Unlike in years past, venture capitalists are now often proud to announce their funds’ shrinkage — and for good reason. Ten-year venture capital returns have fallen in recent years, as the once-lucrative IPO market has slowed and start-ups no longer need as much capital as they once did to get rolling. That’s led to much hand-wringing in recent years about the venture model being “broken.”
One way of fixing the broken model is to ratchet down the size of funds, which appears to have been the aim of Venrock, a blue-blood venture firm that began in 1969 and traces its roots to the Rockefeller family. For its sixth fund, partner Bryan Roberts said the firm “didn’t go out and just take in as much money as we possibly could,” even turning away some investors.
Its prior fund, which closed in 2007, totaled $600 million.
With the new fund, Venrock plans to cut information technology investments to about 35 percent from 45 percent in the prior fund.
Venrock has made numerous healthcare investments over the years, including Castlight Health Inc., a healthcare price transparency company that recently raised $60 million. The Cleveland Clinic is also an investor in Castlight.
Early last year, Venrock established a $194 million healthcare investment fund.