Today we announce the closing of Menlo Ventures XIV, a $450 million fund earmarked for early-stage technology investments. The fund was oversubscribed by existing investors and we feel fortunate to have such supportive and reliable limited partners. I am particularly proud of this milestone because it comes after the culmination of a successful generational transition that began with Menlo XI and Menlo XII, which are some of the highest performing funds of their vintages. Thank you to my partners Shawn Carolan, Venky Ganesan, Matt Murphy, and Jordan Ormont for earning our investors’ trust every day and always looking for ways Menlo can be better. Thank you also to the former generation of Menlo investors whose shoulders we stand on, and who made it their goal to build an enduring franchise.
Menlo XIV will invest roughly half in consumer technology and half in enterprise infrastructure, and like previous funds, there will still be a 5% allocation to seed deals. There will also be a significant allocation to emerging new growth areas – computational biology, artificial intelligence, and robotics and autonomy. Current areas of interest are online marketplaces, financial technology and services, vertical SaaS applications, IT Security and cloud infrastructure.
We are doubling down on our commitment to be impactful investors. First, with heavy internal investment in Menlo Fuel, our venture services program. Fuel is comprised of offerings that aid companies in the crucial go-to-market stage when rapid growth can set the foundation for market leadership and missteps are costliest. Fuel consists of executive recruiting, business development, sales consulting, and marketing strategy services, each of which has a dedicated resource in the firm. We’ve also invested in our own internal software, Menlo Signals, for tracking company metrics both in and out of the portfolio to aid comparative analysis on growth and capital efficiency. Lastly, we’ve opened a San Francisco office where the entire Menlo team spends at least two days a week together, making sure we are available in person for meetings and events both in the city and in the valley.
Menlo XIV closes at a time when the VC industry is flush with capital. Warnings abound about a venture capital “bubble” and an impending downturn. We share this concern and have deliberately avoided the temptation to grow our fund size. Data suggests that funds below $500 million are over five times as likely to deliver over 3x net returns, which certainly is our goal. When markets take a turn for the worse, it is particularly hard to generate outstanding multiples on a large fund.
We are inspired every day by the amazing entrepreneurs we meet. Opportunities are boundless and global and more accessible than ever. We want to help create products and services that improve peoples’ lives and disrupt or create enormous markets and result in iconic, world-changing companies. Please share your dream with us!!!