Bain Capital Ventures Raises $1 Billion Fund, Its Biggest

(Bloomberg) -- Bain Capital Ventures has raised its largest fund yet at $1 billion, becoming the latest in a line of once-modest venture firms to raise mega funds.

The new fund -- a 67 percent increase from Bain’s $600 million vehicle raised in 2016 -- highlights both the trend of increasing fund sizes and a source of increasing tension within the firms themselves. Because the highest returns come from backing smaller, early stage startups, investors strive to do more such deals to deliver the same results. According to Bain Managing Director Enrique Salem, that means a lot more work.

“I talk to my early stage CEOs at least once a week,” Salem said, adding that smaller startups operate on an ad-hoc basis and require significantly more help. That includes assisting recruitment, winning customers, trouble-shooting products and figuring out where to invest resources. Still, early stage is “where you get the best money-on-money return.”

While Bain will set aside $250 million of its new war chest to back more mature companies, the balance will be used to find emerging companies in areas such as artificial intelligence, automation and digital currencies, as well as backing the successful ones in subsequent rounds. Roughly 90 percent of all startups fail, according to industry estimates.

Bain, which expanded to California in 2011 from the East Coast to do a better job finding fledgling startups, accelerated the effort last year by teaming up with a collection of angel investors. The partnership has led to 14 seed and Series A deals during the past year, including cryptocurrency startups Compound and Lumina, Salem said. The firm made early bets on popular women’s clothing rental business Rent the Runway and on, which Walmart Inc. acquired for more than $3 billion two years ago.

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