MENLO PARK, Calif. – The Mayfield Fund in mid-April held a $1 billion first and final close on Mayfield XI, said Kevin Fong, managing partner at the firm. The $700 million-targeted vehicle was launched with a three-day road show at the end of March, Fong added.
Fong said the vehicle’s lightning quick fund-raising pace could be attributed to venture capital market conditions and Mayfield’s successful history. “Our past performance has been great,” Fong said. He declined to provide a rate of return for a previous fund.
The vehicle will back companies in communications, Internet infrastructure/ applications and what Fong termed the mobile Internet sector, nationwide.
The mobile Internet, Fong explained, is the nascent industry servicing people connecting to the Internet from devices other than computers. At the moment, the mobile Internet sector consists of devices like cellular phones and personal digital assistants that allow their users to connect to the Web. This industry group is a new focus for Mayfield. “People want this service and there is a lot that needs to be done to provide it. The infrastructure needs to be built, devices need to be built and applications need to be developed, so we think this will be a fruitful space,” Fong said.
The firm likes to be a company’s first institutional investor, which means most of its investments are in early-stage companies. However, Fong said Mayfield will also invest in fairly developed companies, which had not previously received venture funding.
The vehicle will back approximately 60 companies, with typical deal sizes ranging from $10 million to $12 million, spread over several rounds of financing. As much as 25% to 30% of the fund will be invested in communications, 60% in Internet infrastructure/applications with the remaining 10% to 15% in mobile Internet products, Fong said. The fund’s 10 general partners have invested between $50 million and $60 million in the vehicle, he added. He declined to reveal Mayfield’s management fee or carried interest structure.
The current vehicle is more than twice the size of Mayfield X, which closed on $450 million in June 1999. Mayfield ran through that vehicle in less than 12 months and targeted fund XI for $700 million, because the firm wants to return to a two to three year investment cycle, he said. The $1 billion Fund XI should definitely return Mayfield to that pace, he added.
Mayfield’s traditional limited partners that invested in this vehicle include Yale University, Stanford University, the Massachusetts Institute of Technology, Harvard University, Princeton University, Horsely Bridge Partners, HarbourVest Partners LLC and Knightsbridge Advisers.
Fong said the vehicle currently has three potential deals in its pipeline.