Over more than four decades, Charles River Ventures has shown tremendous longevity in the venture world. With the close of its latest fund, the firm is trying to push a rebrand as CRV, emphasizing the growth in its Silicon Valley practice.
Earlier this month we reported that the firm had closed its 16th fund, which was worth close to $400 million according to SEC documents. Well, the firm has confirmed that it closed that fund, which it will use to continue investing in early-stage startups.
After 44 years in the business, you figure out what works and what doesn’t. CRV has had eight exits with $1 billion valuations or above over the last decade. Only Sequoia Capital, Greylock Partners, and New Enterprise Associates have as many so-called “unicorn” exits in the same time period.
Since it also invests early, CRV’s wins tend to be outsized compared to the rest of the market to the market. It was the first institutional investor in companies like Twitter, Zendesk, and Yammer, for instance.
The latest fund is a small step up from the last one it closed, which was for $375 million back in early 2012. As a result, there are certain things that haven’t changed much for CRV.
For one, the firm is singularly focused on investing in early-stage startups, at the Series A level.
According to general partner Jon Auerbach, the $300-$400 million range is the sweet spot for a fund like CRV, as it gives the firm more than enough money to make follow-on investments in its winners. But it’s not so overcapitalized that the firm is forced to make growth investments or go off-model.
CRV plans to invest in 25-35 companies over the three-year life of the fund, with the average amount invested in each company being around $10 million. But the bulk of the fund is held in reserve for it to back companies that will have those outsized exits — whether that means an IPO or an acquisition.
What has changed over the years, and will continue with the new fund, is CRV’s increased investment in startups in Silicon Valley.
Originally named after the river that runs between Boston and Cambridge, the firm has spent the last decade re-inventing itself with a Silicon Valley office. After decades of betting mostly on infrastructure companies that emerged out of the Boston area, CRV opened a Silicon Valley office in 2004 and has been steadily growing its presence there.
With the close of the new fund, the firm is hoping to emphasize the new-look CRV, which is increasingly focused on investing in West Coast, consumer-focused startups. It has more partners in Silicon Valley than in Cambridge, and that mix is also reflected in the types of companies it’s invested in, and the types of companies that have had the most success in the last decade.
“We believe there are a finite number of change-the-world entrepreneurs… and the place that they congregate is in San Francisco and Silicon Valley,” Auerbach said. Since most of its biggest recent wins were from investments in that area, it’s probably a smart bet to keep focusing there.