One undisclosed LP tells PE Week that the fund has now closed on about $250 million. Draper Fisher Jurvetson X had raised just $196.6 million from 28 accredited investors, according to the most recent regulatory filing in July.
If LPs are frustrated with DFJ, they are not saying, though many of them have not enjoyed the profit windfall associated with the firm’s two biggest successes this decade: Chinese search company Baidu and VoIP company Skype.
In July 2005, when Baidu, which has been dubbed the “Google of China,” skyrocketed on the Nasdaq from $27 a share to $122 on its first day of trading, much ado was made of the hundreds of millions of dollars that the DFJ affiliate fund
Meanwhile, Skype, which was sourced by Draper Richards, also received an investment from ePlanet in 2004. Although the deal was led by Tim Draper, DFJ was constrained at the time by a U.S.-centric mandate. Skype sold to eBay for $2.6 billion in 2005.
However, DFJ has seen far more modest exits from its other portfolio companies. Among the exits in the firm’s seventh fund, a $640 million vehicle closed in late 2000, have been Xfire, an online gaming community that raised $12.5 million and sold to Viacom in 2006 for $102 million; health care services provider Lumenos, which sold to WellPoint for $185 million in 2005 after raising $103 million; and the mobile messaging startup Mobile 365, which sold to Sybase for $400 million in 2006. Mobile 365 had raised $23.6 million from DFJ and other investors.
Asked for more information on the firm’s returns, Draper declined to comment, but a source close to both DFJ and several of its affiliates suggested to PE Week that rumors that DFJ is struggling are unfounded and have done nothing to tarnish the firm’s brand.
“I can tell you that DFJ’s affiliates are not worrying about the pace of this fund-raise, the source says. “They’re feeling the same strength of the DFJ brand as always. The network still works. Entrepreneurs certainly don’t think it’s a factor [worth worrying about].”
The source adds: “It’s not like because Baidu wasn’t in the core fund that LPs are now running for the hills. I’m as surprised as anyone that it’s taking this long [for the firm to close]. Then again, things change. This is a hard time for everyone, including LPs.”
The last time DFJ hit the fund-raising circuit, it filed its first regulatory document in late 2006 but didn’t hold a final fund close, on $650 million, until November 2007. Given a recession from which cash-strapped LPs are only slowly emerging, it isn’t terribly surprising that the Menlo Park-based firm has yet to hold a final fund close on a vehicle for which it first filed 14 months ago.
Still, because of the firm’s notoriously aggressive investment pace, the open-endedness of its 10th fund is gaining attention in Silicon Valley. The firm invested roughly $325 million in 131 companies in 2008. That’s more than the $227 million that the firm invested at the height of the dot-com boom in 2000.
Last year, DFJ, like its peers, slowed down its rate of investment dramatically. But it was still among the industry’s 10 most active investors in five out of 12 months, according to data from Thomson Reuters (publisher of PE Week). —Constance Loizos