August Capital, the 17-year-old Sand Hill venture capital firm, is raising a new $550 million investment fund, according to documents filed this morning with the SEC.
August Partner Howard Hartenbaum has since confirmed the firm’s raise, which is its sixth fund to date. It closed its previous, $650 million fund in March of 2009.
The firm’s new raise consists of two funds: Its core fund, which the firm will use to continue investing in early-stage companies and its $250 million “Special Opportunities Fund,” which August will use for opportunistic investments, growth equity, some buyout — a mixed bag of investment types at the other end of the growth spectrum. A potpourri, if you will.
All in all, don’t expect any drastic changes in style with August’s sixth fund — the firm isn’t suddenly going to take to volume investing, throwing small chunks into a litany of startups. Instead, the five partners are “sticking to what’s worked in the past,” Hartenbaum says.
Interestingly enough, the firm was able to raise $650M in 2009, closer to the height of the recession, but chose (in a bit more stable economic landscape) to raise a smaller fund this time around. When we asked what the reason, Hartenbaum said that the team believes that startups, on the whole, are being more capital efficient. The maturation of technologies (and the growing ubiquity of the cloud) mean that startups can do more with less — it just doesn’t cost the same as it did — even two years ago.
Plus, Hartenbaum says that he thinks modest-sized funds tend to do better. When firms push their funds into the billions, there’s pressure to invest bigger rounds in startups, make more investments, which can lead to forcing things.
When we pushed the partner for some recent portfolio highlights, he picked out Relay Rides, which just announced a partnership with GM, and said that the company is seeing “high growth and management is really executing.” It will be fun to see how August fares with its sixth round. There haven’t been an overwhelming number of August investments recently that really blow one’s hair back, especially compared to the more distant past, when the firm invested in Microsoft, Intuit, Symantec, Sun, Compaq, Seagate, Adaptec, Grand Junction, Postini, Skype, Evite, Shopping.com, and Rhapsody. Not a bad run. Now for a redux.