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March 24, 2006
Foundation Capital Raises $525 Mln Venture Fund; Gould Retires By Hui-yong Yu
March 24 (Bloomberg) — Foundation Capital, a U.S. venture
capital firm whose past investments include online movie-rental
service Netflix Inc., raised $525 million for its fifth fund.
The company also said co-founder Kathryn Gould retired.
Foundation expects to make about 10 investments a year in
the next 3 1/2 years, said Paul Holland, one of six full-time
general partners at the Menlo Park, California-based firm, in an
interview. Foundation previously raised $595 million for its
fourth fund in 2001.
"Having a slightly smaller fund makes sense for us," said
Holland, 45. "We don't have an interest in institutionalizing
the firm, becoming 18 partners spread all around the world."
Venture capital funds are attracting money as investors
look for alternatives to stocks to earn higher returns. U.S.
fund-raising rose 18.7 percent last year to a four-year high of
$22.2 billion, according to VentureOne in San Francisco.
Foundation was formed in 1995 when the partners of Merrill,
Pickard, Anderson & Eyre split off to form Foundation and
Benchmark Capital, best known for its investment in eBay Inc.
Foundation's new fund drew first-time investments from
Stanford University and Purdue University, Foundation said.
"They generally have a much-better-than-average return
history," said Morgan Olsen, Purdue's executive vice president
and treasurer. The West Lafayette, Indiana-based school has a
goal of putting 10 percent of its $1.4-billion general endowment
pool in private equity, which includes venture capital, up from
about 3 percent currently, Olsen said in a telephone interview.
Harvard and Yale Foundation will invest its new fund in a similar manner as
its previous one, Holland said. The fourth fund invested about
80 percent of its capital in semiconductors, telecommunications,
computer networking equipment and software; 10 percent in
energy-related companies, including technologies and products to
reduce pollution; and 10 percent in consumer services. The firm invests at the early stages of a startup,
typically before a company begins selling products and services. Since inception, Foundation has raised $1.6 billion from
investors including Harvard University, Yale University, the
California Institute of Technology and the University of Chicago.
Previous investments include Commerce One Inc., Onyx Software
Corp., Interwoven Inc. and Atheros Communications Inc. Neither Gould nor a Stanford spokesperson immediately
returned phone calls for comment. Story illustration: To graph the performance of Netflix, see
{NFLX US COMP}. To see more on Foundation Capital:
http://www.foundationcapital.com. For more venture capital news.
To contact the reporter on this story: To contact the editor responsible for this story: |
