MENLO PARK, Calif. – Benchmark Capital Partners IV in mid-September closed on $650 million from institutional investors and at press time was preparing to close on $350 million from individuals, including the firm’s management, said Managing Member Steve Spurlock.
The $1 billion fund dwarfs Benchmark’s last vehicle, the $175 million Benchmark Capital Partners III, which wrapped about a year ago and is fully invested, except for reserves, Spurlock said. That fund raised $125 million from institutions and $50 million from individuals.
The firm decided to raise a much larger vehicle to extend the fund-raising cycle and to take larger stakes in follow-on investments, Spurlock said. Despite the major infusion of capital, however, he does not expect the firm to change its investment strategy or to add to its investment staff, which consists of seven managing members, including Spurlock.
Benchmark is an early-stage information technology firm, known in part for backing on-line auction site e-Bay Inc. The firm also invested in Critical Path Inc., E-LOAN Inc., Red Hat Inc. and Scient Corp. Spurlock said he thought e-commerce would be a big part of the new fund’s investments.
Benchmark began informing existing limited partners about its latest vehicle in August, and the fund was raised in five weeks. Spurlock declined to name investors, but he said the new vehicle includes a handful of new institutions.
Benchmark decided to raise a considerable chunk of capital from individuals, inviting those the firm thought could offer strategic advice or deal flow, Spurlock explained.
Benchmark IV features a 30% carry; its predecessor featured a floating carry that ranged between 20% and 30%, but averaged 28% or 29%, Spurlock said. The management fee is between 2% and 3%.