VantagePoint Venture Partners, the Silicon Valley venture capital firm that invested in social networking company, MySpace, has raised another $1 billion fund to invest in technology companies.
VentureWire reported the news this morning.
In June, some skeptics had suggested the firm was having trouble raising the fund, but Managing Director Alan Salzman responded at the time that the firm had always planned to raise a $1 billion, and was on target.
In addition, VantagePoint is hoping to raise more than $150 million for a fund focused on investments in clean technology companies, Salzman told VentureWire in an interview. The firm has already invested in Tesla, the electric car, and backed several other clean tech companies.
Notable is that VantagePoint’s investment in Intermix, the company that owned social networking company, MySpace, is partly what saved the firm. VantagePoint had raised a whopping $1.6 billion fund in 2000, and suffered an internal rate of return of 0 percent, according to the State of Oregon, which invested in the firm. The zero IRR includes even the 10-fold return of over $150 million VantagePoint enjoyed when Intermix was sold to News Corp. last year, VentureWire notes. Among venture firms, VantagePoint was one of the more stubborn, and resisted reducing the size of its fund after the Internet bubble burst. But its results were apparently good enough to placate investors: After all, VantagePoint’s returns were above the industry average, which was a negative 7.62 percent for funds raised in that year of 2000.
In one interesting twist, Salzman said “outside income” the firm’s partners get from fees and stock options while sitting on the boards of portfolio companies will now be given to VantagePoint’s investors, and not kept by the partners.
One Comment
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Insider said:
It’s worth noting that VantagePoint did not invest in MySpace. They invested in Intermix (then called eUniverse) months before the idea for MySpace even came up.
They basically just got very, very lucky, because Intermix itself is a total dog (they make money selling anti-wrinkle cream online).
But at some point, luck is not enough, and it looks like reality has caught up with them.
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VentureBeat » Introducing “VentureBoard,” a marketplace for start-ups said:
[...] Here’s another notable fact: Before the Skype deal, the last time a venture-backed company was bought for more than $1 billion was in 2001, when publicly traded Ciena Corp. bought telecom start-up Cyras Systems for $1.15 billion. This rarity is challenging the venture capital model. Even with MySpace’s robust sale to NewsCorp last year, it wasn’t enough to even push the performance of its major venture backer, VantagePoint into positive territory (see VentureBeat’s story today). Sevin Rosen Funds, another venture firm, has thrown in the towel on raising another fund, saying the environment is “terrible.” Entrepreneurs need different buyers and backers. [...]