It was mid-December as Venrock partner Bryan Roberts waltzed into one of the conference rooms of the venture capital firm he’s been running since 2007—his German Shepherd close at his heels with a tennis ball.
When I asked how he’s been, he hesitated for a moment before answering in his usual slow and earnest fashion: “I’ve been good. I’ve been good,” he said. “Good, and interestingly nervous.”
As we spoke, Venrock, which tends to fly under the radar despite its roots as one of the oldest and most storied venture capital firms in Silicon Valley, was coming off a remarkable few years. As Roberts sat across from me in one of Venrock’s understated, bare-bones conference rooms, he explained how by 2020 and 2021, Venrock had accumulated approximately $5 billion in public stock positions after portfolio companies including Cloudflare, Lucid Motors, and 10X Genomics, went public. Before the market had turned, the firm had sold some 85% of those public positions—returning a heaping sum back to its limited partners in the shape of billions in distributions.
One of Venrock’s limited partners for more than two decades, Geoff Love of Wellcome Trust, told me that Venrock "very objectively took advantage of the market over the last couple of years.”
Roberts had a simpler answer when I asked him about timing: They got “lucky.” Though he did add that Venrock’s nine venture partners “try to be clear-eyed about what things are worth and how people will think about value.”
But now Venrock and the rest of Silicon Valley have plummeted into an entirely new market: One where companies that were last valued at billions of dollars are now calling it quits and shutting down. Making good investment decisions requires careful—and correct—non-consensus bets on companies, at a very different level than it did just a few years ago.
“The reason we're in good shape now is because of the decisions we made three or four or five years ago,” Roberts told me. He added: “I'm spending my time today worried about what great decisions we have to make now in order to continue to be in good shape in 36 and 48 months…I think 2024 will be very interesting for venture investors to figure out which risky portfolio companies they believe in enough to step in and support.”
Venrock is making a seemingly unusual move as it embarks into the new environment. On Thursday morning, Venrock closed the largest fund it’s raised in more than a decade—$650 million for Venrock’s tenth fund—in what, at the onset, is a notable change for the firm. After all, Venrock, like Benchmark, is one of a select few early-stage funds that has repeatedly shied away from dramatically upping their fund sizes and garnering more management fees. Over the last decade, when competitors have taken advantage of the bull market and raised billions of dollars, Venrock has kept its last three funds, funds seven through nine, the same size: $450 million. Venrock VI, raised in 2011, was even smaller—at $350 million.
Why now? Roberts late last week over the phone rejected the notion that Venrock is undergoing any kind of strategy shift. He says the answer is actually rather simple: Over the next few years, Venrock will need more follow-on capital if it wants to save the companies in its portfolio it thinks are worth saving.
Over the last decade, new investors had tried to elbow out Venrock in the Series B rounds, where the firm has historically placed less focus, according to Roberts. Now it’s more likely that Venrock will need to be a first mover in those Series B rounds to attract new investors to the cap table at all, and the firm wants to be able to write larger checks into those rounds, if needed.
Those plans for writing larger, later-stage follow-on checks mark a shift for Venrock—a notable indicator of how venture capital firms are adapting to some of the downturn’s new realities.
One of the reasons Venrock has continued to get checks from Wellcome Trust, Love tells me, has been the firm’s discipline in sticking to what it does best: seed and Series A. But Love says this larger fund is “totally acceptable” given the changes in the market: “[Venrock has] shown just repeatedly a real discipline and skill in selectively backing certain companies in later rounds, and that's what this allows them to do—because they can be a source of capital where companies may struggle to find others that are willing to give it to them.”
Other things are staying the same. Venrock will continue to back approximately eight to 12 investments a year. It will continue to charge its limited partners based on a designated budget, versus management fees. It will stay in the Palo Alto office space it moved to in 2008, when it abandoned Sand Hill Road to save money on rent. And it will still have several dozen Rockefellers in its limited partner base.
And, as for Roberts, who has been at Venrock since 1997, he has no plans to go anywhere. After all, it’s the downmarkets where investing gets exciting, he says. “It's not that interesting when everything’s great. This is where you get to differentiate yourself,” he says.
In other news…InVision, the design unicorn that was once worth $2 billion, said Thursday that it was shutting down at the end of 2024. InVision was a pioneer in UX design tools, but was later eclipsed by rivals like Figma. In 2023 it sold its visual collaboration product, which was its core business line, to Miro. “We’re so grateful to all of you who invested time and energy into making InVision the incredible company that it’s grown to be,” InVisionApp CEO Michael Shenkman wrote in the letter.
Over the weekend...Equity management unicorn Carta was pulled into yet another scandal—this time over allegations of using confidential cap table information for self-dealing. Carta CEO Henry Ward published a response yesterday, saying that Carta’s outreach to three companies regarding secondary share sales was “absolutely a breach of our privacy protocols. And we have addressed it over the weekend.” He said that Carta was continuing to investigate the incidents “to make sure it never happens again” and also said he was rethinking whether Carta should be in the liquidity business at all. I delved into it yesterday, which you can read here.
See you tomorrow,
Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Correction, Jan. 8: A previous version of this newsletter misspelled "fund" and "onset." We regret the error.
