Accel Launches New $4 Billion Late Stage Fund As Some Competitors Lose Momentum

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Accel, a 39-year-old venture capital firm, just made a big move. He announced through Blog postthat it had just closed a new late-stage global fund with $4 billion in capital commitments.

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A fund that closed last week would have been prominent in any market. That’s a lot of money. But at a time when two of Accel’s fiercest rivals – SoftBank and Tiger Global Management – short on the capitalthis should be a particularly sweet moment for the firm, which now has about 100 investors (and just 200 employees) in offices in San Francisco, Palo Alto, London and Bangalore.

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Indeed, assuming the market is experiencing a reset rather than a major multi-year correction, Accel’s timing could hardly be better. The only question is whether the company should moderate its ambitions when market conditions changed this spring. (Today we reached out to Accel for comment, but a company representative pointed us to a post on the firm’s blog.)

This won’t be the first time Accel has returned money to its investors amid market turbulence. In 2001, Accel raised what was at the time its largest fund ever — a $1.4 billion instrument — only to reduce the size of the fund to $950 million in 2002 after the technology market. which first went bad in the spring of 2000 failed to recover and disappointed the limited market. partners, or LPs, have begun made a stink.

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It’s unlikely that LP will back down given what happened next. Before cutting the $1.4 billion fund, Accel proposed splitting it into two $700 million funds, one to invest as planned and a $700 to start investing in 2004. The LPs who voted against this idea – and most of them voted – are still kicking themselves.

One of them is Chris Duvos, then an investor in the Princeton charitable foundation. After the 2001 fund confusion, he handed over the next fund to Accel, from which Accel led Facebook’s $12 million Series A round in 2004. It has become one of the most effective venture capital funds of all time (oops). Meanwhile, Duvos has lost access to Axel. (“Let’s just say I’m not on their speed dialhe joked to this reporter in 2016.)

Still, it’s hard not to wonder how much better Accel’s earnings could have been had it raised at least small less, especially since he has been a very active fundraiser for many years.

Last year alone, he invested $3 billion in a US $650 million early-stage fund (his 15th spot), a seventh European and Israeli early-stage fund that also closed with $650 million, and $1.75 billion global fund in growth stage. designed to support companies such as Qualtrics and 1Password, where a mature company was previously launched, and Accel is helping to turn the dials with massive capital injection. (In contrast, Accel’s new $4 billion “late-stage” global fund aims to invest in companies that have closed previous venture rounds.)

In any case, by historical standards, these are huge venture capital funds, and they are rapidly deploying. (Accel closed its previous $2.3 billion late-stage global fund just a year and a half ago, in December 2020.)

In fairness, it should be noted that Accel has made significant progress. He owned 24% slack at the time of direct listing in 2019 and reportedly returned $4.6 billion to its limited partners only on this bet. Axel also owned twenty% Crowdstrike when the company had a traditional IPO in 2019, and even with technology stocks falling, Crowdstrike’s market capitalization is currently $38 billion. It’s easy to see why investors have backed Accel this spring, even though their overall holdings may have been hit hard by broader market conditions.

As to whether Accel has started to overdo its fundraising, or whether all this capital will allow the firm to dominate for years to come, is one of those questions that only time can tell. Meanwhile, it is interesting how much more integrated the firm has become in recent years.

While the London-based Accel team (established in 2000) and the Indian team (established in 2008) operate somewhat like franchisees and are responsible for raising their own funds at an early stage (the Indian team announced $650 million seventh fund in March), Accel’s late-stage global funds are community property.

This means that each team can use the firm’s latest fund for late-stage investments; each of them will also be responsible for making a profit.

In a world where giant companies are now springing up everywhere, this makes a lot of sense. For example, when Flipkart is sold for $16 billion at Walmart in 2018, not only Accel records, but everyone who works at Accel profited from this sale.

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