Accel, the 39-year-old venture firm, has just made a major power move. It announced via a simple blog post that it has just closed a new, global, late-stage fund with $4 billion in capital commitments.
The fund, which closed last week, would stand out in any market. It’s a lot of money. But at a time when two of Accel’s fiercest rivals – SoftBank and Tiger Global Management – are short on capital, it must be a particularly exciting time for the company, which now has about 100 investors (and a total of 200 employees) in offices in San Francisco in the United States. has service. , Palo Alto, London and Bangalore.
Indeed, assuming the market undergoes a reset and not a major, year-long correction, Accel’s timing could hardly be better. The only question is whether it should have scaled back its ambitions as market conditions changed this spring. (We reached out to Accel for comment earlier today, but a spokesperson referred us back to the company’s blog post.)
It wouldn’t be the first time Accel has returned money to its investors amid market turbulence. In 2001, Accel raised what was then its largest fund ever – a $1.4 billion vehicle – to reduce the fund’s size to $950 million in 2002 after the technology market – which first opened in the spring of 2000 soured – not bounced and frustrated limited partners, or LPs, started to stink.
LPs seem highly unlikely to push back this time, given what happened next. Before cutting back on that $1.4 billion fund, Accel suggested splitting it into two $700 million funds: one to invest as planned and a second, a $700 million fund to start investing. in 2004. The LPs that voted against that idea — and the majority of them did — are probably still kicking themselves.
One of them is Chris Douvos, an investor for Princeton’s equity fund at the time. After the 2001 fund uproar, he passed on Accel’s next fund, from which Accel led Facebook’s $12.7 million Series A round in 2004. It became one of the best performing venture capital funds of all time (ouch). Meanwhile, Douvos lost his access to Accel. (“Let’s just say I’m not on their speed-dial number,” he joked to this reporter in 2016)
Still, it’s hard not to wonder how much better Accel’s returns would be if it had at least one small less, especially considering that it has been raising money very aggressively for years now.
Last year, it rolled out $3 billion in funds across a $650 million US early stage fund (the 15th), a seventh early stage European and Israeli fund that also closed at $650 million, and a global “growth stage” of $ 1.75 billion. fund designed to support companies like Qualtrics and 1Password, where a mature business has been started before and Accel is helping turn the clocks with a massive injection of capital. (By contrast, Accel’s new $4 billion global “late-stage” fund is intended to invest money in companies that have closed previous rounds of risk.)
Either way, these are huge venture capital funds by historical standards, and they’re deploying quickly. (Accel closed its previous $2.3 billion global late-stage fund just a year and a half ago, in December 2020.)
In all fairness, Accel has seen some massive returns. It owned 24% of Slack at the time of its outright listing in 2019 and reportedly returned $4.6 billion to its limited partners on that bet alone. Accel also owned 20% of Crowdstrike when the company staged a traditional IPO in 2019, and even fueling tech stocks, Crowdstrike’s market cap is currently $38 billion. It’s easy to see why investors rose behind Accel this spring, even though their total assets may have been hit hard by broader market conditions.
Whether Accel has come to overdo it in fundraising, or whether all that capital will enable the company to dominate for years to come, is one of those questions only time can answer. What’s interesting in the meantime is how much more integrated the company has grown in recent years.
While the London team of Accel (founded in 2000) and the India team (founded in 2008) act in a sense like franchisees and are responsible for raising their own funds at an early stage (the Indian team announced in March a seventh fund of $650 million), Accel’s worldwide late-stage funds are community-owned.
That means any team can leverage the company’s latest fund to make late-stage investments; they will each also be responsible for generating the returns.
In a world where giant companies are now popping up everywhere, that makes perfect sense. For example, when Flipkart sold $16 billion to Walmart in 2018, the profits from that sale benefited not only Accel’s LPs, but everyone who works for Accel.