Norwest raises $2 bln for its largest fund ever

Norwest Venture Partners XV exceeds by more than one-third the firm's previous largest fund, the $1.5 billion it raised for Fund XIV in February 2018.

Multi-stage and multi-sector investor Norwest Venture Partners has closed its largest fund to date with $2 billion.

Norwest Venture Partners XV exceeds by more than one-third the firm’s previous largest fund, the $1.5 billion it raised for Fund XIV in February 2018. Since then, Norwest has made about 50 new investments from seed to late stage in various sectors, and it has hired and promoted several partners.

In addition, the firm has seen nearly two dozen of its portfolio companies achieve exits in the past 24 months.

As for raising its largest vehicle ever, Jon Kossow, a managing partner at Norwest, said the $2 billion helps to give the firm greater flexibility to write larger checks and to outlast any economic slowdown. “I don’t have a crystal ball, but if there’s an economic pullback, we have the capital to deploy prudently over the next couple of years,” Kossow told Venture Capital Journal.

The firm’s primary institutional LP is Wells Fargo & Co. Norwest raised $1.2 billion for its previous funds in 2016, 2014 and 2010. The Palo Alto firm, which has offices in San Francisco, India and Israel, joins a number of other large investors that are raising ever-increasing funds.

At the start of the year, TCV announced it closed on $3 billion for its 10th fund, its largest ever. DCVC in September wrapped up its largest fund to date with $725 million in commitments. DCM Ventures is expected to go over target for its ninth fund, according to a regulatory filing. The DCM filing officially reports the firm has raised $710 million so far, but it says there is another $52 million in LP interests giving the fund more than $762 million in commitments.

Meanwhile, New Enterprise Associates is in the market for its 17th and largest fund ever, targeting $3.6 billion.

Then there’s Lightspeed Venture Partners, which last year raised Lightspeed Venture Partners XII, a $750 million early-stage vehicle, and Lightspeed Venture Partners Select III, a $1.05 billion fund for late-stage follow-on fundings.

Lightspeed, which has historically focused on early-stage investing, is moving more into growth as deal sizes increase.

But Kossow, who leads the firm’s growth-equity practice, points out that Norwest will maintain “a robust seed-stage program” at the firm, “which allows us to invest all the way from seed to an LBO.”

He said that Norwest has already begun investing from the latest fund.

In looking ahead, Kossow didn’t speculate on whether the IPO window would remain viable in 2020, but he said that on the exit front he believes that many corporate strategics and financial firms appear armed with plenty of capital to continue buying VC-backed companies in the new year.

At Norwest, the firm has achieved liquidity from 23 of its portfolio companies, either through public offerings or acquisitions. Kossow noted that many of them were high-profile exits. The exits include:

  • Consumer: PCA Skin, Spotify, The Learning Experience, Turnitin, Uber;
  • Enterprise: 6 River Systems, Adaptive Insights, Avetta, Cority, Glint, Mist Systems, TRUSTID, Velostrata;
  • Healthcare: Health Catalyst, Silk Road Medical; and
  • India: Appnomic, Capillary, CRMNext, ElasticRun, Manthan, Zenoti.

Norwest personnel on the move

Over the past 18 months, Norwest has promoted and hired several key partners.

On the growth equity team, Rob Arditi was promoted to general partner. On the venture consumer team, Ed Yip and Lisa Wu were each promoted to partner. In additional, the growth equity team saw Stew Campbell and Ran Ding each promoted to principal.

Norwest also bolstered its staff in mid-2018, hiring Priti Youssef Choksi as partner on the consumer team. She previously held strategic roles at Facebook and Google.

Kossow, who was promoted to managing partner from general partner at the close of Fund XIV last year, serves alongside Managing Partners Promod Haque and Jeff Crowe.