Uber investor Menlo Ventures is announcing today that it has $400 million in fresh capital to invest in new startups, thanks to the close of its twelfth fund. With a size equal to the firm’s previous fund, the firm’s partners hope to carry forth the same strategy that served them well in Menlo Ventures XI, and hopefully to repeat some of its success.
Menlo has been around since the 70s, but for most of that time it had invested primarily in enterprise-focused companies. With the firm’s last fund, Menlo Ventures XI, the partnership worked to ensure a more even mix between the amount it invested in consumer and enterprise investments.
Menlo Ventures XI also had a smaller group of partners running it, and much less capital to work with. The firm shrunk its partnership from nine active partners to six with the close of the fund in 2011. It also had just $400 million to invest for the eleventh fund, compared to $1.2 billion for Menlo Ventures X.
Despite a generational transition and reduced fund size, that last fund has performed pretty well. The most successful investment from Menlo XI was undoubtedly its bet on Uber, which came about when it led the transportation startup’s $32 million Series B funding round. Since then, Uber has gone on to raise more than $5 billion in funding and is valued at more than $40 billion.
That said, a number of other portfolio companies from Menlo XI have also done pretty well, including Roku, Betterment, Warby Parker, Tintri, and Stance, all of which have seen their valuations increase dramatically of late.
The firm has also seen its share of exits in the last eighteen months, including the acquisition of Dropcam by Nest for $555 million, Intuit’s acquisition of Check for $360 million, and Verizon’s purchase of Edgecast for $395 million. Other acquisitions in that timeframe include Flurry (acquired by Yahoo), Cellfire (Catalina), Voltage Security (Hewlett-Packard), and Exelate (Nielsen).
Menlo Ventures XII marks the first in which the new investment team raised a fund together, according to managing director Mark Siegel. It was able to do so, in part due to the success it showed this last go-around. Therefore, it’s not really surprising that Menlo Ventures plans to continue with its same investment strategy for Fund 12.
Siegel says Menlo’s partners will continue investing in both consumer and enterprise startups about evenly. It will also continue to focus on a few key investment areas. On the enterprise side, those include cyber security, cloud infrastructure, big data, and SaaS startups. Meanwhile, it will look for consumer investments that include marketplaces, vertical e-commerce and subscription services, and mobile applications.
Menlo Ventures will also earmark $15 million from the new fund to go toward its ‘Talent Fund’ for investing specifically in seed-stage startups. According to Siegel, that fund helps Menlo to identify promising young startups before they become competitive, giving it a slight advantage when it comes time to raise Series A financing.
The new fund brings Menlo’s total cash under management to $4.4 billion. The question is, with another $400 million ready to invest, will Menlo be able to find the next Uber?