Snapchat Backer Lightspeed Seeks to Raise $1.1 Billion for Venture Funds

  • Fundraising comes amid concerns over sky-high valuations
  • Previous investors include NY State Teachers Retirement System

Lightspeed Venture Partners is trying to raise more than $1.1 billion for a pair of new venture funds, two people familiar with the matter said. The fundraising comes as concerns grow over sky-high valuations and subpar post-IPO performance for some large venture-backed technology companies.

The firm is seeking $700 million for its latest flagship fund, Lightspeed Venture Partners XI LP, and $425 million for Lightspeed Venture Partners Select Fund II LP, the people said.
The new main fund will invest in early-stage companies while the select fund will provide capital to companies that are further along in their development, one of the people said.

Even some venture capitalists are voicing concerns about the values being placed on companies in recent funding rounds. Anton Levy, a managing director at General Atlantic, said last week that valuations may fall as much as 5 percent a month this year. In December, Fidelity Investments, an investor in Lightspeed-backed Snapchat Inc., wrote down its investment by 2 percent, the second markdown in three months. Lightspeed participated in a $60 million B-round financing of the photo-sharing app in 2013, according to data compiled by Bloomberg.

The new fundraising comes two years after the Menlo Park, California-based firm won $635 million in commitments for Lightspeed Venture Partners X LP and $430 million for Lightspeed Venture Partners Select Fund I LP, according to its website.

Investors in those funds include New York State Teachers Retirement System Inc., Illinois Municipal Retirement Fund, Texas County & District Retirement System and Alaska Permanent Fund Corp, according to data compiled by Bloomberg. Performance data for those funds was not available.

Lightspeed, which also manages funds investing in China, Israel and India, invests in a range of sectors, including big data, consumer, media, cloud solutions and storage, according to its website. It manages more than $3 billion in committed capital.

The firm was founded in 2000 by Barry Eggers, Peter Nieh, Christopher Schaepe and Ravi Mhatre. Eggers previously worked in business development at Cisco Systems Inc. Nieh worked at General Magic, Acer Computer International Ltd. and Bain & Co. Schaepe had been a partner at Weiss, Peck & Greer Venture Partners and worked at Goldman Sachs & Co. Before Lightspeed, Mahtre held positions at Silicon Graphics Inc. and Booz Allen Hamilton.

Lightspeed’s press office and the founders did not respond to e-mails seeking comment.

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