Mega funds are back. Accel Partners closed two funds today for a total of $1.35 billion in new capital. The funds are Accel XI, which raised $475 million, and Accel Growth Fund II, which raised $875 million. Other VC firms with recent billion-dollar funds include Sequoia, Greylock, and Khosla is raising one as well.
It took less than two months to raise the $1.35 billion. The fundraising kicked off on April 26, 2011.The firm’s last fund, Accel X, was a $520 million fund and closed in 2007
Over the past 12 months, Accel has made over 25 seed investments (BaubleBar, HotelsTonight, Summify, Cardspring), 14 early stage deals (BranchOut, Bonobos, ScaleXtreme, Yardsellr), and 8 “growth equity investments” (99Designs, Rovio, Squarespace, Yapstone). These investments have ranged from $100,000 to $60 million.
Older investments include Facebook, Groupon, AdMob, Baidu, Brightcove, and Kayak.
Most of the money it raised is going into its growth fund, which will go towards later stage companies which are absorbing a lot of capital right now with valuations going through the roof. It takes a lot of capital to keep their ownership stakes from getting diluted in later rounds. The cash can also be used to pay up for a position in companies Accel missed in the earlier rounds. Although that is not really Accel’s style. The growth fund will tend to invest in cash-flow positive businesses, and about 75 percent of the time Accel is the first institutional money in the companies.