Venture Capital News

Venture Capital News

Norwest Raises $1.2 Billion in Venture Capital

With investors enthusiastic about hot technology start-ups, a major venture capital firm has raised $1.2 billion for its new fund.

The Silicon Valley firm Norwest Venture Partners said on Tuesday that it planned to invest the money in companies across different sectors and at varying stages of growth. With the fresh capital, Norwest said it had roughly $5 billion under management.

The new fund comes on the heels of a strong period for the firm, which was able to cash out of a number of its investments last year and in the first few months of 2014. And it suggests that money will continue to flow into Silicon Valley.

Gary WagnerMatthew Howard, a managing partner at Norwest Venture Partners, in 2006.

Norwest, a 53-year-old firm, has adjusted its strategy in the last few months in response to the relatively high valuations in technology, according to Matthew Howard, a managing partner. He said Norwest’s investments have migrated toward companies at earlier stages of their development.

“Part of what’s happening right now is that when a company is identified as a real market leader, there’s just a lot of competition to give to those companies,” Mr. Howard said in an interview. “There’s a scarcity of great companies, and when they’re identified there’s a lot of pressure for them to take on more capital.”

In spite of this competition, Norwest says it can continue to find winning bets at attractive prices. The firm recorded a number of “liquidity events” — sales or initial public offerings of its portfolio companies – last year, including I.P.O.s of the security software company FireEye and the digital coupon company RetailMeNot.

Norwest stands out from other venture capital firms in that it counts one large institution, Wells Fargo, as its primary investor. The bank contributed the majority of the capital to the latest fund, with individual investors providing the balance.

The previous fund, raised in 2009, also totaled $1.2 billion. Norwest says it tends to invest about $300 million of capital a year.