Sevin Rosen Funds, a venture firm with offices in Dallas and in Silicon Valley, is seeking $350 million for its tenth venture capital fund, despite lackluster performance on its recent investments, according to piece in VentureWire today (sub required).
It is likely to raise the money, despite poor results for the funds it raised in 1999 and 2000, which were invested during the rocky era after the Internet bubble burst in 2000.
It is another example of how investors are forgiving certain firms, even though those firms bit off way more than they could chew by raising huge dollops of cash very quickly during rosy times. As long as the main members of a team stay together and show some record of decent performance prior, and have made some promising bets since, they are getting a second lease on life. From VentureWire:
Fund IX, which closed just two years ago, is too young to produce returns since venture capital funds typically lose money before they make money. But Fund VIII, which closed in 2000, was posting a negative 12% internal rate of return as of March, and Fund VII, which closed in 1999, was posting a negative 27% IRR, according to one investor.
Sevin Rosen’s fund-raising highlights an interesting dilemma for investors, who are eager to invest in brand-name venture capital firms but find that few of them, regardless of their good names, have been able to produce decent profits within recent years.