NEA not afraid of 13

New Enterprise Associates has set out to raise $3 billion for its 13th fund, half a billion dollars more than it raised for its previous fund less than three years ago.

NEA disclosed the size of the fund in a document filed with the SEC on Dec. 18 and said it had not raised any capital at that time. Dow Jones reported in December that the firm had held a first close on $1 billion, citing unnamed sources.

NEA declined to comment about its fund-raising efforts.

The firm, which raised $2.5 billion for New Enterprise Associates 12 in June 2006, may find that it takes longer to raise the new fund due to the recession and massive contractions at key pension funds and endowments. In fact, the public market decline cost at least one previous NEA backer, the California Public Employees’ Retirement System. CalPERS committed $130 million to NEA IX, NEA 10 and NEA 12, documents show. But the state pension fund has lost nearly $70 billion in total asset value over the past 12 months. It is not known if CalPERS is an investor in fund 13.

Another NEA sponsor hard hit by the decline in public stocks is the Pennsylvania State Employees’ Retirement System. Penn SERS made $170 million worth of commitments across six NEA funds from 1994 to 2006. The pension fund reported that it had lost $4.3 billion in the third quarter of 2008.

Working in NEA’s favor is the performance of its 12th fund. Although it is just two years old, that vehicle had an estimated rate of return of 9.4% as of June 2008, according to performance data published by CalPERS and the Washington State Investment Board. NEA had called down $21.7 million from each of the $50 million commitments CalPERS and Washington State had made in the fund. NEA 12 had returned $2.4 million to each of the pension funds as of the end of June 2008.

NEA’s $1.1 billion 11th fund, which was raised in 2004, has drawn $20 million of the $25 million commitment that Penn SERS has given it. NEA paid out $5.2 million, documents show. The state pension fund does not estimate outstanding portfolio values or rates of return for its individual commitments.

NEA added several investors in 2008. It hired Partner Tony Florence from Morgan Stanley and Paul Walker from MPM Capital to work on its growth investing practice. It also added David Mott, former president and CEO of MedImmune, as a general partner and Bala Deshpande as a senior managing director of NEA India. In addition, Hugh Panero, co-founder and former CEO of XM Satellite Radio, was named a venture partner.

NEA invests in “growth” stage companies, looking for large deals where it can deploy tens of millions of dollars at a stroke. The firm does not have a separate growth fund—a structure that such firms as Sequoia Capital have opted for—but it has allocated $1.5 billion of its previous fund to large deals.

About 65% of the deals done out of NEA’s previous fund were expansion stage or growth stage financings and 35% were seed or early stage deals, according to data from Thomson Reuters (publisher of VCJ).

NEA maintains an information technology focus. More than 60% of the companies it has backed from NEA 12 are IT companies. Health care and biotechnology companies account for one-fourth of the firm’s portfolio, while industrial and energy companies account for 10.5%, according to Thomson Reuters. —Alexander HaislipDEALWATCH: Five recent investments by New Enterprise Associates 12

ChannelAdvisor Corp._Marketplace management for retailers.

Clearspring Technologies Inc._Widget syndication services.

ComPiere Inc._Open source business management software.

Dexterra Inc._Mobile application and platform.

Play Hard Sports Inc._Online sports network.

Note: Investments made between Sept. 4 and Dec. 19, 2008. Sources: Thomson Reuters