With the new funds, NEA is now aiming for $30 billion in total assets under management. The firm has been on a growth trajectory recently with several sizable investments in notable startups like Kubernetes and Coinbase.
As TechGround learned, NEA filed to be considered as a registered investment advisor. If it passes, this would give the firm a status similar to the likes of other storied firms and enable them to provide clients with high-quality service. This is only one of many firsts that the 45-year old firm has achieved in recent years, and we look forward to seeing what else they can bring in the future!
In light of the uncertainty around technology, NEA has shifted its focus to do business in a more blended way. Scott Sandell, general managing partner at NEA, believes that this new direction will give the firm an edge amid rapidly changing times. By working with top technology companies and embracing new trends, NEA is hoping to stay ahead of the curve and build lasting relationships with clients.
Sure, NEA focuses on maximizing returns on their investments, but they’re also looking to expand their footprint in the industry. They want to be a bigger part of the conversation and help more startups achieve success.
If Sandell’s firm was looking to invest in early-stage or growth-stage companies, it was able to create a fund that invested in both. However, if NEA wasn’t interested in investing but wanted exposure to either stage, they were able to create two funds that met this need. The first fund would invest entirely in early-stage companies and the second would dedicate one third of their capital to growth-stage companies with the rest invested in new growth-stage companies
In the late 1990s, venture capitalists became a priority for Silicon Valley technology start-ups. However, some LPs were resistant to taking on the riskier investments of venture capital. As a result, many companies pursued a dual-fund structure in order to have both types of investors on board.
NEA is growing rapidly and appears to be well equipped to handle the influx of new homework. The firm currently has 22 investment partners, 40 other venture operations staff, and around 100 person staff. Additionally, NEA is interested in horizontal technology such as generative AI and software. This indication of strength likely means that NEA will be able to support the increasing number of students who are looking for investment opportunities in these areas.
The National Endowment for the Arts is a government-sponsored organization that invests money raised from private donations into various art projects across the country. According to its website, NEA’s main goal is to “support excellence in the arts while building national cohesion.” This differs from many other investment organizations, which are typically focused on maximizing returns for their shareholders. When NEA first decided how much of the capital it would invest in its fund, it decided that 20% was enough to begin with and would increase this amount as needed. However, because NEA wants to focus on capital-efficient businesses rather than those with high short-term returns, the remaining 80% of the fund will be invested over a longer period of time.
One of the reasons for the current scarcity of capital is that many companies born in the last 10 years have not yet developed efficient reputations.
With the passage of the JOBS Act in late April, registered investment advisors (REIs) such as NEA can now engage in a wider range of activities and investments, including public stocks and secondary sales. This newfound flexibility may appeal to some REIs; others may see it as an opportunity to increase fees or shift their focus away from client-oriented services. Regardless of individual REI reactions, this new landscape should create more opportunities for informed investors.
LP capital calls have definitely been harder to get done over the past year, but Sandell is adamant that there has never been an issue with getting them done. This could be due to the historically high liquidity in the market combined with companies enjoying a more extended period of profitability. LP investors may also be more selective about where they want their money invested, leading to less demand for these securities.
Sandell’s secretive nature likely means that the firm has returned a great deal more capital than it’s ever raised to shareholders, thanks to the company’s focus on returns and its reluctance to give away too much information.
Austin-based software company Growth Partners has been described as a ‘Apple model startup.’ Rather than relying on outside capital to finance their growth, the company takes on debt and uses it to grow rapidly. However, while many of the country’s established technology companies got their start in this way, Growth Partners is not one of them. According to
