghai, China; New Delhi, India; and Herzelia Pituach, Israel.

"There's no magic formula, no checking the boxes. Often times, in the consumer world , we look for real evidence that consumers love the product, with engagement and retention. That they use it and come back a lot," Liews said, when I asked him what the firm looks for in the companies it invests in.

"Then we want to understand the why, and that means finding a founder who can provide a unique and differentiated perspective about why their product strikes a chord with users."

Lightspeed plans to invest in roughly 75 to 100 companies in the next two and a half, to three and half, years, across both funds. 

It typically invests anywhere from $200,000 to $2 million in the seed stage, in the single digit millions for Series A deals, and roughly $10 million in Series B. Across the life of its companies, Lightspeed will invest between $10 million and $25 million.

It now has $4 billion under management.

"We are continuing our strategy, which we have deployed for many many funds now, whether markets are up or down, we are investing at a consistent pace, and we are  going to continue to do the same," Liew told me.

"Our process is very smooth and speedy. We are now on Lightspeed Fund 11, and we have LPs that have been with us for a long time. Through good and bad markets, we have been consistent in our returns, and they have been pleased to continue to work with us. 

(Image source: lsvp.com)