Benchmark Unveils Its First Growth Fund Amidst $2B Capital Raising Initiative

Benchmark Capital, a prominent venture capital firm in Silicon Valley known for its early stakes in eBay, Snap, Uber, and Twitter, is moving away from a longstanding practice of capping its funds at approximately $425 million and concentrating solely on early-stage investments. After two decades of maintaining this funding limit, the firm has obtained $2 billion in commitments for two new funds, including a $1.25 billion fund for later-stage investments, as reported by the Wall Street Journal.

While many venture capital firms have seen their fund sizes balloon into the billions in the last ten years, Benchmark has stuck to a strategy that solidified its reputation. By being highly selective and usually taking a significant 20% equity in every supported startup, the firm has aimed to maximize returns for its limited partners.

However, Benchmark’s smaller fund sizes have likely hindered its capacity to invest in capital-intensive AI startups, particularly those creating foundation models that often secure investment rounds in the hundreds of millions. As a result, the firm has not invested in high-profile AI labs such as Anthropic or OpenAI, nor in other financially demanding AI firms like Periodic Labs, Reflection AI, or Recursive Superintelligence.

In the AI domain where Benchmark has made investments, the results have been mixed. The firm spearheaded a $75 million round for Manus, a Singapore-based AI agent platform, which generated $100 million in annual recurring revenue just eight months after launch. When Meta announced its plan to acquire Manus for nearly $2 billion last year, it appeared to be another triumph for Benchmark. However, intervention from Chinese regulators, citing export control law violations related to Manus’s origins, blocked the deal in April and placed Benchmark’s stake in jeopardy.

The newly formed $750 million early-stage fund will afford Benchmark greater flexibility to invest in a market where early-stage valuations are on the rise. While the firm has traditionally concentrated on Series A investments, it is now permitting itself more freedom to support companies at different early development phases.

Recently, Benchmark backed two Series B startups: Gumloop, a platform that allows companies to create AI agents without coding skills, and Monaco, a native AI sales and CRM platform.

Everett Randle, a general partner at Benchmark, previously told TechCrunch that the firm aims to build a “meaningful and deep relationship” with entrepreneurs early in a company’s journey, whether at the seed, Series A, or Series B stages.

Benchmark ventured into late-stage investing by raising a $225 million special purpose vehicle (SPV) to participate in a $1 billion pre-IPO round for Cerebras, as reported by TechCrunch. The firm had initially led Cerebras’s Series A funding in 2016. The recent IPO of Cerebras has netted Benchmark a return of $3.25 billion based on the IPO pricing.

This financial success prompted Benchmark to create a dedicated growth fund, which aims to make five to six significant investments in both existing portfolio companies and new startups, according to sources familiar with the firm’s strategy.

The creation of these two new funds is not the only change taking place at Benchmark. Over the past two years, there has been considerable turnover among its general partners.

In 2024, Miles Grimshaw left to rejoin Thrive Capital. Last year, Sarah Tavel, the first and only female general partner in Benchmark’s history, transitioned to a less active role as a venture partner, while Victor Lazarte departed to start his own VC firm.

To fill these open positions, Benchmark—typically operating with four to six general partners—has brought on two notable investors: Randle from Kleiner Perkins and Jack Altman, brother of OpenAI CEO Sam Altman. These developments signal that even Benchmark, known for its cautious approach to expansion, acknowledges that the AI revolution demands a reimagined strategy—enhanced capital deployment, diversified investment stages, and fresh leadership in the partner ranks.