New TCV Fund Raises Record $1.6 Billion
Silicon Valley-based investment firm Technology Crossover Ventures said Monday that it raised a $1.6-billion venture capital fund to invest in new Internet companies, double the amount the 5-year-old firm collected in its three previous funds.
The new fund, TCV IV, is the largest technology fund raised by a private venture capital firm, according to the National Venture Capital Assn. and Venture Economics. Other Silicon Valley venture capital firms are raising funds of about $1 billion this year as institutional investors and individuals plow money into the Internet.
“Playing to win requires making huge investments in building infrastructure, marketing and sales, and strategic partnerships,” said Jay Hoag, a former managing director of Chancellor Capital Management, who co-founded TCV in 1995 with Rick Kimball, a former managing director of Montgomery Securities.
Investors in the fund include 100 institutions, 15 investment banks and more than 150 technology executives, including Eric Schmidt, chairman and chief executive of network-software maker Novell Inc. and Marc Andreessen, co-founder of Netscape Communications and Loudcloud Inc.
TCV also named Chris Nawn, a general partner, to manage its new TCV Franchise Fund, a hedge fund formed in December to invest in publicly traded Internet companies. The Franchise Fund has more than $100 million in capital.
The pace of fund-raising this year suggests venture capital firms are on course to beat last year’s record.
Venture capital funds made up 43.1% of the total private equity raised in the U.S. last year, up from 26.5% in 1998, and accounted for a bigger percentage of private equity than buyout funds for the first time since 1985, according to the publication Venture Economics. Venture capital firms raised $46.55 billion in 1999, up 67% from 1998. By contrast, buyout funds raised $44.63 billion, down by 27%.
Venture capital funds also are moving into other private equity turf. On Monday, Kleiner Perkins Caufield & Byers and partners of the buyout firm Texas Pacific Group joined with consultants Bain & Co. to form a venture to develop Web businesses for established companies. Accel Partners and Kohlberg Kravis Roberts & Co. struck an alliance this year to develop new Internet businesses from industrial companies.
