Recent exits help Redpoint Ventures raise $400M

Redpoint Ventures announced last week that it has raised $400 million for a new venture capital fund aimed at fast-growing Internet services, including social networking and mobile products, as well as clean technology companies.

The latest fund-raising comes on the heels of one of the worst years on record for the venture capital industry and amid continuing challenges in the IPO market. But Redpoint Founding Partner Geoff Yang says that Fortinet Inc., which went public late last year, and the recent acquisitions of several of its portfolio companies, helped to put the firm in a good position to tap investors for a new fund. Redpoint owned 12.4% of Fortinet’s shares after the offering.

In addition to the Fortinet IPO, the firm’s recent portfolio company exits include the sale of WiChorus to Tellabs for $165 million in October; and the sale of LifeSize Communications to Logitech International for $405 million in November.

Meanwhile, Redpoint portfolio companies Calix Networks and Solyndra have filed to go public, though they’ll both need big boosts from the markets for its backers to see meaningful returns. Calix has raised $272 million and Solyndra has raised $512 million from investors.

Yang says that the firm began talking to investors about a new fund last fall and closed the funding round on schedule with more demand from investors than it could accommodate.

“We were prepared for a much tougher environment based on all the horror stories we had read and if you look at the macro conditions,” Yang says.

The new fund, Redpoint IV, will focus on early stage companies involved in social networking, mobile computing, cloud computing and clean technology.

Partners at Redpoint, which was a backer of News Corp.’s MySpace, said that social networking and mobile services designed for smartphones, such as Apple Inc.’s iPhone, are transforming industries from entertainment and e-commerce to video games.

While acknowledging that the business models for many social networking sites are not yet fully developed, they stressed that many social media firms are already generating significant revenue.

“I think maybe people would be surprised how real these businesses are,” Yang says. —Constance Loizos and Alexei Oreskovic, Reuters