General Catalyst, the 20-year-old venture firm that has been bulking up in recent years, announced this morning that it has secured $2.3 billion in capital commitments across three funds: a $600 million early-stage fund, a $1 billion growth fund for companies with $10 million-plus in annual revenue and a $700 million “endurance fund” to back large companies doing more than $100 million in sales, as reported earlier in Forbes.
It’s an impressive amount for the firm, which last closed a $1.4 billion fund in 2018 that combined its early and growth-stage investments — which was itself a huge leap from the $845 million in capital that General Catalyst raised in early 2016 across two funds.
Seemingly, the idea is to compete in more later-stage deals, which could well come down in price as other, non-traditional backers are forced to retrench from the suddenly dicey market.
SoftBank, whose fortunes have shifted, is one example. Mutual fund investors that have flocked to privately held companies will likely start committing less capital to illiquid startups right now, too, especially given that the IPO window is shut for the foreseeable future.
The firm tells Forbes it’s also looking to back sectors that are more relevant than ever in the era of coronavirus, including healthcare software, technologies for remote education and working.
Just today, Olive, a Columbus, Ohio-based healthcare startup that’s looking to AI-enabled robotic process automation solution, said it has raised $51 million in funding led by General Catalyst, with participation from its earlier backers. (FierceHealthcare has more here.)
Still, the firm’s limited partners, including university endowments and pension funds that have been asked to provide more, faster, to venture funds in recent years, have seen their assets hard hit by the sudden economic downturn.
It will surely make the kind of commitments they’ve made to General Catalyst and other firms to recently announce giant funds somewhat trickier to execute.
While there’s no reason to think they won’t fulfill their obligations, during the last major downturn in the startup world back in 2000 (the 2008 recession hit Wall Street much harder than Silicon Valley), some venture firms wound up reducing the size of their funds.
In part, they did this to ease the financial obligations of their limited partners. In part, they suddenly needed a lot less capital. Another reason they cut back what were then record-breaking-size funds was the harsh realization that the more they raised, the harder it would be to produce venture-like returns.
General Catalyst has a number of high-flying bets in its portfolio. Among them: Stripe and Airbnb. It isn’t yet clear how Stripe is faring in the current environment, but Airbnb and its hosts around the world have been struggling as much of the world shelters in place.
Though the company originally expected to go public in 2020, those plans seem highly unlikely now.