In what is widely considered to be a difficult fund-raising environment, Norwest Venture Partners has raised a $1.2 billion fund, NVP XI, following on from the $650 million NVP X Fund which it raised in 2006. Managing Partner, Promod Haque, indicated that he sees this larger fund positions the firm to diversify along three axes:
1) Geography – increasing deal flow in China, India and Israel;
2) Sector – extending focus into healthcare information and medical systems; and
3) Stage – increasing focus on growth equity (later stage) investments in mature companies.
This new fund is interesting due to its size and its focus on later stage investments. Amidst much discussion about how the traditional VC model is broken, it seems as if some funds are scaling up, becoming increasingly reliant on financial innovation to secure attractive returns for their investors within a short timeframe (NVP has invested in a power company in India, for example). In contrast, others are keeping small to focus on investments in early stage startups that do not require a lot of capital (Union Square Partners manages two funds with a total of $281 under management and is focused on investing in early stage, capital-efficient startups).
That said, there are exceptions, like the newly established Andreessen-Horowitz. The firm has $300 million under management which it invests in very early stage Internet companies as well as more mature businesses. The firm was part of the syndicate which purchased Skype from eBay, contributing $50 million to get the deal done.