Benchmark raises its first-ever growth fund as part of $2B capital raise

Benchmark Capital, a renowned venture capital firm from Silicon Valley, famous for its early investments in companies like eBay, Snap, Uber, and Twitter, is taking a bold step away from its historical practices. For over twenty years, the firm has maintained a policy of capping its funds at around $425 million, focusing primarily on young startups. However, it has recently secured commitments totaling $2 billion across two new funds, including a groundbreaking $1.25 billion fund aimed at later-stage investments, as reported by the Wall Street Journal. In an era where many venture capital firms have dramatically increased their fund sizes into the billions, Benchmark has remained true to its roots, which have contributed to its legendary status. The firm’s strategy has revolved around being highly selective and taking substantial stakes—typically 20%—in each startup, ensuring maximum returns for its investors. Nevertheless, this conservative approach has limited Benchmark's ability to invest in capital-heavy AI startups, particularly those creating foundational models, which often require funding in the hundreds of millions. As a result, notable companies like Anthropic and OpenAI, along with other capital-intensive AI labs such as Periodic Labs and Recursive Superintelligence, have not received investments from Benchmark. The introduction of a new $750 million early-stage fund will provide the firm with increased flexibility to invest in the rapidly escalating early-stage valuation landscape. While traditionally focused on Series A companies, Benchmark is now open to investing at various stages of development. Recently, the firm has supported two Series B startups: Gumloop, which enables enterprises to develop AI agents without coding, and Monaco, an AI-driven sales and CRM platform. According to Benchmark general partner Everett Randle, the firm aims to cultivate meaningful relationships with entrepreneurs early in their journey, whether at the seed stage, Series A, or Series B. Benchmark dipped into late-stage investing with a $225 million special purpose vehicle (SPV) to participate in a $1 billion pre-IPO round for Cerebras, a company it had initially backed during its Series A in 2016. Following Cerebras' IPO last month, which generated a remarkable $3.25 billion return for Benchmark, the firm’s decision to establish a dedicated growth fund seems timely. This new fund is expected to make five to six significant investments in both existing portfolio companies and new startups. In addition to these financial developments, Benchmark has experienced a notable transition in its leadership over the past two years. Miles Grimshaw left to rejoin Thrive Capital in 2024, and last year, Sarah Tavel, the firm’s first and only female general partner, transitioned to a less active role as a venture partner. Victor Lazarte also departed to launch his own VC firm. To strengthen its team, Benchmark has welcomed two prominent new investors: Randle, who was recruited from Kleiner Perkins, and Jack Altman, the brother of OpenAI CEO Sam Altman. These changes indicate that Benchmark, historically resistant to growth, is now adapting its strategy to align with the demands of the AI era, which calls for greater capital investment, broader stages of funding, and new perspectives among its leadership.