Three Kings: Bessemer, Greylock, Summit Raising Big New Funds

3/4/11Follow @gthuang

The big guys are getting bigger: Three prominent venture and private equity firms with Boston representation are in the news this week about raising big new funds.

How does this affect startups and innovation? Probably not all that much, other than being part of the natural cycle of money flow. But it’s interesting, and possibly encouraging, to see big investors having some initial success in what remains a very difficult fundraising environment. Perhaps the IPO and exit markets are heating up.

I’m reminded of what micro-VC David Beisel (whose quarterly Web Innovators Group meeting is this Monday) said, when he predicted that over the next 10 years, big venture firms will raise even larger funds. (As a corollary to that, Bob Nelsen from Arch Venture Partners remarked last fall, in response to the notion of VC contraction, that “it’s hard to kill a venture fund, but it’s easy to kill a venture partner.”)

OK, here’s the news around town:

—Bessemer Venture Partners is planning to raise a new fund in the neighborhood of $1.5 billion, according to a report in Bloomberg this morning (based on unnamed sources). The firm’s last fund, completed in 2009, was about $1.35 billion, the report says. Bessemer is known for its investments in companies like Skype, LinkedIn, Yelp, American Superconductor, Endeca, Sirtris, VeriSign, and Vertica.

—Greylock Partners announced this week that it has expanded its present fund to $1 billion (up from $575 million in late 2009) and has formed a growth-stage fund to focus on more established companies. Greylock’s later-stage investments—about 40 percent of its dollars since early 2006—include Constant Contact, Zipcar, Pandora, Redfin, Facebook, and Groupon.

—Summit Partners is raising a $500 million venture fund and a $3 billion growth equity fund, according to a report in Mass High Tech this morning, which cites SEC documents filed for a growth-stage fund and a venture fund. Summit closed a $300 million venture fund and a $3 billion growth fund back in 2005, the report says. The firm’s investments have included Casa Systems, Innov-X, Winshuttle, and Cloudmark.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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