Why mess with a good thing?
Palo Alto, California-based Venrock announced Thursday that it has closed its eighth fund, raising $450 million for future technology and healthcare investments. The news was delivered in a blog post by Venrock Partner Bryan Roberts.
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“It is a(nother) $450 million fund which feels, for us, a bit like the littlest bear’s bowl of porridge—not too big and not too small, but just about right.”
While there’s a tendency for VC firms to set successively higher goals and then break through the stated hard cap, Venrock is sticking with what it knows in lukewarm market conditions.
“Given the current low return environment across most asset classes globally, recent venture performance has attracted a substantial oversupply of capital,” Roberts explained in the post. “For us and many others, this makes fund raising a reasonably efficient process, but does nothing to decrease the weight of responsibility placed on the firm. And, it means that we have to be even more insightful or early or proprietary with investment opportunities.”
Founded in 1969, Venrock has had more than a few years to fine-tune its approach. By the time fund V closed in 2007, the pot was up to $600 million. But that didn’t last. In 2010, it chose to raise almost 40 percent less, while also cutting the team back from 15 investing partners to eight.
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In an email forwarded by a company representative, Roberts said the firm wants each success to have an impact on the whole.
Venrock has found its sweet spot, but the industry is always changing. A poor IPO market in recent years, for example, has driven larger private rounds. In recent years, the firm has backed Juno Therapeutics, which raised over $300 million in its first year, and Intarcia Therapeutics, which has gone on to raise over $1 billion from private investors.
For Roberts, those deals remain an anomaly.
“We continue to take each investment opportunity as its own unique situation. Most of our initial investments are in the $250,000 to $7 million range,” he explained. “Very large financings, like Intarcia’s recently, are often done later in the company’s maturation when the capital needs are larger but the risk lower.”