Photographer: Victor J. Blue/Bloomberg
Venture Capital

Jet Backer Norwest Raises $1.2 Billion Venture Fund

The firm’s managing partners say the tech startup market is undergoing a “correction.”

Norwest Venture Partners, which is an investor in, Spotify, and Uber Technologies, has closed a $1.2 billion fund. The venture capital firm will place bets amid what partners describe as a tougher environment for technology startups.

The market has changed dramatically since Norwest raised its last fund in May 2014, which was the same size as the current one. Venture capital firms raised less money and closed fewer funds in 2015, according to data from the National Venture Capital Association, a trade group. Norwest's three managing partners, who each personally invest in the firm's venture funds along with other backers including Wells Fargo, said the startup market is undergoing a "correction."

Writedowns by Fidelity Investments and BlackRock carry major significance for later-stage companies, according to Jeff Crowe, one of Norwest's managing partners. "In early-stage venture, it doesn't matter whether there's a correction or not," said Crowe, who is responsible for Norwest's investments in Jet, Spotify, and Uber, while also serving on the board of directors for various younger companies.

Norwest, which backed startups acquired by Spotify and Uber, will continue to invest in corporate software, consumer products, and health tech. Since closing the previous fund in May 2014, the firm has seen at least 15 of its companies acquired and seven hold initial public offerings. The IPOs, which include Lending Club and Apigee, helped boost the firm's internal rate of return, though partners declined to share the numbers.

Before it's here, it's on the Bloomberg Terminal.