Norwest Venture Partners (NVP) has raised a $2 billion combined venture capital and growth equity fund to invest in companies across all stages and verticals. It’s the Palo Alto firm’s 15th fund to date, and its largest investment vehicle yet.
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The Palo Alto-headquartered firm, which also has offices in San Francisco, India, and Israel, now manages $9.5 billion across its numerous funds with the addition of NVP XV, the new fund. NVP has historically and will continue to invest in three main sectors: consumer internet, enterprise software, and healthcare. It cuts checks for all stages, from early stage to growth equity.
NVP said it has invested in over 600 companies to date, and currently has 150 active investments. According to the firm, 23 of investments, or 15 percent of all investments, are led by female founders.
With $2 billion in its pocket, it’s a good time to understand how NVP works and thinks.
What’s Ahead For The New Fund
In an interview with Crunchbase News, Jeff Crowe, managing partner at NVP, pointed to previous liquidity events from the firm’s portfolio as a driver for closing NVP XV. The firm, which has been around for over 50 years, pointed to 23 liquidity events from its companies, like Uber, Spotify, RetailMeNot, LendingClub, and Kayak, as “notable.”
“Investors’ willingness to give you more money to invest is directly correlated to your track record of what you’ve done for them,” Crow said. “And obviously, you know, given that we’ve been around for decades, we’ve got a decades-long track record.” Below is a chart that details NVP’s fund growth over time.
Crowe’s confidence in the firm’s track record leads him to believe that with the largest fund ever in his midst, NVP doesn’t need to change their investment strategy from the past.
NVP does all of its investments, regardless of focus, from the same capital pool. This contrasts with some firms that choose to spin out different funds to invest in different verticals, like SoftBank’s $108 billion artificial intelligence focused fund.
“So if a digital healthcare company really has issues that pertain to consumer internet, but also issues that pertain to the healthcare industry, then we kind of team up internally,” he said. “So that’s why we just do it out of one fund.”
Another perk, per Crowe, is that since NVP invests across multiple stages, if a portfolio company wants a follow on round, it can grab one from a firm it knows well.
Along with previous focuses, Crowe said he is excited about continuing to invest heavily in security, real estate, insurance, and healthcare delivery. Also, of course, fintech.
To End With An Anecdote
In venture, there are more losses than wins. And with all the capital flow out there, it’s easy to get wrapped up in thinking about the next check instead of previous learning lessons. So, I thought it would be worth ending with an anecdote that Crowe said summarizes a core part of NVP: staying with its investments “even if they’re going through bumpy times.” (After all, NVP did indeed invest in Uber).
Here it goes:
LendingClub, a peer to peer lending company, went public in 2014. NVP started investing in it in 2007, a year before the San Francisco startup rolled out its services. Then, as Crowe recalled, the Securities Exchange Commission came in and shut down the company due to legalities and intricacies.
“So, a year after they had launched, they were out of business,” Crowe continued. As LendingClub negotiated with the government to get back into business, NVP decided whether or not they should pull out of the investment. Ultimately, the firm stuck with the startup, and as we know, LendingClub began to scale until it ultimately went public years later. (It has since had its fair share of hardships and roadblocks).
So here’s what we can glean from NVP’s above anecdote: $2 billion is going to look a lot like a slow, steady, and sometimes bumpy investment path.
Illustration: Li-Anne Dias
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