Khosla Ventures has raised a new $1.4 billion fund to back startup winners like DoorDash,
- Khosla raised its fifth consecutive fund over $1 billion to back the next generation of technology startups.
- The firm is also dedicating $400 million to funding deals at the seed stage.
- In addition to venture investing, Khosla is also sponsoring SPACs like Valo Health and Nextdoor.
Khosla Ventures, the storied venture capital firm known for its investments in Doordash, Instacart, GitLab, Square and Stripe, has raised $1.4 billion in funding to invest in early-to-late stage startups, Insider has learned.
The amount will be distributed across its seventh main fund that focuses on companies across different stages, and a separate seed fund for startups seeking their first outside capital investment. Specifically, the firm is dedicating $400 million for seed deals, and $1 billion for later-stage companies.
The firm started the fundraising process last October and has consistently followed a pattern of raising a seed fund alongside the main fund every time it raises capital. This is the fifth consecutive fund Khosla has raised above $1 billion.
The cash from the new fund will be deployed across investments in enterprise, consumer, health, sustainability, financial services, deep technology, and AI startups, said the firm. Founding partner and managing director Samir Kaul tells Insider the firm is just scratching the surface of what is possible in terms of investments across multiple sectors.
“With this fund close, we have the arsenal to continue being bold, early, and impactful in our investments in a whole new set of companies,” said Kaul, who is also on the board of Impossible Foods.
Founded in 2004, Khosla Ventures is helmed by revered Silicon Valley investor Vinod Khosla. With $15 billion in assets under management, the firm often invests in companies that don’t follow conventional thinking, like QuantumScape which makes batteries for electric vehicles, and Glydways, a startup that’s developing a personal mass transit system. Khosla also invested in Instacart back in 2013, and Stripe the following year before valuations for both startups ballooned to double-digit billions of dollars.
In the last 12 months, seven companies in Khosla’s portfolio have generated over $9 billion in returns for the fund including Gitlab which jumped 35% on its first day of trading to hit a $15 billion market cap earlier this month.
Venture funds are getting larger as deal flow and valuations reach new heights. And in today’s frenzied environment, landing the hottest deal often means getting in earlier or launching dedicated funds.
In September, Greylock announced a $500 million fund dedicated to seed deals, following similar moves by Andreessen Horowitz and Sequoia Capital earlier this year. In addition to its cryptocurrency dedicated funds, a16z is also in the process of raising a new gaming focused venture fund, as reported by Insider.
In the first nine months of this year, VCs have closed in on $96 billion in fundraising across 526 funds, topping the previous record set in 2020 of $85.8 billion raised across 665 funds, according to the latest PitchBook-NVCA Venture Monitor.
Still, Vinod Khosla recently told Insider he thinks half of today’s successful startups won’t sustain their sky-high valuations.
“I always say, in periods like this, more companies will lose investors’ money than will win, but more money will be won than lost,” he told Insider in August. “That means there’ll be winners in large categories that make up for all the losses in all the hype and hoopla.”
In addition to venture investing, Khosla Ventures has also launched at least four special purpose acquisition companies earlier this year to help startups go public.
Boston-based Valo Health, a drug discovery and development startup, is expected to go public in November through a merger with a Khosla Ventures’ SPAC in a deal worth $2.8 billion. Khosla is also helping the neighborhood social media app Nextdoor go public with its special purpose acquisition company Khosla Ventures Acquisition Co II. The deal, worth $4.3 billion, is also expected to close in November.