Opportunities for Entrepreneurship: Menlo’s New $250M Fund

We are announcing today the closing of the Menlo Ventures Opportunity Fund.  This is a $250 Million vehicle and we’re very flattered that it was significantly oversubscribed.  Thank you to our enthusiastic and supportive LPs!

Why did we raise this fund and why now?

Great companies are created in all kinds of economic environments.  Technology disruption creates opportunities for startups, not the macroeconomic cycle.  The Opportunity Fund was formed to take advantage of early growth stage opportunities at a time when funding in this stage is declining. We intend to help fill the “Venture Valley” by focusing on the most promising entrepreneurs and companies at the Series B and C stages.

The “Venture Valley” is the gap created by non-traditional investors and venture growth funds exiting Series B and C rounds and focusing more on late stage rounds (Series D and beyond). As a result, these Series B and C rounds are declining. According to PitchBook, there were 371 venture capital fundings of B and C rounds combined in the first quarter of 2016, down from 403 in the first quarter of 2015. We expect this trend to continue.

But venture capital isn’t about short-term “hits.” It is about building value for the long term, and many of the amazing companies created in the last few years still need equity financing.  In a downturn, there is less competition.  It is easier to hire.  We want to enable the best companies to take advantage of the market correction and play offense, not defense, and build competitive advantage for tomorrow.

The Opportunity Fund will be invested in both new and existing portfolio companies in the early growth stage, ranging in size from $20-50 million and invested concurrently with our main multi-stage $400 million fund, Menlo XII.  We’ll continue continue to focus the majority of our investments in six sectors. In enterprise, the sectors are cloud infrastructure, SaaS and cybersecurity. In consumer, the sectors are marketplaces, fintech, and e-commerce.

Hindsight on the last four decades suggests that some of our best investments will be made in the next 24 months.  We look forward to partnering with the next generation of iconic entrepreneurs and companies.  Be bold!