Venture capital firm Benchmark is raising $425 million for ‘Benchmark 1,’ its eleventh fund, per a letter sent to limited partners obtained by Forbes, for a new ‘technological era.’
Venture capital firm Benchmark is raising $425 million for its eleventh fund amid an artificial intelligence boom, according to an investor letter obtained by Forbes. Benchmark plans to make about 30 early-stage investments from the fund, which is not yet closed.
“We are at the dawn of a technological era that will make everything that came before look like a prelude,” Benchmark’s partners wrote in the letter, which was sent to limited partners invited to invest in the fund in mid June, a source with knowledge of the offer told Forbes. “We are a handful of equal partners with the hunger and ambition to build something great.”
Benchmark’s five partners in the fund – “equal” in the sense that they share upside and profits evenly, regardless of service time – include Midas Listers Peter Fenton, Eric Vishria and Chetan Puttagunta, as well as Sarah Tavel and Victor Lazarte.
Benchmark declined to comment through a spokesperson.
The firm is maintaining the same fund size to “force discipline and accountability to focus on what matters,” the partners wrote in the letter: “delivering the highest levels of service” to its founders and LPs.
Benchmark has raised the same size funds since at least 2013, when it raised its Fund VIII, although its pace of investing those funds has fluctuated. Its ninth fund was raised in 2018, five years later, and its most recent, Fund X, was raised two years after that in 2020, as Reuters reported at the time. Benchmark finished investing out of that fund “recently,” per the letter, meaning it took about four years to deploy.
The new fund will be styled as ‘Benchmark 1’ as part of a reset for the generative AI era, the letter added. All of the firm’s partners are expected to look at AI companies within their typical areas of concentration such as consumer tech, cloud computing or crypto, a source with knowledge of the firm’s thinking told Forbes.
Benchmark has already made a number of AI investments, including Sierra, the AI agents startup led by former Salesforce co-CEO Bret Taylor; automated worker startup 11x, per a Business Insider report; AI circuit board maker Quilter; legal software maker Leya; and video generator HeyGen, in which Lazarte recently led a $60 million round.
And while the firm isn’t expected to write many such large-sized checks, Benchmark will have a bit more capital to deploy than the official Benchmark 1 number, according to the source. Its symbolic $425 size doesn’t include the considerable amount of capital the firm’s own partners pour into its funds, the person said. Factoring in those general partner commitments, Benchmark will have effectively more than $500 million to deploy.
Known for early investments in companies including Uber and Twitter, Benchmark has long stood out in Silicon Valley for a bespoke approach compared to rivals that have raised multi-billion-dollar funds and greatly expanded their investment team headcount. As detailed in a Forbes profile in 2015, ‘The Benchmark Way’ eschews such growth in favor of a small, tight-knit partnership of four to six investors who write infrequent checks.
The model is costly: any investor hired by Benchmark, even midway through a fund cycle, is cut into the firm’s considerable profit-sharing overnight, at the expense of its other partners. But it’s also proven highly lucrative when it works. Backing only one or two companies per year, Benchmark’s partners typically take 20% or more of the equity in a startup, alongside a seat on its board of directors. With a company like ride-sharing app Uber, that meant an early stake of little more than $10 million turned into nearly $7 billion at its 2019 IPO.
“We don’t believe there is another firm executing our strategy,” Benchmark’s partners claimed in the letter.
That model has also incentivized Benchmark to be deliberate in its generational planning. Of the five partners mentioned in that 2015 Forbes profile, Fenton and Vishria remain. Former Midas List investors Matt Cohler and Mitch Lasky stepped back in 2018, while Bill Gurley, another longtime list fixture and the firm’s lead Uber investor, stopped making investments for the firm in 2020. Tavel, meanwhile, joined in 2017 and Puttagunta the year after. The firm’s most recent partner hire was Brazilian gaming entrepreneur Lazarte, who joined in 2023.
They were meant to be joined by investor Miles Grimshaw, who joined from Josh Kushner’s Thrive Capital in 2020. But in March, Grimshaw returned to Thrive, in large part because he wanted to invest more flexibly across stages and check sizes than was possible within Benchmark’s rigid portfolio structure, according to three industry sources. Grimshaw did not respond to a comment request.
One question for Benchmark remains Fenton, who drove investments like Twitter and Yelp, and more recently, Taylor’s buzzy Sierra AI. Were Fenton, 51, to retire, the durability of Benchmark’s partnership would face a greater test, industry peers have said. But the letter made no mention of Benchmark 1 serving as the last for Fenton, who is 51; he may continue for one or more more funds after it, a source with knowledge said.
Other past partners, including Cohler and Gurley, have remained involved with the firm through board seats and advising, the person added.