In a way, it will be more of the same for New Enterprise Associates (NEA)—just with a hefty addition to its war chest to work with.
Early Wednesday morning, the venture capital firm announced it closed on $2.8 billion in committed capital for its fifteenth fund, plus $350 million more for its NEA Opportunity Fund—a new co-investment “vehicle” for writing checks that are larger than its typical investment.
Dayna Grayson, a partner with NEA, says this brings the net capital raised by NEA to $17 billion. “This gives us the opportunity to take advantage of venture growth equity deals,” she says, which the firm has pursued for some time now, in addition to its bread-and-butter, early-stage investing across healthcare and tech.
NEA is headquartered in Menlo Park, CA, and the Washington, DC–area with offices in New York, Boston, and abroad in China and India. Along with the announcement of the new fund, Scott Sandell was appointed as a managing general partner at NEA.
Grayson (pictured) calls the new fund a reaffirmation of the firm’s line of attack. “What you want to see in venture investors is a broad, but focused, proven strategy,” she says. “Especially in markets like we’re in today, you don’t want to deviate too heavily.”
NEA has already made some new investments with this fund, Grayson says, some of which may emerge this week.
This news comes at a time, though, when others have questioned whether we are currently in a bubble with money flowing too freely to “fake entrepreneurs.”
“We certainly have seen a number of valuations be very frothy as of late,” she says. However Grayson also says talk of a bubble tends to be focused on investing activity in companies rather than venture investing into funds. And NEA seems to be maintaining its stride. “If you look at the number of IPOs we had, in 2014 it was 12,” she says. “We’re No. 5 or 6 in terms of unicorns that exited.”
Looking at the market, she says valuations have increased, with more Series F or later financing rounds in 2014 up significantly from 2010. “This could speak to a couple of things,” Grayson says.
Companies could be choosing to stay private longer, she says, with private investors giving them an alternative to going public. Looking at the public market, there are about 54 tech IPOs on deck this year, she says. The first quarter may have seemed meager in terms of new IPOs, but Grayson says the backlog indicates the exit market will likely remain strong. “I think we’re seeing a different market out there as companies build to significant revenue and traction while still being private, which is new,” she says.
