Norwest Closes $1.2 Billion Venture Fund

Norwest Venture Partners (NVP), one of the most respected funds in Silicon Valley, says that it’s closed NVP XI, a $1.2 billion fund that will invest in diverse sectors and geographies. NVP, which recently recorded a major hit with the $405 million sale of video conferencing equipment maker LifeSize, is one of the few venture funds to close a mega-fund. Khosla Ventures ($1 billion) and Greylock Partners ($575 million) are two other partnerships that have been able to raise mega-funds. At the same time, there have been numerous reports of many partnerships struggling to whip up interest in their second or third funds. “Track record is what that matters,” said Promod Haque, general partner with NVP, in a conversation earlier today.

Haque’s track record is a mile long. In the last bubble, he rose to prominence with the mega-billion-dollar sales of Cerent (to Cisco), Siara (to Redback) and several other telecom and chip companies. Norwest, which has been investing for about 48 years, has raised a total of $3.7 billion. Haque explained that NVP would continue to invest in companies of all shapes and sizes in the U.S., India, China and Israel. In addition, NVP is also going to focus on health care IT and medtech.

“Health care and medtech (and genomics) are increasingly becoming software-centric and we have expertise in software investments,” Haque said, explaining his rationale behind the investments. Norwest, which also was the largest investor in Rackspace (s RAx) is bullish about the prospects of cloud computing and broadband-focused startups, such as Cyan Optics. (Read my post about Cyan.)

I asked Haque how he reconciles investing in early-stage companies and his late-stage investments — after all, they do need completely different mindsets. He doesn’t think so, saying the only difference is in the number of checks he writes as an investor. “In growth-stage companies, we write one big check, but in early-stage companies you write multiple checks,” he said. “Startups that are on the right track and growing fast need a lot of cash.”

Photo source: Flickr user aresauburn.