Scale raises $250 mln venture fund
Posted on Thu, Jan 21, 2010
Bloomberg
U.S. firm Scale Venture Partners raised a $250 million fund to back Internet and health-care startups, saying an improving market for technology-company mergers is boosting returns.
Scale has invested $68 million of the new fund since May, the firm said on Wednesday in a statement. That money backed Indianapolis e-mail marketing firm ExactTarget, Cambridge, Massachusetts-based marketing-software company HubSpot and Newark, California-based Oraya Therapeutics, which makes robotically controlled devices to treat eye diseases.
An improving market for initial public offerings also may help Scale boost returns on its new fund, partner Kate Mitchell said. The Foster City, California-based firm cleared $100 million last year from the $1.8 billion sale of Web-marketing company Omniture to Adobe Systems and Cisco Systems’ $183 million purchase of Web security firm ScanSafe.
“It all comes down to did you deliver returns? We did and it got recognized,” Mitchell said. “If you don’t show the beef - companies in registration to go public or with $100 million in sales - you won’t raise money.”
Fundraising by venture firms in the U.S. fell 47 percent last year to $15.2 billion during the financial crisis, according to the National Venture Capital Association. The 120 funds raised were the fewest since 1993. Scale’s last fund, raised in 2004, totaled $400 million.
The 19 startup IPOs since 2007 mark the slowest two-year stretch since the mid-1970s, holding down venture capital returns. Scale invested in ExactTarget when the company shelved a proposed IPO last May.
One sign of improvement is that at least 16 venture-backed companies have registered to go public since Oct. 28, including Scale-backed Alimera Sciences, which is developing a device to deliver medication for diabetes-related eye diseases.