Accel, the 39-year-old venture capital firm, has just made a big move. He announced, through a simple blog postthat it has just closed a new, global fund at a later stage with $ 4 billion in capital commitments.
The fund, which closed last week, will be remarkable in every market. That’s a lot of money. But at a time when two of Accel the fiercest rivals – SoftBank and Tiger Global Management are low On capitalthis should be a particularly sweet moment for the company, which now employs about 100 investors (and a total of 200 employees) in offices in San Francisco, Palo Alto, London and Bangalore.
In fact, if we assume that the market is undergoing a reset rather than a serious adjustment that has lasted for years, Accel’s time could hardly be better. The only question is whether it should have reduced its ambitions as market conditions changed this spring. (Earlier today, we approached Accel for comment, but a spokesperson directed us back to the company’s blog post.)
This will not be the first time Accel has returned money to its investors amid market turmoil. In 2001, Accel raised what was then its largest fund ever – a $ 1.4 billion vehicle – only to reduce the fund’s size to $ 950 million in 2002, after the technology market – which for first deteriorated in the spring of 2000 – failed to recover and frustrated limited partners, or LP, continued to make a stench.
The LPs seem unlikely to back down this time, given what happened next. Before cutting that $ 1.4 billion fund, Accel proposed splitting it into two $ 700 million funds: one for investment as planned and a second $ 700 million fund to start investing in 2004. The LPs that voted against the idea – and the majority did – are probably still kicking.
One of them was Chris Duvos, an investor in the Princeton Donation Fund at the time. After the fund turmoil of 2001, it transferred the next fund to Accel, from which Accel led Facebook’s Serie A round for $ 12.7 million in 2004. It has become one of the best-performing venture capital funds of all. times (uu). Duvo, meanwhile, lost access to Accel. (“Let’s just say I’m not on their fast dial“, He joked with this reporter in 2016)
Still, it’s hard not to wonder how much better the return on Accel can be if you raise at least a little less, especially considering that it has been a very aggressive fundraiser for years now.
Last year alone, it provided $ 3 billion to the $ 650 million early US fund (its 15th), the seventh early European and Israeli fund, which also closed with $ 650 million, and a global fund of $ 1 million. $ 75 billion Growth Stage Fund designed to support companies like Qualtrics and 1Password, where a mature company was previously launched and Accel helps turn its dials with massive capital infusion. (In contrast, Accel’s new $ 4 billion global late-stage fund aims to invest money in companies that have completed previous rounds of risk.)
Either way, these are huge hedge funds by historical standards, and they are expanding rapidly. (Accel closed its previous global fund at a later stage with $ 2.3 billion just a year and a half ago, in December 2020)
Honestly, Accel had a huge return. It owned 24% of Slack at the time of its direct inclusion in 2019 and reportedly returned $ 4.6 billion to its limited partners only for this bet. Accel also owns 20% of Crowdstrike, when the company traditionally organized an IPO in 2019, and even with the fall in technology stocks, Crowdstrike’s market capitalization is currently $ 38 billion. It is easy to assess why investors united behind Accel this spring, although their total assets may have been hit hard by broader market conditions.
Whether Accel has started to go overboard in raising funds, or whether all this capital will allow the company to dominate for years to come, is one of those questions that only time can answer. The interesting thing, meanwhile, is how much more integrated the company has grown in recent years.
While the London-based Accel team (founded in 2000) and the Indian team (established in 2008) act as franchisees in a sense and are responsible for raising their own funds at an early stage, the Indian team announced $ 650 million seventh fund in March), Accel’s global funds were later owned by the community.
This means that each team can use the company’s latest fund to make investments at a later stage; each of them will also be responsible for generating returns.
In a world where giant companies are now popping up everywhere, it makes a lot of sense. For example, when Flipkart is sold for $ 16 billion of Walmart in 2018, the profits from this sale benefit not only Accel boards, but all those who work for Accel.