Accel Closes $3 Billion in Funding Across Three Funds

Accel Secures $3.05 Billion Across Three New Investment Funds

Accel announced on Tuesday the successful closing of three new funds, collectively totaling $3.05 billion. These funds will be allocated to support both early-stage startups and provide growth capital for more established businesses.

Global Investment Strategy

A key aspect of this funding round is Accel’s reinforced commitment to global investing. The 38-year-old venture firm, headquartered in Silicon Valley, is strategically expanding its reach internationally.

This announcement highlights the continued strong investor confidence in the tech startup landscape and the substantial capital currently available to emerging companies.

Fund Breakdown

The new funds consist of the following:

• A $650 million 15th early-stage U.S. fund.
• A $650 million seventh early-stage European and Israeli fund.
• A $1.75 billion sixth global growth-stage fund.

The $1.75 billion growth fund complements a previously undisclosed $2.3 billion global “Leaders” fund, finalized in December, which focuses on later-stage investments.

Investment Approach and Portfolio Size

According to Partner Rich Wong, Accel anticipates investing in approximately 20 to 30 companies per fund. Average investments from the growth fund will range between $50 million and $75 million.

Investments from the global Leaders fund are expected to be in the $75 million to $100 million range.

Continued Support for Incubation

Despite focusing on larger investments, the firm remains dedicated to nurturing startups from their inception. Wong stated they are still “excited” to incubate companies.

“We will continue to provide seed funding, writing checks of $500,000 to $1 million,” he explained to TechCrunch. “It’s crucial for us to collaborate with companies from the outset and support them throughout their development.”

Backing Bootstrapped Companies

Accel has a proven track record of investing in companies that were initially self-funded and often profitable. A recent example is Lower, a fintech company based in Columbus, Ohio, which secured a $100 million Series A round.

Frequently, Accel receives referrals to these companies from its existing portfolio businesses, such as Galileo Clay Wilkes, who directed Lower’s CEO to Accel.

Focus on Non-Silicon Valley Startups

Companies backed by Accel’s early-stage and growth funds are often bootstrapped and located outside of Silicon Valley. The firm actively seeks opportunities beyond the Bay Area.

With offices in London and Bangalore, in addition to the Bay Area, Accel’s investment philosophy centers around “investing early and locally,” as stated by Wong. This approach has led to investments in companies across the globe, including those in Mexico, Stockholm, Tel Aviv, and Munich.

Recent Successes

Since its last fund closure in 2019, Accel has witnessed 10 portfolio companies successfully launch initial public offerings (IPOs). These include Slack, Bumble, UiPath, CrowdStrike, PagerDuty, Deliveroo, and Squarespace.

Furthermore, 40 portfolio companies have been involved in mergers and acquisitions (M&A), such as Qualtrics’s $8 billion acquisition by SAP and Segment’s $3.2 billion acquisition by Twilio. Rockwell Automation’s recent $2.22 billion cash acquisition of Plex Systems, a company Accel initially invested in back in 2012, is another notable example.

Current Investment Areas

Recent investments include fintech companies like Flink (LatAm), Trade Republic (Berlin), Unit, and Public (a Robinhood competitor). Accel has also continued to support existing portfolio companies such as Webflow and Hopin.

Thematic and Open-Minded Approach

Wong describes Accel’s investment strategy as “open-minded but thematic.”

Accel Partner Sonali de Rycker, based in London, echoes this sentiment. “We examine companies focused on automation, consumer products, and security, but on a worldwide scale. Our objective is to identify the most promising entrepreneurs, regardless of their location,” she explained.

Impact of Technology

The proliferation of smartphones and cloud computing has amplified this global focus, according to Wong. Previously, companies primarily served consumers within their own countries.

“However, the market size has expanded dramatically, enabling companies to achieve greater scale. This is a key reason why we are observing investment at this accelerated rate,” he added.

Growth of the Leaders Fund

The firm’s global Leaders fund is “dramatically” larger than the $500 million Leaders fund closed in 2019, reflecting this increased investment capacity.

Companies Staying Private Longer

De Rycker also notes that companies are remaining private for extended periods, increasing the opportunity for investment until a sale or IPO occurs.

Long-Term Relationships

Accel prioritizes building long-term relationships with potential investments, sometimes spanning several years.

“1Password exemplifies this approach,” Wong stated. “Arun [Mathew] cultivated that relationship for at least six years before the investment materialized. Ultimately, 1Password reached out and expressed their readiness.”

This led to Accel leading the Canadian company’s first external funding round in its 14-year history – a $200 million Series A – in 2019.

Cautious Approach to Emerging Sectors

While maintaining an open mind, Accel is exercising caution in certain emerging sectors. Wong clarified, “We are not announcing a $2.2 billion crypto fund, but we have made crypto investments and are observing interesting developments. We will assess how the crypto landscape evolves.”