Twitter Backer Spark Capital Raises $450 Million in Biggest Fund

Spark Capital, an investor in Twitter Inc. and Tumblr Inc., raised $450 million for its largest fund dedicated to consumer-focused Web companies.

The firm is betting that even after the shares of companies such as Facebook Inc., Groupon Inc. and Zynga Inc. declined after their public offerings, there’s money left to be made in consumer-oriented websites. That’s particularly true in industries such as health care and education that were slower to adopt online technologies, said Todd Dagres, a founder and general partner.

When the firm started in 2005, “there wasn’t as much competition, there weren’t as many VCs investing in the target area we were,” Dagres said in an interview. “Back then we had no brand. Now we’re much more competitive.”

Spark Capital, which raised $360 million for its previous fund, raised more money to follow through on investment rounds as early-stage companies matured, Dagres said. Boston-based Spark prefers to take on about 30 companies per fund, with its investments ranging from Warby Parker, an online eyeglasses shop, to Adap.tv Inc., a marketplace for video advertising, he said.

“In order to build a company like Tumblr, it takes a lot of capital, and we’ve been able to participate in every round,” Dagres said, referring to the New York-based blogging platform. “We like having enough money to follow our deals through the entire life cycle.”

To contact the reporter on this story: Sarah Frier in New York at sfrier1@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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