TCV closes record $4B fund to invest in e-commerce, fintech, edtech, travel and more

The pandemic has spelled economic setbacks for many people and industries, but the capital swirling about the technology world continues to roar along. In the latest development, TCV - the storied venture capital firm behind the likes of Airbnb, Spotify, Peloton and Facebook - has closed a record $4 billion for its latest fund.

This is not only the company's biggest fund to date, but it also speaks to just how fast the tech industry is accelerating in terms of capital and how much of it tech is attracting. In 25 years of operations (a milestone it passed in 2020) TCV invested $14 billion across hundreds of startups. This latest $4 billion fund raised in a matter of months represents nearly 30% of that figure.

(It's also more than the company originally targeted, which was $3.25 billion.)

Parter John Doran told TechCrunch the plan will be to use the money to continue backing existing portfolio companies, as well as make new bets, both in areas that have shown to be very strong winners in the last year - e-commerce, education, and tools to enable working in the cloud, for example - but also investments in areas that may not be doing as well right now, but TCV will believes will return, like travel.

We have to take a long term view," he said in an interview. It's about great founders and CEOs, and where those in areas like travel, you'll still see the startups get funded at up rounds. Besides, who will be better positioned to grow and take advantage of a world that's now more digital? That is a huge opportunity in the long term."

As with other big capital events, the closing of a VC fund may not be intrinsically interesting news in itself, but it's a significant bellwether that points to the level of confidence, interest and activity in the early stages of the funding process. That, in turn, has a direct knock-on effect for startups, and subsequently the technology industry at large.

In the case of TCV XI, as it is known, it's a sign of strength in the market - it is $1 billion more than its previous fund, closed before the pandemic in 2019 - but also an endorsement of some of the less traditional processes and practices that have become the norm in many of our lives.

Notably, the raising (and closing) of the fund was done entirely virtually over the last year, Julia Roux, the company's head of investor relations, told TechCrunch, from a mix of returning and new LPs. Going virtual is also, in many cases, the route that TCV (and other VCs) have taken in closing deals over the last year too, which looks like it may now be here to stay.

TCV has been very active in the past year, not just with private startup investments but seeing one of its most successful startups go public. Airbnb boldly went for an IPO in December, in the wake of a year that saw its business providing accommodation and other services to travellers come to a grinding halt.

The IPO was an example of the kind of more long-term investing that the firm is keen on doing (and very much has the funds to do now) despite current market conditions. Doran pointed out that TCV remains a big believers in the Airbnb story," investing in more shares in the company in the IPO.

Other big investments this year have included a lot of activity in commerce and fintech - including Mollie (raised $106 million), Spryker ($130 million), Revolut ($500 million), Klarna ($650 million), Nubank ($400 million) and Mambu ($135 million) - and Strava ($110 million). (Note how many of those rounds were outside the U.S.: almost all of them. The company says it has some $4 billion under management outside the U.S. now.)

Recent exits include AxiomSL, Genesys, Cradlepoint, and Silver Peak.

We are humbled by the ongoing support of new and returning investors, which enabled us to raise a record sized fund," said Jay Hoag, a founding general partner at TCV, in a statement. Just as importantly, we are honored by all the great entrepreneurs we've worked with over the past 25 years, as their vision and relentless execution has been our foundation. We look forward to backing entrepreneurs with our new fund that we believe will become the next generation of iconic companies, in this incredibly fertile technology industry."