July 12, 2024
What's the opposite of a lean startup?

Menlo Ventures has raised $1.35 billion in new capital that it plans to use in part “to support the forthcoming generation of AI startups,” the venture firm announced today.

Notably and unsurprisingly, the firm is today quite bullish on the future of artificial intelligence, noting that it has already backed the likes of Abnormal, Anthropic, Cleanlab, Pinecone and Typeface. 

“Not every investment has to be an AI investment, but we believe that’s where the most exciting innovations will spark,” Menlo Ventures Partner Venky Ganesan said in an emailed statement. “That said, we also believe that, as AI becomes more sophisticated, we will increasingly rely on AI-powered tools and services to make us faster, smarter, and better at what we do. At that point, AI will lose its novelty and become an unsurprising, if not expected, collaborator throughout the day. Many of the companies that were already in the market with products and services that lacked AI features have moved quickly to layer in AI capabilities so that they can remain competitive and relevant in this new AI era.”

With the new funds, the firm says it has raised more than $3.8 billion across eight fund groups and distributed $5.2 billion to its LPs. The new capital will be invested out of the 46-year-old firm’s flagship venture fund, Menlo XVI, which is focused on the seed to Series A stages; Menlo Inflection III, which is focused on Series B and beyond; and their affiliated funds. 

In July of 2022, the Bay Area firm, known for its early bets on companies like Uber and Warby Parker, told regulators that it had secured $761.4 million for its third “special opportunities” fund. Menlo closed on Fund XV, a $500 million raise, in October of 2020. It currently has $5.6 billion under management.

Over the years, Menlo has seen 80 portfolio companies exit, 15 of which went public. Those companies include Getaround, Carbonite, Gilead, Roku and Rover.

The firm also says it made seed and early-stage investments in 24 unicorns across the enterprise, consumer and healthcare sectors, and saw 65 of its portfolio companies get acquired. Those acquired companies include StrataCam (bought by Cisco), Tenor (acquired by Google) and PillPack (acquired by Amazon), among others.

Recent Menlo investments include leading Finch’s $40 million Series B raise and Sana Labs’ $34 million round. It also — as mentioned above — participated in AI darling Anthropic’s May $450 million raise.

Looking ahead, the firm said in  a blog post: “AI represents a seismic shift that will add trillions of dollars in value to the global economy, and Menlo will help write the next chapter.” However, it intends to still invest in healthcare/digital health, consumer, cloud infrastructure, cybersecurity, fintech and SaaS startups as well.

Menlo isn’t the only venture firm raising $1 billion-plus funds these days. In October, Greylock Partners unveiled two new endeavors: a $1 billion early-stage fund — its 17th — and Greylock Edge, a program to support founders developing ideas into companies with early revenue and product market fit.

This story was updated post-publication to include comments and information from Menlo.

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