I am extremely excited to announce that my partners at August Capital and I have raised a new fund. This fund is the seventh in August Capital’s twenty year history. And while the venture capital industry has seen a fair amount of change over the last twenty years, our approach to the venture business has remained quite consistent. We believe that the venture capital business is, by its nature, a boutique business. And we believe that venture capitalists are in the business of helping to make entrepreneurs successful, and not vice versa. August VII will follow in that tradition. We look forward to supporting amazing entrepreneurs building game changing businesses.
The raising of August VII also marks my 15th year in the venture business. I have seen stunning ups and downs in the economy over the last fifteen years. And I have seen stunning ups and downs in the venture capital industry. The VC business was left for dead in the early 2000’s. In fact, the first decade of the 21st century was marked by net negative returns across the vast majority of the venture industry. Yet venture capital came roaring back with the economy.
The first half of this decade has been marked by ever bigger financings and ever bigger venture capital firms. Yet, as we approached the raising of August VII, we sat down as a partnership and asked ourselves what we wanted our new fund to look like. Did we want to raise a billion dollar fund and jump on the “ever bigger” band wagon? Or did we want to stick to our knitting and focus on what we do best — supporting a manageable number of great entrepreneurs as they navigate the challenges of building game changing businesses? The answer to us was clear.
In December we approached our existing investors with a blue print for August VII. Rather than raise two separate funds, as we had done before (an early stage fund and a special opportunities fund), we decided to raise a single fund that would focus on spectacular entrepreneurs independent of stage. We also decided that we would raise a cozy $400 million dollars, which would give each of our 5 General Partners about $80 million dollars to invest over the coming years. August’s seven funds have ebbed and flowed over the years, but have always been about $80 to $100 million per investing partner. It may not be everyone’s sweet spot, but it certainly is ours. And it has been a winning formula that has delivered meaningful returns to our investors over our lifetime.
Despite the fact that we started the fundraising process right before the holidays, we were thrilled to see that our Limited Partners shared our philosophy about the venture business. We had some fantastic conversations with our investors in December and January. They remain as bullish about the tech economy as are we. And in just under two months, we were able to close our seventh fund. Our biggest challenge was figuring out how to squeeze hundreds of millions of dollars of interest into a $400 million fund. In the end, we had to expand the fund a little bit, so as not to disappoint our long-time supporters — we closed a $450 million fund the last day of January.
As excited as we are about closing our new fund so that we can get back to supporting great entrepreneurs, we are particularly thrilled to do so along side our new partner Tripp Jones. Tripp joined us a few short years ago and in that time has proven to be a thoughtful investor and steadfast supporter of the entrepreneurs he backs. Tripp has invested in such great companies as Paperless Post, WattPad and Adara, and will no doubt find world class entrepreneurs and breakthrough companies in which to invest in August VII. I join Tripp, along with Vivek Mehra, Howard Hartenbaum and Eric Carlborg as General Partners in our new fund. Our partners Dave Marquardt and John Johnston will continue to play the role of Founding Partners and support our existing portfolio. August Capital would not be what it is today without the incredible stewardship of John and Dave, and we are grateful to have their ongoing participation and support.
I am repeatedly surprised that it is news in the tech world when a venture capital firm has raised a new fund. After all, venture funds are merely a means to an end. As VCs, our job is to find spectacular entrepreneurs and help make them successful. Of course, first and foremost, we help entrepreneurs by giving them the capital they need to build big businesses. So we are thrilled to have raised August VII and look forward to working with more amazing people solving valuable problems. My partners and I consider it a great privilege to work with entrepreneurs day in and day out, and we are excited to continue that tradition with August VII.