On July 18th, 2019 the Sierra Ventures team announced the raise of our 12th venture fund. Fund XII was oversubscribed and raised 25% more than the previous (2016) fund. In addition to increased commitments from our existing investors, we added five Institutional Investors, three Strategic Investors, and one large Family Office. The enthusiasm from the investor base can be attributed to results from our prior two funds where we have had 9 notable exits, including 2 exits in 2018 which generated almost $800 million in gross proceeds. The continued investor support affirms our strategy and sector focus, which will remain consistent for Fund XII. We thank them for their support.
As we look forward to continuing the success of the firm, we’re also taking time to look back on our strategy, investment thesis, and the ethos of what makes Sierra Ventures and the entrepreneurs we invest in successful.
Sierra’s investment strategy for Fund XII will remain the same as Fund X and XI, and will be managed by the same partners, Mark Fernandes, Tim Guleri, and Ben Yu, who have worked together for over 17 years. For us, investing small, concentrated pools of capital at an early stage leads to the best engagement with entrepreneurs and the best returns for our investors. We have positioned our funds so we’re not too big to do Seed investments, but not too small to provide substantial follow on capital to help our companies grow to their next significant milestones.
Our primary focus areas are Next Generation Enterprise and Emerging Technologies, or “Deep Tech”. For each fund, we look for big waves of changes in spending, and then spot new innovations to enable such changes.
Our stage focus is Seed, Series A, and Series B. When evaluating investment opportunities, we look for the following, building on each previous stage:
- Seed – big ideas and strong entrepreneurs. Typical check size of $500K – $2.5M.
- Series A – early proof points of product market fit and initial customer traction. Typical check size of $2.5M – $7M.
- Series B – validation of revenue model and ability to scale rapidly. Typical check size of $6M+.
Investment Thesis & Network
Since 2012, Fund X and XI have invested in over 50 companies that rode the wave of consumerization of IT, the emergence of B2B marketplaces, and AI/ML for vertical applications, as well as new emerging areas including crypto/blockchain, AR/VR, and robotics. In the new fund, we will continue to seek innovations in these areas. In particular, we believe blockchain and AI will become the horizontal platform technologies that covers both enterprise and consumer needs, touching most everything we do.
As we invest in emerging sectors like Fintech, Insurtech, Healthcare Tech, and IoT, we are excited to continue to partner with our Strategic Investors who are global leaders in each of these areas. They have been invaluable in helping us make investment decisions, have often become co-investors in our companies, and are tremendous partners to our entrepreneurs.
Geographically, we now have Strategic Investor coverage in the US, Europe, Asia and LatAm. Their networks have been beneficial as our portfolio companies build global customer footprints.
In addition to our global network of investors, our 15-year-old CXO Advisory Board, which is comprised of CIOs, CTOs, CSOs, CDOs and other top executives from Global 2000 companies, is a powerful tool for portfolio company feedback, scaling, and global expansion.
Sierra Ventures Ethos
We know what it takes to build a great company. Over the years we have found that Entrepreneurs who share our values and have the characteristics of the ideal “Sierra Entrepreneur” self-select into partnering with us. The Sierra Ventures Ethos boils down to the following:
- Build Together: The Entrepreneurs that are attracted to Sierra Ventures are ones that appreciate the value we provide beyond writing the check. They are excited about the experience we bring and the time we can give them, being available for them 24/7. We invest in people that really believe in building a business together. A good example of this is RedLock. After leading their Seed investment round, we became their partner to rapidly scale the business in just two years, leading to a $195M exit.
- Build to Last: We look for ideas that are built for the long-term. Investing in areas like Next Generation Enterprise and Emerging Technology, we know that building a lasting, impactful company takes time. That’s why we invest “patient capital” – making sure to invest at the right capitalization at the right stage of the company. We’re the partners who invest the first dollar and stay with our Entrepreneurs all the way through IPO. Treasure Data is a good example of this. We led their Series A round and supported them for two additional fund-raising rounds over 5+ years, which culminated in an exit for $600M.
- Build Global: Great Entrepreneurs can come from anywhere. And we believe they can grow anywhere too. We work with Entrepreneurs from all over the world and we encourage them to think globally around execution and growth. Our strong Investor and CXO Advisory Board Networks help Entrepreneurs scale their company globally, landing international customers and engaging with on the ground networks in new territories.
Fund XII and Beyond
At the end of the day, it really all comes down to great ideas, great people and great execution. That’s what we’ve always been about. As we embark on the next adventure with Fund XII, we are eager to meet the next wave of Entrepreneurs building world-changing companies.
-Tim, Mark, and Ben