MENLO PARK, Calif. – Benchmark Capital was extremely tight-lipped about the first investment made from Benchmark Capital Partners III, L.P., a $125 million vehicle that held a final close in mid-November.
General Partner Bruce Dunlevie would only reveal that the deal, finalized in December, involved a telecommunications company.
The latest fund closely resembles Benchmark Capital Partners II, L.P., which closed on $125 million in August 1997. Like its predecessor, Benchmark III will back early-stage information technology companies mainly in the United States but may also consider international deals. If history repeats itself, however, most of the capital will be invested in Northern California, Mr. Dunlevie said.
The firm launched its fund-raising effort last September and closed on capital exclusively from existing Benchmark backers. Mr. Dunlevie acknowledged that the firm was capable of raising a larger fund, given its L.P.s’ increased capital pools and the success of previous Benchmark vehicles, but the general partners preferred not to. “We couldn’t identify the benefit of doing that,” he said. “We’re seed investors; we don’t need more capital.”
Other general partners are David Beirne, Bob Kagle, Kevin Harvey and Andy Rachleff.
Returning L.P.s in the new vehicle include Horsely Bridge Partners, Ford Foundation, Charles Stewart Mott Foundation, Yale University endowment and the Duke (family) endowment.
With 26 companies under its belt, Benchmark II is finished making de novo investments. Its portfolio includes eBay, a company that launched a highly successful public offering last fall (VCJ, November 1998, page 50).
Benchmark I, an $85 million vehicle closed in May 1995, is fully invested and has posted “very good” returns, said Mr. Dunlevie, who would not disclose exact figures.
Horsley Bridge’s Managing Director Phil Horsley said his firm has backed all three Benchmark funds because it was impressed by Benchmark’s focused IT-strategy and its staff.