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"It was gratifying to generate such strong interest," says Mitchell.

Scale Venture Partners this month raised a $400 million fund -- and completed its withdrawal from Bank of America.

Formerly the bank's venture arm known as BA venture partners, Scale has become independent. Scale continues to manage the portfolio for its first fund of $500 million in which BofA is the only investor. The second fund, however, does not include BofA. Scale raised money from a dozen institutional investors and BofA exited given that strong demand from others.

"It was gratifying to generate such strong interest, which was a nice validation of our approach to investing and our top-quartile results," said Kate Mitchell, managing director at Scale and a former online banking executive at BofA.

Scale's fundraising success is a sign of how much money is being pushed at venture capital, making room for the next generation of top performers. After all, there's only so much money the top tier firms like Sequoia Capital, New Enterprise Associates and Kleiner Perkins Caufield & Byers can put to work. And institutional investors that are newcomers to venture investing find it even more difficult to get into the top tier firms.

So these investors are casting a wider net and pouring capital into newer firms like Scale, Granite Ventures, Shasta Ventures, Sofinnova Ventures and Emergence Capital Partners.

"A lot of investors are making calculated bets with these new firms," said Mac Hofeditz, a partner at San Francisco-based Probitas Partners, which served as Scale's private placement agent in raising the firm's second fund.

Among the dozen new investors backing Scale are Credit Suisse, Key Capital Corp., Lexington Partners, Liberty Mutual, Macquarie Global Private Equity Fund, Montague Newhall, Pantheon Ventures and its affiliates, Paul Capital Partners and Storebrand.

"Scale was an opportunity for limited partners to invest in a firm run by a team with a lot of experience as both venture investors and operating professionals," said Craig Marmer, also a partner at Probitas.

Scale's track record with its first fund, raised in 2000, sparked a lot of interest in the firm's second fund.

"Even before our fundraising, we were getting calls from limited partners inquiring about investing with us," Mitchell said.

The Foster City firm, with $1.2 billion in capital under management, has achieved several successful exits from its first fund's portfolio. Good Technology was recently acquired by Motorola. And Microsoft acquired two of Scale's portfolio companies, Placeware and Frontbridge.

Portfolio companies that have gone public from its first fund include Monolithic Power Systems, Seattle Genetics, Omniture and Somaxon. Portfolio company Glu Mobile, a San Mateo maker of games for cell phones, is in registration to go public.

Mitchell credits the firm's success in picking winners to her venture colleagues' deep knowledge of their industries. It's not unusual for the firm to approach companies before they're looking for venture financing to inquire about investing.

"We cold call companies," she said. "We're often their first institutional money."

Monolithic Power Systems is an example of one of the firm's cold-calling successes in which the firm has made more than five times what it invested.

Mitchell describes the firm's investment strategy as "thesis-based investing" in which it develops an investment theme and then looks for companies likely to benefit from that outlook. For instance, the firm's investment team took apart a television set to determine which components could be digitized, leading the firm to its current portfolio company, Xceive.

"Throughout our fundraising process, we heard that the team and our thesis-based approach to investing were important differentiators," Mitchell said.

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