Meritech Capital Partners (MCP) has closed Meritech Capital Partners IV, a USD425 million late-stage venture capital fund. The fund will continue MCP’s successful strategy of investing in rapidly-growing technology companies primarily in the United States. This fund brings the firm’s cumulative capital under management to USD2.6 billion and is a successor to MCP III, a USD400 million fund which commenced investing in 2006.
“Our later-stage investment practice is working well,” says Paul Madera, Managing Director at Meritech. “We are particularly grateful to our management teams who are growing great companies, and we appreciate the on-going support of our Limited Partners. The exceptional investor demand for this fund is a tribute to our portfolio companies and our investment results.”
Rob Ward, Managing Director at Meritech, adds: “Our partnership is stronger than ever, and we continue to invest behind the world’s leading entrepreneurs. We have been fortunate to back proven winners like Josh Makower and Bill Facteau at Acclarent, Ken and Michael Xie at Fortinet, Jerry Kennelly and Steve McCanne at Riverbed and many others. This new fund is a tribute to their hard work and success.”
With MCP IV, the firm will primarily target four sectors: Internet and Digital Media, Communications and Wireless, Enterprise IT and Medical Devices. Typical investments will range in size from USD10 million to USD20 million.
“We see no shortage of investment opportunities given the innovation that is taking place in mobile, virtualisation, cloud computing, the social-enabled Internet and data management and analytics. If anything, there are a record number of attractive late-stage companies today.” says George Bischof, Managing Director at Meritech. “Our deal flow is the strongest it’s ever been. We have recently invested in category leading companies such as Box.Net, Cloudera, Cyan, Tableau and Wonga” said Mike Gordon, Managing Director at MCP. “We provide the insight, capital and the contacts necessary to accelerate and manage growth.”
Meritech currently has four Managing Directors, Bischof, Gordon, Madera and Ward and the partnership team has more than 60 years of late-stage investing experience. The partners have made venture capital investments in many of the most successful venture backed technology companies of the past decade including Cornerstone OnDemand, Facebook, Fortinet, Intralase, Netezza, Netsuite, Riverbed and Salesforce.com.
Meritech has been one of the most prolific producers of returns to LPs in recent years with 16 liquidity events in the past 18 months; 13 of them valued at USD400 million or greater. Recent MCP liquidity events include the initial public offerings of 21Vianet (VNET), Broadsoft (BSFT), Calix (CALX), Cornerstone OnDemand (CSOD), Fortinet (FTNT), Netsuite (N), and Zipcar (ZIP) and several highly successful M&A transactions; Pace Technology acquired 2Wire for USD475 million, Harmonic acquired Omneon for USD310 million, Johnson & Johnson acquired Acclarent for USD820 million, IBM acquired Netezza for USD1.7 billion, and Microsoft acquired Danger for USD500 million.
Limited Partner demand for MCP IV was exceptionally strong, and the fund was oversubscribed. Limited Partners in MCP IV came from around the globe and include foundations, university endowments, public pension funds, private equity fund-of-funds and sovereign wealth funds.