Spark Capital Closes Fourth Fund at $450M

2/26/13Follow @curtwoodward

Boston’s Spark Capital, a venture firm with high-profile investments in Twitter, Tumblr, and Foursquare, has closed its fourth fund at $450 million.

Founded in 2005 by Todd Dagres, Santo Politi, and Paul Conway, Spark started with an emphasis on early stage, consumer-focused technology and media companies. It’s since expanded its focus a bit, with investments in companies tackling areas like business intelligence, networking, and e-commerce. Spark also has an office in New York.

Word of Spark closing a new fund, which it began marketing late last year, started leaking out a few weeks ago. The firm’s fourth fund is reportedly oversubscribed at $450 million, representing continued growth in fund size over the years. The first fund registered at about $260 million, according to SEC filings. Spark Capital II was about $360 million, and the third fund about $355 million.

While it’s still a little early to judge Spark’s performance, the Massachusetts state pension board has listed its investment in the first Spark Capital fund among its performance reports. Spark Capital I is recorded as having a 7.92 percent internal rate of return—a moneymaker, but not yet in the double-digit IRR category that investors in venture funds are hoping to see.

There’s clearly more appetite for Spark’s approach, which focuses on early stages but also puts money into more established companies that are “category leaders,” as general partner Bijan Sabet wrote on his blog.

“We have another chance to invest in the next great entrepreneurs, products and companies,” Dagres wrote in announcing the new fund. “We can continue to mine the massive value creation driven by the Internet. We can anticipate the path of technology as it spreads into the emerging markets. We can search for the next category leader. We can maybe even have a hand in the construction of a company that has a profound impact on the planet. How cool is that?”

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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