- TCV, the powerful growth equity firm behind Netflix and Facebook, just closed a massive $4 billion fund.
- It is the largest in the firm’s 25 year history, General Partner Neil Tolaney tells Insider.
- The firm invests $100 million to $150 million on average in growth-stage companies like Strava, ByteDance, and Klarna, others.
- Visit Business Insider’s homepage for more stories.
TCV, Silicon Valley’s powerhouse investment firm, just closed a massive $4 billion fund to find the next Airbnb and Peloton
TCV, the powerful growth equity firm behind Netflix, Facebook, and other marquees tech companies, just closed a $4 billion fund, its largest fund to date.
This is the firm’s eleventh fund and follows a $3.2 billion fund that closed in January 2019, according to the firm. Short for Technology Crossover Ventures, TCV has seen several portfolio companies go public recently, including Airbnb, Avalara, and Peloton. While the firm has traditionally been focused on growth equity, TCV partners tell Insider the new fund will open the door to selectively invest at earlier stages of a startup’s life.
“At the moment, the focus for us has been the traditional growth equity space, but as we sort of think about the next five years, it would be a miss on our part if we didn’t consider the other types of strategies,” General Partner Kapil Venkatachalam tells Insider.
For this next $4 billion fund, TCV plans to find the next Airbnb or Peloton by splitting investments between consumer and enterprise tech startups. “Historically, it’s been about 50-50 in terms of B2B and B2C, but every fund is unique,” said Venkatachalam.
TCV was founded by Jay Hoag and Rick Kimball in 1995. Before TCV, Hoag was a Managing Director at Chancellor Capital Management, where he spent more than 12 years as a technology-focused venture capitalist and fund manager. Like Hoag, Kimball also spent more than a decade as a venture capitalist and senior equity research analyst before joining TCV. Hoag is on the board of Electronic Arts, Netflix, Peloton, TripAdvisor, VICE Media, and Zillow, while Kimball is on the board of Rent the Runway, among others.
In the last 25 years, TCV has built up an impressive reputation as a key insider within the Silicon Valley tech ecosystem as investors and board advisors. The firm has invested about $14 billion in over 350 companies by investing in startups during “inflection points,” expanding its position while other investors exit.
An example of that is when TCV first invested in Facebook while the social network was still a private company, says Neil Tolaney, TCV general partner.
“One of the big questions about Facebook, over time, is could they have a sustainable business model? There was a pretty key inflection point there, where [we asked] could they actually generate ROI for these marketers in any discernible way to sustain budgets? And could they do that without sacrificing the engagement of the consumers,” Tolaney tells Insider.
And while the firm has taken some 65 companies public, including Airbnb, Spotify, Peloton, and Netflix, a spokeswoman says they don’t consider those “exits” because TCV maintains board positions on many of their portfolio companies.
“We specifically sought out TCV in our last private fundraise,” said John Foley, founder and CEO of Peloton in an emailed statement. “They are the best late-stage growth capital partner and have proven this discernibly and tangibly to us while we were private, while they increased their stake via a large IPO purchase, and on an ongoing basis.”
With an average check size of around $100 million to $150 million, up to as much as $400 million, according to the firm, TCV’s current portfolio includes hot tech unicorns, like Strava, ByteDance, and Klarna, among others.
By specializing in key areas of focus, TCV has been able to invest in companies with “incredible context,” and become longstanding board members, said Tolaney, the general partner. Aside from Netflix, TCV also holds active board seats on Zillow and Peloton.
“Over a quarter-century, Netflix has gone from an outrageous idea to one of the world’s leading entertainment companies, and TCV has supported us every step of the way,” said Reed Hastings, Netflix’s Co-Founder and Co-CEO, in a press release. “I’m so grateful for the enduring partnership, which includes Jay Hoag’s wisdom and guidance as our lead independent director.”