Benchmark Capital will hold a first and final close on its fifth fund this month. The fund will total $400 million, with about $325 million coming from LPs and the remainder coming from Benchmark’s partners and individuals.
As has been the case with all of Benchmark’s funds, almost all of the LPs in the new fund are charitable foundations and university endowments. Return investors include fund-of-funds Horsley Bridge, Yale University, the Ford Foundation and the Hewlett Foundation, according to a source close to the firm. The firm won’t take money from public LPs, such as state pension funds.
The new fund will make about 40 deals at about $10 million apiece.
The reduced size of the new fund mirrors moves by most venture firms to scale back. Benchmark’s last fund, raised in 1999, totaled $1 billion.
The new fund also will feature a slightly different lineup of GPs. The five GPs are Alex Balkanski, Bruce Dunlevie, Bill Gurley, Kevin Harvey and Bob Kagle.
Co-founder Andy Rachleff will go part-time with the new fund and David Beirne, who went part-time last year, will not be a GP. Rachleff will maintain all of his board seats, but he won’t be as active in making new investments.
Benchmark has a total of 14 investment partners and two operating partners, one in the United States and one in England. Seven GPs manage the firm’s U.S. investments, while four GPs invest its European fund, and its Israeli fund is invested by three GPs.
Since the firm doesn’t have any direct public investors, Benchmark’s performance has not been available for public scrutiny the same way as other top-tier firms. But judging from its past deals, the firm had its biggest year with its inaugural fund, an $85.9 million vehicle that invested in monster hit eBay, along with moon shots Ariba, Juniper Networks and Shasta Networks.
A Benchmark investor who asked not to be named says the 1995 fund is among the best-performing venture funds in history, and notes that its $6 million investment in eBay was valued in excess of $4 billion at distribution.
Benchmark’s second fund, raised in 1997, also posted an internal rate of return well in excess of 100%, the investor says.
As poorly as dot-com funds have performed to date, Benchmark’s third and fourth funds, which were raised in 1998 and 1999, respectively, are “shaping up to be top-performers for their vintage and will post positive returns,” the investor says.