Dan Primack

The latest on private equity, M&A, deals and movements — from Wall Street to Silicon Valley

Kleiner Perkins goes big: VC firm raising more than $1 billion

October 27, 2010: 5:33 PM ET

Kleiner Perkins Caufield & Byers got all sorts of attention last week for its $250 million sFund -- including from yours truly -- but that just scratches the surface of the venture capital firm's fundraising ambitions. Fortune has learned that KP is in the process of raising $1.4 billion for a pair of new funds, including one that will house most of the sFund allocation.

Here's how it breaks down, according to limited partners in existing KP funds:

KPCB XIV: This is the firm's fourteenth "general" fund, which is targeting $650 million. Of that total, approximately half will be dedicated to IT investing while the rest will be balanced between greentech and life sciences. The IT piece includes a $200 million allocation to the sFund initiative -- the remaining $50 million of which will be provided by "strategic partners" like Amazon and Facebook.

KP raised $700 million for its thirteenth general fund in 2008, but later expanded both it and its predecessor fund via annex vehicles.

KPCB Digital Growth Fund: The firm is targeting $750 million for this effort, and I don't yet have specific investment strategy details. Judging by the name, however, I'd assume that we're talking about later-stage IT investments. Kind of like what KP does with its Green Growth fund, except for a different industry sector.

So, to be clear, the $250 million sFund doesn't actually exist yet. KP already has pitched to limited partners in Silicon Valley, and soon will do the same in New York City. It isn't expecting any difficulties, despite the overall fundraising doldrums for VC firms.

How do I know? Well, because KP announced the sFund via press conference and press release. Typically, VC firms refrain from announcing new funds before they have actually been raised, pursuant to an SEC ban on general solicitation for private placements. The only way KP lawyers would have allowed the sFund show is if the firm already told its potential universe of investors that the new funds were being raised (i.e., KP can prove that the investors did not learn of the funds via public notice).

Most VC firms wouldn't take such a chance, because their known universe -- usually existing LPs -- might not pony up enough cash, thus requiring solicitation of new prospects. But in the case of a firm like KP, such worries don't seem to exist.

It's also worth noting that these two funds would seem to indicate a bit of an emphasis shift back toward IT investing. I'm not suggesting that KP ever left tech, but simply that earmarking over 80% of new fundraising efforts toward the sector makes greentech and life sciences look a bit less important than they did when the Green Growth and Pandemic funds were announced...

Attempts to receive comment from Kleiner Perkins partners and spokespeople were unsuccessful.

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About This Author
Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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