Sticking With Wells Fargo as Sole LP, Norwest Raises $1.2 Billion Fund
Norwest Venture Partners has closed its 12th fund, Norwest Venture Partners XII LP, at $1.2 billion-the same size as its last fund, which the firm raised in late 2009. — Norwest is one of a handful of venture capital firms …
Context & Ripple Effects
Norwest matched the size of its 2009 $1.2 billion fund, preserving its prior fundraising scale rather than expanding it. Its financing model is distinctive in the supplied coverage: Wells Fargo supplies the entire fund commitment, while NEA's $2.1 billion raise in 2012 illustrates the larger fund sizes available elsewhere in venture capital.
First-order effects
- Norwest has $1.2 billion of committed capital for its twelfth fund, with Wells Fargo as the only limited partner.
- Wells Fargo becomes the sole outside capital provider for the fund, concentrating the manager's LP relationship in one institution.
Second-order effects
- Norwest's future fundraising capacity is more directly exposed to Wells Fargo's allocation decisions because there are no other LP commitments to offset a change in support.
- Other venture managers seeking large funds face a clearer contrast between assembling broad LP syndicates and securing a single institutional backer.
Third-order effects
- If this structure is adopted more widely, venture-fund supply would become more concentrated in bilateral relationships between large institutions and selected managers, rather than diversified LP pools.
The trend: Venture fundraising is testing more concentrated capital structures, with a single institutional LP able to underpin a fund at established scale.