Madrona Venture Group, one of the higher-profile venture capital firms in the Seattle area, has closed on an oversubscribed $250 million fund, its fourth to date.

The firm was shooting for $225 million, but received strong interest from both existing an new investors. Alongside the University of Washington, Madrona now counts Cambridge and Oxford Universities among its backers.

Madrona has done well recently with several high-profile exits, including Microsoft’s recent $115 million acquisition of Farecast. In an interview with the Seattle PI’s John Cook, partner Matt McIlwain said the firm had stopped fundraising at the point it did in order to stick with its winning formula:

Madrona capped the fundraising at $250 million, partly because it didn’t want to disrupt its regional and industry focus. Nearly all of the firm’s bets are in early-stage Pacific Northwest companies operating in the consumer Internet, software, networking and wireless sectors.

At the current investment pace of about four to eight new companies each year, McIlwain said there was a “logical limit to the size of the fund.” …

Partners at the firm are aggressively looking for those deals. And despite the sluggishness in the IPO market, McIlwain says it is just a matter of time before they have a portfolio company that returns 10 times or more of the capital invested …

[H]e noted that big public technology companies — the Microsofts, Ciscos and Intels of the world — are sitting on $300 billion of cash. Given that the large technology companies are not growing as fast as they once did, McIlwain believes some of that cash will be used to acquire emerging startups.

Madrona’s other companies include AdReady, BuddyTV, Redfin and Teachstreet. Our coverage on the firms’ investments is collected here.