Menlo Ventures Is Said to Seek $400 Million for Venture Fund

Apr 09, 2014 1:45 pm ET

(Update with Menlo Ventures declining to comment in third paragraph.)

April 9 (Bloomberg) -- Menlo Ventures is seeking $400 million for its 12th multistage investment fund as the most active initial public offering market in more than half a decade is helping the venture capital industry make a comeback, according to two people familiar with the plans.

The firm is keeping Menlo Ventures XII LP the same size as its last fund, which was reduced from the prior two offerings, said the people, who asked not to be identified because the plans are private. The Menlo Park, California-based firm makes technology investments in consumer and enterprise-focused companies such as those focused on e-commerce, mobile and gaming and storage and big data.

Jenny Saling, director of marketing at Menlo Ventures, declined to comment on fundraising plans.

The venture industry is benefiting from a robust market for IPOs and billion-dollar acquisitions. Last month, Facebook Inc. agreed to buy Oculus VR Inc. for about $2 billion, making it the fourth 10-digit deal this year for a venture-backed company. Menlo Ventures missed out on some of the hottest social media and consumer Internet bets, such as Twitter Inc., whose returns helped many of its Silicon Valley peers raise funds in recent years.

The firm’s prior fund, which started deploying cash in 2011, was valued above cost at a multiple of 1.2 times invested capital and an 18 percent net internal rate of return as of Sept. 30, according to performance data on Washington State Investment Board’s website.

MobiTV, MOG

Menlo Ventures’ funds raised since the dot-com stock bubble era haven’t fared as well. Its 1999 fund was valued below cost with a negative 13 percent net IRR, the data show.

After gathering $500 million for its 1999 fund, Menlo Ventures tripled the size of its next offering in 2000 and raised $1.2 billion in 2005. The funds, which started investing in 2001 and 2006, were producing net IRRs of 1.1 percent and negative 0.1 percent, respectively, according to the Washington investment board.

Menlo Ventures invested in MobiTV Inc., a maker of software that lets smartphone users watch live television, which pulled its plans for an initial offering in July 2012 citing “unfavorable market conditions.” It also bet on the music- streaming service MOG, which was sold to Beats Electronics LLC two years ago for $14 million.

The firm led a series B funding round in 2011 for car- booking application maker Uber Technologies Inc., which has also attracted cash from Google Ventures, TPG Capital and Benchmark Capital. Shervin Pishevar, who led the firm’s investment in Uber, left his managing director role last year and became an adviser. Menlo Ventures hired Pishevar in 2011 to focus on social web and consumer Internet companies.

--With assistance from Ari Levy in San Francisco.