Sequoia continues to grow with new fund

Sequoia Capital raised $175 million from 83 accredited investors for a new growth fund, according to a regulatory filing. Sequoia Capital Growth Fund III AIV appears to be distinct from the Sequoia Capital Growth Fund, which closed on $861.5 million from 82 investors in May.

The firm did not return telephone calls or emails requesting information about the filing.

It is possible that this filing is for a China-focused growth fund, since the firm was raising such a fund in August, according to a source familiar with the firm. No information was available about the size of the China growth fund or whether it would stand separate from the Sequoia Capital China Principals Fund I, which raised $20 million in 2005.

Growth funds are nothing new for Sequoia. It raised a $400 million for a growth fund in India in 2006.

The firm has managed a growth fund in parallel with its core early stage funds since the late 1990s. The first version, Sequoia Capital Franchise Fund, raised $350 million in 1999. Its latest growth fund is flexible across deals. For example, it invested in privately held ITA Software, which designs back-end processing programs for airlines.

Sequoia’s growth fund also plays in the public markets. It teamed with Francisco Partners in June to make a $42 million investment in Blue Coat Systems (Nasdaq: BCSI). Blue Coat used the cash to purchase Network Appliance’s NetCache business.

The firm’s ability to close another growth fund so quickly on the heels of its third fund suggests investors are optimistic about the firm’s growth strategy. —Alexander Haislip