Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Insight Partners is on the verge of closing a new $10bn-plus fund, roughly half of the amount it had originally targeted but a sign that technology investors are cautiously returning to a venture market that has been battered over the past two years.
The New York-based venture capital firm will not formally close its 13th fund until early next year but at least $10bn has been committed, according to five people with knowledge of its plans, and the final figure may ultimately be closer to $12bn, said two of the people.
Technology investors are tentatively returning to a market that has turned sharply downwards since 2022. VC firms Andreessen Horowitz, Thrive Capital and Iconiq Growth have raised almost $20bn between them in the past six months. General Catalyst is also close to closing a new fund of more than $6bn, according to a person with knowledge of the matter.
The new vehicles signal growing confidence among larger VCs that they can still profit despite a dearth of initial public offerings over the past two years. An IPO drought has prevented VCs from returning capital to their own backers, institutional investors and endowments known as limited partners, which is an important precursor to them raising new funds.
But a pick-up in dealmaking has eased the pressure: Two Insight portfolio companies have been acquired in the past week, with Mastercard buying Recorded Future for $2.65bn and Salesforce buying Own for $1.9bn.
VCs have also sought creative ways to eke out liquidity.
Insight, with more than $80bn in assets under management, is using a private equity-style structure to sell more than $1bn worth of start-up stakes and free up cash to return to investors, according to a person with knowledge of the plans. The firm has set up a continuation fund, which allows LPs to sell their positions in portfolio companies to other investors while letting Insight retain its share of the underlying company.
One start-up in the fund is cyber security business Wiz, which abandoned a planned $23bn acquisition from Google in July, according to the person.
But $10bn is also a substantial reduction on Insight’s previous $20bn fund, raised in 2022, and is half of the target the firm set when it began talking to investors in June of that year. Last year, Insight cut its target from $20bn to $15bn, having raised just $2bn from investors.
“They have had to take their medicine, the whole market has,” said one New York venture capitalist.
Insight declined to comment.
Insight was one of the most aggressive investors during the boom years for technology investment running up to 2022. It has backed Wiz, Checkout.com, HelloFresh, Twitter and collapsed cryptocurrency exchange FTX.
The firm has reined in spending over the past two years, but the pace of dealmaking has increased in recent months. Insight has invested in more than 15 companies this year, according to a person with knowledge of its activity.
“New investment has definitely picked up, but no one expects it to go back to 2021 levels, and no one wants it to,” they said.
Read the full article here
