The Silicon Valley venture capital firm TVC has helped some of world’s most well-known technology companies. The firm announced in January 2021 that it raised a record $4 billion fund. It is by far the largest fund in TCV’s 25-year history. It is also $1 billion more than the previous fund it raised in 2019 before the pandemic.
The record size of TCV’s latest fund, which is its 11st fund, comes amid a pandemic boost in technology investments. It is a reflection of the enormous capital flowing into the technology industry during a time of economic hardship for many people. According to PitchBook, U.S. venture capital firms raised $73.6 billion in 2020. This surpasses the previous record of $86 billion set in 2018. Notably, firms raised fewer total funds raised in 2020, illustrating how success has become more concentrated among top funds.
Jay Hoag and Rick Kimball founded TCV, which stands for Technology Crossover Ventures, in 1995. Prior to founding TCV, Hoag and Kimball had worked in the venture capital industry for a number of years. Based in Silicon Valley, TCV has spearheaded the growth of industry-leading companies such as Facebook, Spotify, Airbnb, and Zillow. TCV has raised eleven funds since its founding, translating into a total of over $14 billion worth of investments across hundreds of companies.
About TCV Investments
TCV normally invests between $30 million and $300 million in any given portfolio company. It focuses on investing in high-growth private companies that are in their later stages of growth. This contrasts with the approach taken by some VC firms that tend to invest in seed stage or Series A rounds.
The firm’s focus on growth stage capital investments is aptly captured by TCV’s middle initial—“crossover”. TCV provides capital to support its portfolio companies in rapidly scaling their businesses, often when they are “crossing over” from startup mode into a potential industry leader. Later down the road, TCV provides assistance with exit strategies, whether it be a merger, an IPO, or restructuring.
A good illustration of the success of TCV’s sustained crossover support model is Netflix. As Reed Hastings, co-founder and CEO of Netflix, states: “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. I’m so grateful for the enduring partnership.”
Some of TCV’s largest investment in 2020 have been in the e-commerce and fintech space. Some consumer-focused companies TCV has invested in recently include e-commerce platform Spryker and fitness tracking platform Strava. On the fintech side, it has participated in funding rounds for companies such as Dutch payments startup Mollie, British fintech company Revolut, Swedish online bank Klarna, and Brazil-based Nubank.
Plans for TCV XI
The plan is to deploy the funds from its latest $4 billion, TCV XI, to invest in more fintech, education technology, e-commerce, and digital entertainment companies. TCV states that it hopes to allocate its funds “to capture the vast opportunities presented by digital transformation and rapid technology adoption.”
Other leading venture capital players raised massive funds in the past year. At the start of 2020, Tiger Global Management raised its 12th fund, valued at $3.75 billion. This was followed by the closing of a $3.6 billion fund by New Enterprise Associates. Finally, storied Silicon Valley VC firm Andreessen Horowitz raised two funds in November totaling around $4.6 billion.
In 2019, the venture capital firm closed a $3 billion fund called TCV X. In 2016, it closed TCV IX for a total valuation $2.5 billion.
Numerous Virtual Fundraisings and Closings
Notably, TCV has navigated a number of virtual fundraisings and closings over the past year. It has also witnessed the IPO of Airbnb at the end of 2020. Alongside Google Capital, TCV led Airbnb’s Series E round in 2016 that raised $555 million of growth equity. Given the success with the virtual format, this is likely to remain the norm to some extent.
TCV’s portfolio companies have had a number of successful exits recently. AxiomSL, a cloud-based risk management platform that TCV invested in three years ago, is being acquired by a leading technology-focused private equity firm, Thoma Bravo. As another example, Cradlepoint is being sold to Ericsson in a $1.1 billion deal. Three years ago, TCV made an investment in the Series C round of Cradlepoint, a wireless solutions provider.
TCV has also made a number of notable investments recently, in companies such as Mambu, OneTrust, Strava, and Spryker.
With TCV’s past track record and the strong future growth ahead for technology companies, TCV will have a plethora of investment options. Founding partner Jay Hoag commented: “We look forward to backing entrepreneurs with our new fund that we believe will become the next generation of iconic companies, in this incredibly fertile technology industry.”