Examples of outsized funds abound. In 2018, Sequoia announced it had raised $6 billion of its $8 billion Growth Fund III. And in January, TCV closed its latest vehicle, TCV X, on $3 billion.
The latest evidence? On Thursday, Norwest Venture Partners closed its 15th flagship fund on $2 billion—its largest ever. In the US, it's also the 14th-largest VC vehicle of the last decade. The fund will target investments spanning from seed to late-stage across the consumer, enterprise software and healthcare sectors.
"This [fund] gives us the flexibility to do more late-stage venture or more late-stage growth equity, or write larger checks in those deals, which is probably what's going to happen," Norwest managing partner Jeff Crowe said.
The vehicle's close tops off an active two years for the 58-year old Palo Alto-based firm, which now manages assets exceeding $9.5 billion. Its preceding fund, NVP XIV, closed in February 2018 on $1.5 billion. That's a quick turnaround for a fund of any size—the median time between VC funds in the US is hovering around three years, according to PitchBook data—but especially for such a large one, an achievement that Crowe attributes to a lengthy track record of successful investments.
Since the last flagship fund closed, Norwest has completed nearly 50 new investments spanning a range of stages and industries. It also exited 23 portfolio companies, including unicorns Uber and Spotify. It first backed both companies in 2015, participating in a $2.8 billion Series E round for Uber and a $526 million Series G for Spotify.
Since the start of 2014, Norwest has closed four funds totaling $5.9 billion in aggregate. Contrast that to the decade or so prior: Norwest closed just three funds between 2000 and 2013, collectively worth about $2.25 billion.
The accelerating size and pace of Norwest's fundraising underscores the recent trend of startups raising more and larger rounds in the private markets. As many VC-backed companies wait longer to go public, they're raising additional venture funding to finance their operations—money that, in the past, they'd have likely raised on Wall Street. Without that, many startups are increasingly seeking expensive later-stage venture capital rounds.
But the late-stage rounds aren't the only ones growing. All deals are getting pricier, according to Crowe.
"What's a seed deal today was a Series A five years ago," he said.
The median deal sizes for angel & seed, early- and late-stage investments have steadily increased over the past several years, with the median early-stage deal nearly double what it was five years ago, per the 3Q 2019 PitchBook-NVCA Venture Monitor. By year's end, total VC deal value will likely top $100 billion for the second year straight, and deal count is expected to exceed 10,000 for the third year straight.
Featured image of Jeff Crowe courtesy of Norwest Venture Partners