August Capital pulls in $650M for fifth fund

August Capital, the 14-year-old firm founded by VC veterans Dave Marquardt and John Johnston, has held a final close on its fifth fund, raising $650 million.

General Partner David Hornik (who wrote about the fund late last week on his blog, said that the fund took less than four months to raise. The firm began calling LPs “right after Thanksgiving,” he told PE Week.

Hornik says that August, traditionally an early stage fund, will “continue to invest over the range of information technologies,” such as software, consumer products, hardware, networking gear and microprocessors.

Moreover, says Hornik, the partnership is eyeing later stage opportunities, such as management buyouts and PIPEs, because of the “current economic environment.” The new fund is structured to give the firm the flexibility to invest in all stages.

“We look forward to investing on both ends of the company spectrum and now have significant resources to bet on the great companies we see, big and small alike,” he writes in his blog.

Menlo Park, Calif.-based August raised $550 million for its previous fund in 2005. After that fund close, the firm announced it would diversify into growth stage investments, though the growth stage companies it has backed in recent years have centered on companies that have been in the firm’s portfolio for many years and that, like many startups in this climate, are still waiting for their exit opportunity.

For example, in January, August participated in a $7 million, late stage financing round for 13-year-old Ubicom, which makes multithreaded processors and software for media applications. August, which was joined by Mayfield Fund, and several other firms, first backed Ubicom in 2004, according to Thomson Reuters (publisher of PE Week).

In late December, August also participated in the eighth round of funding for Openlane, an online automotive auction company founded in 2000. August has been an investor in the Menlo Park, Calif.-based startup since 2000.

August has not participated again in a massive investment similar to the LBO of disk drive maker Seagate Technology, whose turnaround the firm participated in alongside Silver Lake Partners and Veritas Software. The syndicate took Seagate private in 2000 in a complex $20 billion deal, then took it public again in 2003, reaping billions for its investors.

That could be changing. With August’s new fund, “We can invest as much as several hundred million dollars in a single deal if we feel it is sufficiently compelling,” says Hornik, “and we intend to actively investigate those opportunities.”

August closed its first fund in 1995 with $98 million, and has been steadily increasing its assets under management since. In 1998, the firm closed its second fund with $190 million. In 2000, it raised $418 million for its third fund.

Limited partners in past August Capital funds includ Horsley Bridge Partners, Legacy Venture, Duke Endowment, TIFF Partners, Cornell University, Howard Hughes Medical Institute, Ford Foundation and Yale University, according to Dow Jones.

In recent years, it has steered much of its capital to Web startups. Most recently, the firm has invested in the multiplayer online gaming company Ohai in an undisclosed Series A round with Rustic Canyon; in a $5.2 million Series A round for Pixaxxa, a startup that converts Web images into e-commerce links, with co-investor Foundation Capital; and in Aardvark, a new search service started in 2007 by several former employees of Google. Late last year, August led Aardvark’s $5.25 million Series A, which also included Baseline Ventures.

August has also continued to back startups in a variety of other sectors that have historically interested the firm, including networking and microprocessors. In December, August gave follow-on financing to 8-year-old Scintera Networks, which builds products for multi-gigabit communication and networking systems. Scintera has raised more than $33 million in total funding from August, Kleiner Perkins Caufield & Byers, Sevin Rosen Funds and other investors.

In December, August also provided more backing to 4-year-old semiconductor maker DSM Solutions, which has raised $18.7 million from August, Kleiner Perkins and DAG Ventures, among others.

August has enjoyed big exits across all sectors, though a big liquidity event hasn’t happened for a few years. August was among the earliest investors in the wireless communications component maker Atheros Communications, which held a $124 million IPO in 2004. The same year, online shopping search engine, another August portfolio company, also went public.

August’s returning GPs include Hornik, Johnston, Marquardt, Vivek Mehra and Andy Rappaport.

Howard Hartenbaum, who left Draper Richards last summer to join August, is a new GP in the fund. Hartenbaum was recently ranked No. 13 on the Forbes Midas List of top VCs because of his early involvement with the Internet phone company Skype, which sold to eBay in 2005 for $2.6 billion.