Battery Ventures Staying the Course With $950M in New Funds

Battery Ventures, a Boston-based firm with branches in the Bay Area and Israel, now has $950 million in new money to invest, the company announced today. Battery has set up a $650 million main fund, Battery Ventures XI, and allocated $300 million to its new Battery Ventures XI Side Fund, which will make investment bets in larger amounts.

Battery had no splashy changes in investment tactics to reveal concerning its plans for the new money. For general partner Roger Lee, the good news is that things are staying the same. The limited partners (LPs) providing the fresh cash are roughly the same group of pension funds, endowments, funds of funds, and family offices that invested in Battery’s two most recent previous funds in 2013, which totaled $900 million, Lee says.

The investment firm is also sticking to its habitual pace, raising new funds every two and a half to three years, Lee says. Battery is staying the course on its mix of global investments, which include early-stage seed bets, growth rounds, and private equity deals. The firm will continue to stack its portfolio with companies such as business-to-business service providers and Web infrastructure firms, while consumer technology outfits will still make up a minority of its investments.

That breakdown is common among funds, Lee says, given the historical record of investments and winners. “It maps pretty clearly to enterprise products and services,” he says.

As an example, Battery points to yesterday’s news about one such portfolio company, Atlanta-based healthcare software firm Brightree. San Diego, CA-based medical device company ResMed (NYSE: RMD), is acquiring Brightree for $800 million.

Another business outfit that Battery backed, San Mateo, CA-based marketing technology company Marketo (NASDAQ: MKTO), was among six of its portfolio companies to go public over the last three calendar years. That IPO group included a consumer e-commerce outfit, though—Boston-based home furnishings company Wayfair (NYSE: W). Battery also counted 15 acquisitions of its portfolio companies during the same three-year span.

Among the target sectors for Battery are industrial technology, Web-based software, “big-data” technology, cybersecurity, and mobile computing. But the firm will remain active in consumer Internet investing, Lee says. Its past consumer tech investments include Groupon and Angie’s List; current portfolio companies include last-minute hotel bookings company Hotel Tonight and job hunting site Glassdoor.

But in the main, Battery looks for business-oriented companies with solid fundamentals that can ride out market fluctuations over the long term.

“The consumer world is very tricky to invest in,” Lee says. Sometimes it yields a breakaway winner, he says. “If not, you can lose a lot of money.”

Bernadette Tansey is Xconomy's San Francisco Editor. You can reach her at btansey@xconomy.com. Follow @Tansey_Xconomy

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