Menlo Ventures Closes $500M Early-Stage Fund

Menlo Ventures, a venture capital firm established 44 years ago with locations in Menlo Park and San Francisco, has officially announced the closing of its fifteenth early-stage fund today, securing $500 million in capital commitments.

This investment amount mirrors the sum Menlo revealed last year for a growth-stage fund, representing only the second of its kind in the firm’s history.

We recently spoke with managing director Venky Ganesan regarding the details of this new fund. A notable aspect is the absence of longtime Menlo managing director Mark Siegel, who has been with the firm for 24 years following a role in business development at Netscape, and is now, similar to Bill Gurley of Benchmark and Todd Chaffee of IVP, creating opportunities for newer members of the Menlo team.

Ganesan also indicated that Menlo, which focuses its investments on consumer, enterprise, frontier technology, and healthcare startups, may increase its focus on investments related to the health sector, a logical development given current trends.

Interestingly, Menlo originally incubated Gilead Sciences in 1987, but then paused its involvement in life sciences for approximately 20 years before re-establishing the practice in 2017 with the hiring of Greg Yap as a partner to spearhead related investments. Yap was initially tasked with allocating around 15% of the firm’s previous ($450 million) early-stage fund to technology-driven life sciences, but Ganesan anticipates that a potentially larger portion of the new fund will be directed towards tech-enabled health and medical startups.

Regarding investment amounts, Ganesan stated that Menlo will occasionally participate in seed rounds, but primarily concentrates on Series A and B funding, providing initial investments ranging from $8 million to $15 million for a target ownership stake of 20% in Series A deals, and beginning at $12 million to $14 million for Series B rounds. (The firm’s later-stage fund handles larger investments beyond these stages.)

Washington State has consistently been a key investor in Menlo, and this fund continues that trend, with a $125 million commitment from its investment board.

Ganesan also highlighted the State of New Mexico Investment Council as a new investor, one of three new backers for the fund—all of whom were introduced to Menlo through existing investors and committed their support through virtual meetings.

The firm’s recent successful exits have understandably generated strong institutional interest in the new fund. Menlo led Uber’s Series B funding round in 2011, and prior to Uber’s IPO last year, the firm had already realized a 93x return on its $10.5 million investment, earning $973 million through the sale of nearly half of its Uber stock to a syndicate led by SoftBank.

Another significant success for Menlo has been Roku, a provider of digital media players for video streaming, which became a public company in 2017. Shares initially traded around $15 at the time of the IPO and currently trade at $233 per share.

Furthermore, Menlo’s current portfolio companies also demonstrate strong potential for future returns. Poshmark, a consignment company, recently confidentially submitted a draft registration statement for its IPO, and Chime, a mobile banking startup, completed a funding round last month that valued the company at $14.5 billion.