Norwest Venture Partners, a 60-year-old venture and growth equity firm backed entirely by Wells Fargo, today rolled out its sixteenth fund, a $3 billion vehicle, its biggest to date.
It is easy to shrug off the development, but the assets Norwest has raised over the decades to $12.50 billion is now in a new pool. This is a big deal and another sign that the market is a different one than it was five years ago.
One can see why Wells would agree to such a commitment in a go-go environment. It is not possible to compete on the growth equity side unless you have a huge money cannon. Tiger Global Management's biggest fund ever had a first close of $8.8 billion, according to the report. It closed its previous fund six months ago. To win deals, you need to be able to elbow out some of the other funds that are also writing checks.
One of the biggest venture funds ever closed, with a value of $6.7 billion.
Norwest has a lot of hits. Over the last couple of years, almost 30 of Norwest's earlier bets have "exited" in some fashion, despite the fact that it closed a $2 billion pool in 2019.
The security outfit Shape Security sold for $1 billion in late 2019, after raising $183 million in funding. Aporeto raised $35 million from investors and sold it to Palo Alto Networks for $150 million in cash. A third portfolio company, a Canadian developer of risk and compliance software called Galvanize, sold to Diligent for $1 billion. Norwest led the $50 million in funding for the company.
A number of Norwest investments hit the public market. Opendoor is a real estate company and Talkspace is a digital mental health company. Udemy began trading publicly in October after staging a traditional IPO. As of this writing, its shares are trading down by a third.
There is a major edtech IPO.
Norwest has offices in Tel Aviv, Israel, and India, so it has an extensive geographic reach.
A wide range of companies are invested by the outfit. Some of them are life sciences outfits. Direct-to-consumer retail plays are some of the ones that are listed. Dave, a consumer finance startup, is about to close a merger with a blank-check company and is about to begin trading publicly in January.
Lisa Wu, who led the Plaid deal, notes that Norwest only sees the upside in such companies. Norwest is not a strategic investor.
She says that Wells gives them a competitive advantage, but their relationship is really an arm's length one. We have complete authority over our investment processes.
Norwest hasn't yet made a deal in the world ofcryptocurrencies. It is just a matter of time, suggests Wu when asked about this. She says that they talk about it every day. The momentum is coming in Fund XVI.
