Key Takeaways
- • Bain Capital Ventures closed its eighth fund with $1 billion in commitments, comprising $650 million for early-stage investments, $250 million for growth-stage companies, and $100 million in partner co-investment.
- • The fund closure was propelled by strong exit performance from Bain-backed portfolio companies, including DocuSign (IPO April 2019 at $4.4B valuation, up 47% post-listing) and SendGrid (acquired by Twilio for $2 billion, up 3x from IPO price).
- • Bain's fundraising activity reflects broader 2018 venture market momentum, with $32 billion raised across 230 U.S.-based funds through Q3 2018, positioning the year to exceed 2017's total and deployment accelerating to $83 billion in the first nine months of 2018.
- • The firm targets early-stage startups with unproven business models and minimal market data, leveraging conviction-driven investment theses from limited information, with early-stage allocation of $650 million representing two-thirds of the fund.
Summary
Bain Capital Ventures has closed its eighth fund with $1 billion in total capital commitments, marking a substantial addition to the venture capital industry's accelerating fundraising activity in 2018. The fund structure reflects the firm's dual investment mandate: $650 million is designated for early-stage investments in startups with unproven business models, while $250 million targets larger growth-stage companies. Bain's managing partners also committed $100 million in direct co-investment alongside the primary fund. According to Enrique Salem, a managing director at Bain Capital Ventures who focuses on cybersecurity, the firm's early-stage investment thesis relies on conviction-driven decision-making with minimal data: "We've invested from PowerPoint slides. You have to have conviction with very little data."
The successful fund close was substantially aided by exceptional returns from Bain's existing portfolio. DocuSign, which received Bain's initial investment at a $1.6 billion valuation, completed an IPO in April 2019 with a $4.4 billion valuation and has appreciated 47% since its public market debut. SendGrid similarly delivered outsized returns, rising nearly three times from its IPO price before agreeing to acquisition by Twilio for $2 billion. These successful exits enhanced Bain's track record and investor confidence, facilitating the fundraise.
Bain's fundraising success reflects broader momentum across the venture capital industry. Through the third quarter of 2018, 230 U.S.-based venture funds raised $32 billion in aggregate commitments, positioning 2018 to exceed 2017's total fundraising volume. More significantly, deployment velocity has accelerated sharply: venture capital firms invested more than $83 billion in the first three quarters of 2018 alone—surpassing any full-year investment total from the prior decade. This combination of increased capital availability and accelerated deployment suggests a highly competitive investment environment and elevated deal activity across early-stage and growth-stage segments.
The successful fund close was substantially aided by exceptional returns from Bain's existing portfolio. DocuSign, which received Bain's initial investment at a $1.6 billion valuation, completed an IPO in April 2019 with a $4.4 billion valuation and has appreciated 47% since its public market debut. SendGrid similarly delivered outsized returns, rising nearly three times from its IPO price before agreeing to acquisition by Twilio for $2 billion. These successful exits enhanced Bain's track record and investor confidence, facilitating the fundraise.
Bain's fundraising success reflects broader momentum across the venture capital industry. Through the third quarter of 2018, 230 U.S.-based venture funds raised $32 billion in aggregate commitments, positioning 2018 to exceed 2017's total fundraising volume. More significantly, deployment velocity has accelerated sharply: venture capital firms invested more than $83 billion in the first three quarters of 2018 alone—surpassing any full-year investment total from the prior decade. This combination of increased capital availability and accelerated deployment suggests a highly competitive investment environment and elevated deal activity across early-stage and growth-stage segments.
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