New York: Norwest Venture Partners raised a $1.2 billion (Rs5,556 crore) venture capital fund, the biggest to be completed this year, to expand in Israel and India while broadening the range of companies it backs.
Bullish: Norwest managing partner Promod Haque. Hemant Mishra / Mint
The fund, Norwest’s 11th since its founding almost 50 years ago, will give the firm more money to fund larger companies, managing partner Promod Haque said in an interview. Norwest has backed at least 450 companies, including software maker PeopleSoft Inc. and social gaming start-up Playdom Inc.
“Some of our initiatives in growth-investing and globalization have done pretty well, and we need a larger fund so we can scale them,” said Haque, 61, who emigrated to the US from India in 1972. “It took a little bit of time, but we have a track record.”
Venture fund-raising fell by two-thirds in the first nine months of the year from a year earlier, according to the National Venture Capital Association in Arlington, Virginia.
Along with a $575 million fund announced by Greylock Partners this month, Norwest’s new fund shows that venture capital firms with a proven track record can still attract investors, Haque said.
Norwest expanded in India and Israel when it raised a $650 million fund in 2006, Haque said. The Palo Alto, California-based firm has since hired at least seven partners in India and Israel.
It plans to expand US investments in medical devices and health-care information technology.
It is also investing more money in later-stage companies that once would have gotten capital from public investors, Haque said.
Norwest’s fund bucks an industry trend towards smaller investment pools, advocated by venture capitalists such as Alan Patricof of Greycroft Partners Llc in New York and David Sze at Greylock.
Norwest raised more money because its diversification plans are expensive, and larger companies are more capital-intensive, Haque said. A slowdown in initial public offerings means the firm will need to support start-ups for as long as eight or nine years, he said.
It’s going to take money to get companies to where they can go public or do mergers at a reasonable price, Haque said.