TCV gears up to raise Fund X

  • Expected launch in Q3 or Q4
  • Dataroom open; no PPM or LPA yet
  • Could target more than prior fund

Technology Crossover Ventures, which has invested in major tech companies including Netflix and LinkedIn, is preparing to raise its next flagship fund later this year, possibly in the third quarter, according to three people with knowledge of the firm.

No official target has been set, but one person with knowledge of the firm said TCV could try and raise as much as $3 billion. TCV closed its prior fund on $2.5 billion in 2016.

The firm opened a dataroom on the fund but has not yet issued a private-placement memorandum on the pool, the person said.

Katja Gagen, a spokeswoman for TCV, declined comment.

TCV last raised $3 billion with its seventh fund in 2007. It collected $2.23 billion for its eighth fund in 2014.

The Palo Alto, California, firm invests in public and private tech companies, focusing on internet, services, infrastructure and software. TCV occasionally invests in startups but looks “for companies with multiple years of revenue,” Nathan Sanders, who earlier this year was promoted to chief operating officer, told Buyouts in a 2016 interview.

TCV has backed tech companies including Airbnb, Capella Education, EA, HomeAway, Spotify and Zillow.

Some of the firm’s big exits included LinkedIn, which Microsoft acquired for $26.2 billion. Unilever bought Dollar Shave Club for $1 billion, while Hellman & Friedman agreed to invest $900 million in Genesys.

In March, TCV agreed to buy a controlling stake in Watermark, which provides assessment software for higher-education institutes. The firm also took a minority stake in Avetta, which provides cloud-based risk-management software to businesses in sectors like oil and gas and chemicals.

The firm’s ninth fund, still early in its J-curve period, was generating a 3.33 percent net internal rate of return as of Sept. 30, 2017, Washington State Investment Board data shows. Fund VIII was producing a 12.69 percent net IRR, Washington State said.

Fund VII was producing a 22.39 percent IRR since inception as of March 2017, California State Teachers’ Retirement System performance information shows.

Rick Kimball and John Hoag formed TCV in 1995.

Sam Sutton contributed to this report.

Action Item: Check out TCV’s Form ADV here:

The Apple Campus 2 is seen under construction in Cupertino, California, in this aerial photo taken April 6, 2016. REUTERS/Noah Berger