Benchmark’s Peter Fenton, Eric Bischlia, Sarah Tabel, Chetan Puttagunta and Victor Lazarte will act as equal partners in the new fund.
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Venture capital firm Benchmark is raising $425 million for its 11th fund, Benchmark 1, according to a letter sent to limited partners. Forbestowards a new “technology era.”
Venture capital firm Benchmark is raising $425 million for its 11th fund amid a boom in artificial intelligence, it said in an investor letter. ForbesBenchmark plans to make around 30 early-stage investments from the fund, which has not yet closed.
“We are at the beginning of a technology era where everything that has preceded it seems like a good omen,” Benchmark’s partners said in a letter sent in mid-June to limited partners invited to invest in the fund, according to a source familiar with the offering. Forbes“We are equal partners with the same passion and ambition to build something great.”
The fund’s five benchmark partners (“equal” in the sense that they share the upside and profits equally, regardless of length of service) include Peter Fenton, Eric Bishulia and Chetan Puttagunta of Midas Listers, as well as Sarah Tabel and Victor Lazarte.
Benchmark, through a spokesman, declined to comment.
The firm is keeping the fund size the same to “enforce discipline and accountability and focus on what matters,” the partners said in the letter, and to “provide the highest level of service” to founders and LPs.
Benchmark has raised funds of a similar size since at least 2013, when it launched its Eighth Fund, but the pace of investment has fluctuated: Fund 9 was launched five years later, in 2018, and its most recent Fund X two years later, in 2020, Reuters reported at the time. Benchmark “recently” exited that fund, according to the letter, meaning it took about four years to invest.
The new fund will be called “Benchmark 1” as part of a reset for the age of generative AI, the letter added. All of the firm’s partners are expected to focus on AI companies within their respective areas of expertise, which could include consumer technology, cloud computing or cryptocurrency, said a source familiar with the firm’s thinking. Forbes.
Benchmark already has a number of AI investments, including Sierra AI, an AI agent startup led by former Salesforce.com co-CEO Bret Taylor, automated worker startup 11x, AI circuit board maker Quilter, legal software maker Reya and video generator Heygen, where Lazarte recently led a $60 million funding round.
While the firm isn’t expected to write such large checks often, it does allow Benchmark to deploy a bit more capital than its official Benchmark 1 figure, the people said. That symbolic $425 million size doesn’t include the substantial capital the firm’s partners will pump into the fund, the people said. Given those general partner commitments, Benchmark could effectively deploy more than $500 million.
Benchmark, known for its early investments in companies such as Uber and Twitter, has long stood out in Silicon Valley for its bespoke approach compared with rivals that have raised billions of dollars and significantly expanded their investment teams. Forbes A 2015 profile said “The Benchmark Way” eschews such growth in favor of smaller, tight-knit partnerships with four to six investors who don’t write checks frequently.
The model is costly: Investors hired by Benchmark, even mid-fund cycle, are overnight cut out of the firm’s substantial profit share at the expense of other partners. But it has also proven highly lucrative when it works: Benchmark’s partners invest in only one or two companies a year, and typically take more than 20% of the startup’s shares and a seat on its board. In the case of a company like ride-sharing app Uber, the initial investment was just over $10 million, but it ballooned to nearly $7 billion by its 2019 IPO.
“We believe there is no other firm executing on our strategy,” Benchmark’s partners argued in the letter.
The model also encourages Benchmark to be prudent in its generational planning. Of the five partners mentioned in 2015, Forbes Fenton and Visulia remain on the profile. Former Midas List investors Matt Kohler and Mitch Lasky exited in 2018, and another longtime list regular, Bill Gurley, a key investor in Uber, stopped investing in the company in 2020. Meanwhile, Taber joined in 2017 and Puttagunta the following year. The firm’s most recent partner hire is Brazilian gaming entrepreneur Lazarte, who joined in 2023.
They were set to be joined by Myles Grimshaw, an investor who joined from Josh Kushner’s Thrive Capital in 2020. But Grimshaw returned to Thrive in March, according to three industry sources, mainly because he wanted flexibility to invest in different stages and check sizes that Benchmark’s rigid portfolio structure didn’t allow. Grimshaw didn’t respond to a request for comment.
The question mark for Benchmark is Mr. Fenton, who led investments including Twitter, Yelp and, more recently, Taylor’s much-talked-about Sierra AI. The sustainability of Benchmark’s partnership will face a bigger test if Mr. Fenton, 51, retires, industry sources said. But the letter makes no mention of Benchmark 1 being Mr. Fenton’s last. Mr. Fenton could remain involved in one or more funds after that, a source familiar with the matter said.
Other former partners, including Kohler and Gurley, remain involved with the firm as directors or advisers, the people added.
