Accel Partners raises $1B in new money

Even in this environment, there is lots of money around after all. It’s just that LPs are more cautious, seems to be the takeaway from this NYT blogpost:

Who says that money is tight for venture capitalists? Accel Partners, the Palo Alto, Calif., venture capital firm behind companies like Facebook, Glam Media and MetroPCS, announced Thursday that it had raised two new funds for a total of $1 billion.

Accel began fund-raising in mid-October, raising $1 billion in just two months, an impressive feat during a time when many of the investors in venture funds are unable to come up with the money they have already committed, nonetheless commit to new funds. Many of these limited partners have signaled to venture firms that they will not be ready to commit new money until 2010.

One of the new funds, the $480 million Accel Growth Fund, represesnts the first time the 25-year-old venture firm has raised a fund for late-stage companies. Its previous 10 funds have focused on investing in very young companies, and Accel is still investing its most recent $520 million fund in such start-ups.

2 Responses to “Accel Partners raises $1B in new money”

  1. Old Hand says:

    Anyone who is thinking Venture Capital is going to sustain the next 5 years in its current shape is DREAMING. Accel got $1B probably because it was a top quartile return fund. For every Accel that raises money, 5-10 funds stand to be wiped out (the median return of such funds is 5% !!)

    Check out
    http://www.forbes.com/technology/forbes/2009/0112/066.html?partner=technology_newsletter

    Quote

    Joshua Lerner, a professor at Harvard Business School, recently analyzed returns, net of fees, for 1,252 U.S. venture funds going back to 1976. The median return for top-quartile firms was 28%. That included the huge profits of the tech boom, which aren’t likely to recur. The median return for all venture funds was just under 5%, or worse than what Treasury bonds would have given you. “If you’re not with the good guys, it’s not worth playing,” Lerner says.

  2. I would speculate that a good chunk of this “late stage” money ($100m+) may go to FaceBook. Accel is an early investor in FaceBook and the FaceBook CFO is rumoured to be doing global rounds (China, Dubai, etc.) for their next round of funding ($300m+).

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