Benchmark raises $2B, adds $1.25B growth fund

Benchmark raised $2 billion across two funds this summer, including a $1.25 billion growth vehicle, TechCrunch reported Oct. 18. It is the second time in 31 years the firm has moved off raising a far smaller fund.

The early-stage core fund sat at $500 million for 20 years. Partner Peter Fenton told the TechCrunch Disrupt audience that keeping it flat was 'probably a tactical error on our part,' and that it has 'just inflated to be consistent with the existing economy.' He described the growth fund as 'an expansion of our mandate' to take deals that would have returned 'somewhere between 10 and 1,000x' but fell outside an early-stage remit. That leaves roughly $750 million for the core fund if the two vehicles make up the whole $2 billion.

For allocators, the growth fund changes the shape of a Benchmark commitment. Fenton said he would like the vehicle to hold four to six positions, 'maybe seven to eight,' and that if it works, 'one or two investments will generate 90% of the returns.' Deploying $1.25 billion across that range implies an average position of roughly $160 million to $310 million, before fees, reserves or recycling. An LP sizing the fund is underwriting a portfolio in which a single company can carry the vehicle. Fenton added that the partners 'all have different answers, which is the beauty of a partnership.'

The core fund's cadence is unchanged: two or three new companies per partner per year, or 10 to 15 across five partners. Fenton described the core commitment as a 10-to-15-year relationship with founders that 'doesn't scale.'