While fund sizes of many venture capital firms have ballooned into billions of dollars over the last decade, Benchmark Partners, one of Silicon Valley’s most successful investors, has stuck to raising approximately $425 million in capital every few years.
That’s what the storied firm told in a letter to its limited partners when it announced its latest fund this summer, reported the Information. However, Benchmark’s partners are not limiting themselves to whatever capital commitment they make for their main investment fund. The firm is currently raising an additional $170 million for a fund called Benchmark Partners Founders’ Fund I, according to two regulatory filings.
Benchmark isn’t quietly asking its LPs to contribute more funding to a new strategy. TechCrunch understands that $170 million is expected to come primarily from the firm’s partners, past and present, with some availability for their friends and family to join too. This isn’t new, a source familiar with the fund says. The partners-only fund has been a strategy from its early days.
While it is not unusual, and often a requirement, that partners contribute their personal capital alongside LPs into their main funds, it is more rare that a firm has a large separate fund composed almost entirely of partners’ own money.
But Benchmark is not an ordinary VC firm. It was an early investor in companies like eBay, Snap Uber, Twitter and Uber, and has returned billions to its backers over those years, often multiplying the original funds by as much as 10-fold, according to reports from Forbes and the Information reported.
So its partners have every reason to want to double down on their investments. A separate fund allows them to do so in a way that doesn’t involve managing limited partner’s money. They aren’t the only VCs to think like that. Homebrew, the VC firm founded by Satya Patel (known for his time at Twitter, Battery Ventures, and Google) and Hunter Walk (YouTube, Google), quit taking limited partner money altogether in 2022. Homebrew’s main fund is now their own money. Sequoia’s separate wealth management firm, Sequoia Heritage, was also famously seeded with $150 million a piece from partner Michael Moritz and Doug Leone, although it took on $250 million from outside investors, too.
Benchmark has always operated less like the giant VC firms. It is, for instance, an equal partnership firm, which means each partner shares an equal percentage of the outfit’s management fees and profits. The firm invests primarily in Series A stage companies for around 20% ownership and is so sought after, its website is little more than a landing page.
