Fund Briefs, December 2011

Elevation Partners Looks to Raise up to $1.9B for Growth Fund

Elevation Partners, the firm that sports U2 frontman Bono as a co-founder, is expected to begin formally raising a second fund soon.

With offices in New York and San Francisco, Elevation is currently “unofficially” marketing to LPs, placement sources say, as first reported by VCJ online affiliate

Officials for Elevation declined comment.

A person close to the situation says the second fund will be a middle-market growth equity fund that will have the latitude to invest from seed to late stage.

Elevation raised $1.9 billion with its first fund in 2004, of which 92% has been invested, sources say. The debut fund has a net IRR of 8.52%, according to a March 31 report from the Washington State Investment Board, a limited partner. But one placement source says the fund actually has a net IRR of 12.2 percent.

Elevation has yet to hire a placement agent for fund II, one source says. Marketing for the fund is expected to benefit from the addition of Avie Tevanian, a former senior Apple executive. The Mac OS X architect joined Elevation in January as a managing director.

The biggest investment Elevation made from its debut fund was in Palm. The PE firm invested a combined $460 million in Palm from 2007 to 2009, starting with a $325 million PIPE in October 2007. Hewlett Packard bought Palm for $1.2 billion in July 2010.

Elevation has also made a sizable bet on Facebook, invested $270 million via three investments with a “blended valuation of $16 billion,” a source says. The firm is looking at a 5x return on its Facebook investment, the source says. The firm also invested $100 million in Yelp, which has registered for a public offering. The Yelp investment could yield a 3x return for Elevation, the source says.

—Luisa Beltran

Redpoint Raises Second Growth Fund at $400M

The public failure of Solyndra left a bunch of venture firms with black eyes, but the solar company’s bankruptcy didn’t hamper fundraising efforts for at least one of its backers: Redpoint Ventures.

The Menlo Park, Calif.-based venture firm has raised $400 million for its second Redpoint Omega fund, which will target growth companies. That’s considerably more than the $250 million the firm raised for Redpoint Omega LP in 2007. Fundraising for Omega II began over the summer (without the help of a placement agent), and the firm held a final in late October, a knowledgeable source says. Fundraising went well because the VC had “a good story to tell” on the growth side, the source says.

Redpoint declined comment.

Redpoint typically invests in companies in sectors including broadband infrastructure, enterprise software and mobile, as well as energy. Redpoint’s growth funds target companies that are generating revenue, growing very fast and may or may not be profitable, the source says.

Omega II’s successful fundraising follows Redpoint making the news as one of the backers of Solyndra, which filed for bankruptcy protection in September after raising more than $1 billion in venture capital and getting a $535 million loan guarantee from the federal government.

Redpoint Omega did not invest in Solyndra. Instead, the firm backed Solyndra from its early stage focused Redpoint Ventures II. Overall, Redpoint invested $40 million in the company, according to a firm spokesman.

Redpoint Ventures II has had its fair share of successes. The $750 million fund, raised in 2000, has a 5.5% net IRR, according to March 31 data from California Public Employees’ Retirement System, an investor in the fund. Fund II’s hits include HomeAway, which went public earlier this year, and Right Media, which was sold to Yahoo in 2007 for $680 million.

—Lusia BeltranIA Ventures Nears Close on $110M

Less than a year after raising a $50 million debut fund, New York-based IA Ventures has raised nearly 90% of a second fund with a $110 million target.

The firm has closed on $97.75 million for IA Venture Strategies Fund II LP, according to a regulatory filing from late October. The filing doesn’t name limited partners in the new fund, but firm founder Roger Ehrenberg has reportedly said LPs in the first fund included Cendana Capital, TIFF and Horsley Bridge.

IA Ventures, which launched in December 2010, invests in companies “focused on Big Data tools, technologies and applications,” Ehrenberg wrote in his blog last March. ”We establish our initial position at the seed stage, either as first-money in investors or perhaps following a small friends-and-family round.”

The firm has invested the first fund quickly. Its website shows that it already has 19 companies in its portfolio, including BankSimple, BillGuard, Kohort, Metamarkets, Sulia, The Trade Desk and Yipit.

Ehrenberg currently sits on the boards of six companies—BankSimple, Datasift, Kinetic Global Markets, Metamarkets, Recorded Future and The Trade Desk.

—Lawrence AragonAccel Carves Out Big Dollars for Big Data

Accel Partners has upped its bet on Big Data, announcing last month that it has dedicated $100 million from its various funds to invest in startups focused on Big Data problems.

“What we’re seeing here is a real opportunity to build companies up and down the data stack,” says Ping Li, one of several Accel partners participating in the Big Data Fund initiative. “We think there is a real opportunity to back the next generation of billion-dollar software companies.”

Research firm Gartner recently identified Big Data as one of 10 “strategic technologies” for 2012. And Accel has long had an interest in Big Data. It was an early investor in Facebook, perhaps the Web’s biggest producer of unstructured data. Accel is also a backer of Fusion-io (NYSE: FIO), which makes hardware and software to speed up the processing power of data centers, and Cloudera, which makes a commercial version of Apache Hadoop, open-source data management software that works with petabytes of data.

Besides the Big Data Fund, Accel is assembling a team of Big Data advisors and in the spring will host a Big Data conference to bring together data scientists, entrepreneurs and others to network and discuss trends.

In addition to Li, other partners involved in the Big Data Fund include Andrew Braccia, Kevin Efrusy and Richard Wong in the United States, Subrata Mitra in India and Bruce Golden in London.

—Lawrence AragonIntel Capital Launches $100M AppUp Fund

Intel Capital said last month that it created a $100 million AppUp Fund to support applications and infrastructure for its AppUp Center.

The fund fits tightly with the Intel’s theme of promoting the spread of connected mobile devices. It will invest in companies producing infrastructure, middleware, digital content and AppUp Center applications. The center supports applications that run on Windows, Android and other operating platforms.

Along with unveiling the new fund, Intel Capital announced its first two fund investments: the mobile marketing platform company Urban Airship and the German devices operating system developer 4tiitoo.

Intel Capital’s investment in Urban Airship joins a $15.1 million Series C round that includes, Verizon, Foundry Group and True Ventures.

—Mark BosletAndreessen Horowitz Seeks $900M for Third Fund

Andreessen Horowitz, which has made many large bets on Internet companies in the less than three years it’s existed, is setting out to raise a third fund totaling $900 million. The new fund would bring AH’s total capital under management to about $2.1 billion.

A limited partner in AH’s prior funds says although the new fund will be enormous, it won’t have a specific focus on growth stage deals. The firm will continue to be a “stage agnostic” investor, meaning it will invest from early stage to growth stage, said the LP, who asked not to be named.

LP reception to the new fund has been “very good” and AH should have no trouble meeting its target, the LP said.

Andreessen Horowitz launched in July 2009 with a debut fund of $300 million. It followed up with a $650 million second fund in November 2010, and a $200 million co-investment fund in April of this year.

—Lawrence AragonAccel Partners Raises Sidecar, India FundsAccel Partners has raised a combined $94 million for two sidecar funds to go with its 11th core fund and its second growth fund.

The Palo Alto, Calif.-based venture firm said in a regulatory filing that it raised $59.9 million for Accel Growth Fund II Strategic Partners LP. It reported in June that it had raised $875 million for Accel Growth Fund II LP.

Separately, Accel Partners has raised $155 million for its second fund focused on seed and early stage opportunities in India, the firm announced in mid-November.

Accel currently has 34 portfolio companies in India. Accel says that it has 11 investment professionals based in India, led by four partners: Mahendran Balachandran, Shekhar Kirani, Subrata Mitra and Prashanth Prakash.

Accel’s presence in India began in 2008 with the its acquisition of Erasmic Venture Partners. The firm then expanded the fund from $10 million to $60 million.

Kleiner Perkins China FundKleiner Perkins Caufield & Byers is raising a $250 million fund to invest in companies in China, according to a regulatory filing from early November.

The fund, KPCB China Fund II LP, is the second China-based growth fund Kleiner Perkins has raised. The firm raised $380 million for its first China-focused effort in 2008.