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Join The Information for AI Agenda Live on Wednesday, September 23, at SFMOMA. We’re bringing together the industry’s most influential researchers, founders, and investors to preview the next wave of innovation—from breakthroughs in continual learning models to the latest bleeding-edge applications. Learn more here. Welcome back! For most of this decade, venture capital has morphed from a game of spotting the best young startups to making a more complex range of investments—from public stocks and cryptocurrencies to multibillion-dollar bets on older startups. General Catalyst even bought a hospital system! But industry stalwart Benchmark had held fast to a definition of VC that was more common when the firm was founded two decades ago. As Thrive, Andreessen Horowitz and Lightspeed Venture Partners each announced multi-billion-dollar fundraises, Benchmark repeatedly raised funds from about $400 million to $500 million—until recently. The firm is raising its first growth-stage fund, of $1.25 billion, to invest in the most promising mature startups, as well as an early-stage fund of $750 million, The Wall Street Journal first reported. It will aim for venture-style returns, typically defined as 10 times the capital invested, for the growth fund, according to a person familiar with the firm. It’s a notable change, but it doesn’t come completely out of the blue. As we reported earlier this year, Benchmark raised a $225 million special purpose vehicle backed by its general partners and limited partners to invest in an early 2026 funding round that valued Cerebras, then 20 years old, at $23 billion. The SPV plus additional money invested late last year increased its total cash returns from Cerebras at the time of the initial public offering but lowered the overall multiple on its total investment. And last year, Victor Lazarte—then a partner at Benchmark, who subsequently left—had broached the topic of raising larger funds so the company could invest more broadly, we reported last year. The shift toward more growth-stage investing reflects the fact that startups are waiting longer before going public and increasing their valuations to levels previously unseen for pre-IPO companies. “Benchmark has earned the right to double down into their winners, and since these winners stay private for longer (perpetually?), the capital needed to support them can easily be hundreds of millions per company,” said Gokul Rajaram, a founding partner at early-stage firm Marathon and a limited partner in many funds, including Benchmark, in a text message. “Venture is going through a tectonic shift.” He chalks up the shift among early-stage firms toward bigger and sometimes later-stage funds to a number of factors. These include skyrocketing capital needs from AI startups that have to invest heavily in expensive computing; the desire for venture firms to be kingmakers, or help the startups they invest in beat their direct competitors by outspending; and a jump in engineer salaries. Other early-stage firms have also expanded into later-stage investing. Khosla Ventures, known for its early investment in OpenAI, started raising follow-on funds in 2021. Ron Conway’s SV Angel did the same in 2022. In my opinion, it’s not unlikely that other early-stage stalwarts could follow. CRV, for instance, raised a late-stage fund in 2022 but returned some of that money to its limited partners in 2024. Rajaram also doubts Benchmark will be the last, given how many startups are opting to stay private for longer. “It’s inevitable that most good firms will raise more capital to support their best companies over a decade plus,” he said.
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