Benchmark’s five general partners used their appearance at this week’s TechCrunch Disrupt to describe a firm that is raising more money but not investing any faster, and that is comfortable sitting out a frenzied market. The venture firm’s partners said they still make only two or three new bets per year per partner and still hold Monday partner meetings without an agenda. The panel followed a summer in which Benchmark announced $2 billion across two funds, only the second time in its 31-year history that it has departed from raising a far smaller vehicle.
Peter Fenton said the core fund’s craft of working closely with founders at the start of a 10-to-15-year commitment does not scale. He said Benchmark had held the core fund at $500 million for 20 years and had now adjusted it for inflation, calling the earlier decision not to do so likely a tactical error. He described the growth fund as an expansion of Benchmark’s mandate, saying the firm had been constrained by its early-stage focus and had turned away opportunities that would have returned between 10 and 1,000x. Asked how many bets the $1.25 billion growth fund might make, Fenton pointed to a concentrated portfolio in which one or two investments generate 90% of returns, suggesting four to six, perhaps seven or eight.
Newcomers Ev Randall and Jack Altman described why they joined. Randall, who arrived late last year after working at Founders Fund, Bond and Kleiner Perkins, said she was drawn to small partnerships over hierarchical firms with 50- or 60-person investment teams, because small groups allow for more candid conversation and feel like going out on the field together. Altman, who joined in February after raising a second $275 million fund for his own firm in what he told the Wall Street Journal took one week, said the partners’ focus on being the first call for founders and on concentration stood out in an industry tied up in money and status.
Eric Vishria said the firm’s approach is deliberately unsystematic, describing an ongoing conversation about what is becoming possible and which companies are bending light. He said five people do not need a formal process, and that the partners planned to have dinner after the session with an entrepreneur who built a multi-hundred-billion-dollar company Benchmark is not invested in, to stretch their thinking. Sanjay Puttagunta said the absence of an agenda leaves room to react when a founder needs help landing an executive or a strategic partnership. Altman said low deal volume makes rigor unnecessary; a firm investing in 100 or 200 companies a year would want a CRM and a formal voting process, while at Benchmark the lack of structure is a huge asset.
Fenton said Benchmark avoids declaring winners and losers on the spot, comparing its approach to awe at the possibilities rather than to Shark Tank, and said a room where someone dislikes an entrepreneur makes the firm a poor partner. Puttagunta said the pace of investing has stayed consistent and that Benchmark will not be part of every successful company, which he called acceptable, adding that the firm looks for an entrepreneur’s strength to amplify regardless of how much capital is sought, the structure or location.
On founders’ concern about investors backing competing companies, Vishria said Benchmark commits to an entrepreneur and works closely enough that conflicts matter, but that every company evolves quickly, so companies naturally move into one another’s territory and conflicts will occur. He said the firm maintains confidentiality.
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