Why We (Only) Raised a $250 Million FundShare
We are proud to announce the close of Emergence Capital Partners III: a $250 million venture fund. Why did we limit the fund to this size when so many other venture firms are raising billion dollar funds or more?
The answer: Focus.
When we founded Emergence in 2003, we realized that to do something as crazy as starting a new venture firm in Silicon Valley, we would have to do things differently than other firms. And so, we decided to focus on an area that was completely misunderstood by the venture community: technology-enabled services. We also made a commitment to limit the size of our portfolio so that we would have time to focus on the entrepreneurs we would back. We even decided to locate our offices in San Mateo to be closer to the software community rather than being near most other VCs on Sand Hill Road.
We felt that a reasonable fund size would allow us to execute our focused approach best. We think everyone should have capital constraints. It forces us to be clear about our priorities and truly selective about the investments we make. It also allows us to spend more time with a few entrepreneurs rather than a little time with a lot of entrepreneurs. We’ve raised billion dollar funds prior to forming Emergence and have found that more capital doesn’t always yield better results.
Focus has paid off for us. We’ve had the pleasure of seeing many of our portfolio companies blossom into industry leaders. We have attracted world-class base of institutional limited partners. We’ve developed a reputation for being the leading venture firm focused on tech-enabled services — the most-meaningful technology trend that we’ve seen in our careers. And, along the way, we’ve built a great firm culture that’s focused on collaboration and having fun.
So when it came time to raise our third fund, there was no question that we’d limit the fund size to enable us to execute our focused, disciplined approach to venture capital investing. We’ve never been a firm that follows the pack and we don’t see any point in changing now.