Some venture firms are having difficulty raising new funds, but top firms are still getting money with ease — in part to invest in fast-growing places like China and India.
In the past month we’ve seen Foundation Capital take $750 million, Kleiner Perkins grab $700 million, plus its $500 million “Green Growth” fund, and now Lightspeed Venture Partners is announcing its own fresh $800 million fund, oversubscribed from a $675 million target.
The fresh Lightspeed fund is almost twice the size of its last raise, which topped out at $475 million two years ago. It seems like a lot to invest. But the firm is expanding its game. It will continue to invest in early-stage investment in the United States and Israel, but put more focus on later-stage investments in China and India.
It joins a host of other firms. That trend became most notable last year, when Sequoia Capital kicked its highly-respected LP Yale University to the curb for refusing to put money toward the firm’s risky-looking global investments, like its vegetable farm in China. Along with cleantech — the reason for Kleiner Perkins’ extra $500M — global investment is the top reason that many VCs have started raising funds sized more to private equity.
China and India are prime beneficiaries of the trend, in particular China: Last year, VCs pumped $3.2 billion into Chinese companies - up from $1.8 billion the previous year - and that figure could jump to $4 billion to $5 billion in 2008, according to a piece by the Mercury News on the trend this weekend.
Despite their immensity, China and India have been capital starved historically, Lightspeed managing director Ravi Mhatre told me. However, there’s no indication that Lightspeed is going to start putting money into growing vegetables. He explains his approach using mobile services as an example. In the US and Europe, the market isn’t growing much, so carriers are looking for value-added services for high-paying customers. In poorer countries, revenue per subscriber is much lower, but their numbers are exploding — making investment more of an infrastructure bet.
The fund will keep its traditional focus on IT, including the internet, enterprise software, mobile services and the semiconductor industry. And like many of its top-tier peers, Lightspeed will probably be up the percentage of its money that it puts towards cleantech from the smaller amount it has invested to date.
