Top 6 Venture Capital Firms 2020

Venture capital is the investment in startups and early-stage businesses by private investors or firms, and is a form of private equity investing. In exchange for funding, venture capitalists receive equity in the startup. It is most common in high-tech, high-growth industries, including internet and software services, biotechnology, and industrial manufacturing.

6 Best Venture Capital Firms

Source: Data collected using Crunchbase Pro in November 2019

Selecting a venture capital firm is a matter of luck and matchmaking. The best chances of getting funding come from a direct introduction to one of the partners. Startups that don’t have this advantage will need to apply to multiple venture capital firms. The process is largely a numbers game, but entrepreneurs should make sure the interests of the firm they select and their vision for the company are aligned.

Intel Capital

The corporate venture capital arm of Intel Corporation, Intel Capital focuses on technology startups across industries, including hardware, software, semiconductor manufacturing, and digital media. Founded in 1991 by Avram Miller, Intel Capital serves the U.S. market as well as China and Western Europe. Intel Capital has made 1,338 total investments, and was the lead investor in 34% of its investments.

Intel Capital Investment Profile

Intel Capital is focused on what it calls the “future of disruption,” meaning it is heavily focused on disruptive technology companies. Currently, it is seeking investments in artificial intelligence, autonomous tech, internet of things (IoT), robotics, and next-gen computers. In 2018, it was the lead investor in over 66% of its new deals.

The most common investment industries for Intel Capital are:

• Software: 297
• Information technology: 152
• Enterprise software: 139
• Mobile: 108

Consumer and enterprise software make up the highest overall category of Intel Capital’s investments, which makes it a safe bet for founders of startups who are introducing disruptive concepts into the software marketplace. Intel also has a strong presence in manufacturing and semiconductor technology, which sets it apart for firms designing and manufacturing high tech chips and circuits.

Investments & Exits

Intel Capital has an investment-to-IPO success rate of 28.5%, making it the highest-ranked venture capital (VC) firm in terms of successful exit percentage. Additionally, with a lead investment-to-IPO rate of 83.37%, startups will see significantly increased odds of a successful exit with Intel in the lead investor position.

Intel Capital has made the following investments and exits:

• Total investments: 1,338
• Lead investments: 457
• Total exits: 381
• Investment-to-IPO: 28.5%
• Lead investment-to-IPO: 83.37%

Intel Capital is a leading technology investor, and has numerous exits, with a high ratio of lead investment-to-IPO or acquisition. Among its exits are Animoca Brands, a developer and publisher of mobile games, Schoology, a learning management system, and MongoDB, a business-centered database.

Total Funds Raised

Compared to the other venture capital firms on this list, Intel Capital has a more conservative number of funds, according to Crunchbase, and overall a lower number of total funds raised. It’s worth noting that while available data indicates total funds raised of $1.3 billion, Intel Capital claims it has invested $12.4 billion since 1991.

The estimated number of funds and total funds raised by Intel Capital are:

• Number of funds: 8
• Total funds raised: $1.3 billion

Bessemer Venture Partners

Bessemer Venture Partners was founded in 1974, an offshoot of Bessemer Securities, itself founded in 1911. Bessemer opened a Silicon Valley office in 1975, later expanding offices to Boston, and ultimately opening offices in India and Israel. Bessemer has made 910 investments, 34% of which as a lead investor, and has had 197 exits.

Bessemer Venture Partners Investment Profile

From its early beginnings in the steel industry, Bessemer now focuses on consumer and enterprise technologies as well as the healthcare industry. It has a wide-ranging philosophy, investing in seed, early-stage, and growth-stage companies. It has recently focused on consumer and enterprise software, as well as internet and information technology.

The most common investment industries for Bessemer Venture Partners are:

• Consumer software: 137
• Enterprise software: 64
• Information technology: 64
• Internet: 61

Alongside a focus on consumer and enterprise software, Bessemer has displayed a preference for software as a service (SaaS) startups, which complements its focus not only on investing related to internet but also mobile technology. It appears to be a good platform for consumer convenience apps, multichannel commerce, artificial intelligence (AI), and automation startups.

Investments & Exits

Bessemer comes in second in terms of overall investments that led to an IPO, with a rate of 21.65%. Notably, having Bessemer as lead investor led to a significant increase in the rate of IPOs, though not as dramatic as the advantage enjoyed by Intel Capital.

Bessemer Venture Partners has made the following investments and exits:

• Total investments: 910
• Lead investments: 309
• Total exits: 197
• Investment-to-IPO: 21.65%
• Lead investment-to-IPO: 63.75%

Bessemer has consistently made large investments in technology companies, including internet and consumer-facing software and SaaS companies. Its notable exits include companies like Shopify, a cloud-based ecommerce platform, Twilio, a cloud-based communication company, and Dynamic Yield, an AI-powered consumer communication company.

Total Funds Raised

Bessemer has a total of six active funds. Its most recent is the BVP Dollar fund, which was announced in October 2019 and initially raised $525 million. Bessemer says it has raised just over $6 billion to date.

The estimated number of funds and total funds raised by Bessemer Venture Partners are:

• Number of funds: 6
• Total funds raised: $6 billion

Kleiner Perkins

Founded in 1972, Kleiner Perkins has offices in Silicon Valley as well as in San Francisco and Shanghai, China. Kleiner Perkins has made 1,136 total investments; it was lead investor for roughly 26% of those investments, and has had 240 exits.

Kleiner Perkins Investment Profile

Kleiner Perkins’ early investments were largely in software and hardware, as well as other high tech firms. Over time, its portfolio has grown to include the healthcare industry as well as mobile, internet, enterprise software, and biotechnology.

The most common investment industries for Kleiner Perkins are:

• Software: 114
• Healthcare: 72
• Mobile: 72
• Internet: 69

Recently, the firm refocused on funding of early stage enterprises, a shift from many of its earlier investments in late-stage growth companies. Kleiner was an early investor in Google and Amazon. Founders in early-stage growth, particularly those in software, healthcare, and “hard tech,” shouldn’t overlook Kleiner Perkins.

Investments & Exits

Kleiner Perkins has impressive ratios of investments-to-IPO, clocking in at 21.13% on a total of 240 exits. Significantly, on investments where Kleiner Perkins was a lead investor, the success rate was 78.95%, second only to Intel Capital.

Kleiner Perkins has made the following investments and exits:

• Total investments: 1,136
• Lead investments: 304
• Total exits: 240
• Investment-to-IPO: 21.13%
• Lead investment-to-IPO: 78.95%

Kleiner Perkins invests in a broad number of categories, and counts many household names among its most notable exits, including Twitter, Uber, Peloton, and Beyond Meat, the meat alternative that has seen growing popularity.

Total Funds Raised

Kleiner Perkins has raised about $5.2 billion across 17 funds, including its Digital Growth Fund, the most recent iteration of which raised $1 billion, according to estimates. Its most recent fund, Kleiner Perkins XVIII, raised $600 million and is focused on what it calls getting “back to the future,” or investing in early-stage growth.

The estimated number of funds and total funds raised by Kleiner Perkins are:

• Number of funds: 17
• Total funds raised: $5.2 billion

New Enterprise Associates

New Enterprise Associates (NEA) was founded in 1977 and is headquartered in Chevy Chase, Maryland. It has offices in Baltimore, Boston, New York, San Francisco, China, and India. It has made 1,589 investments, of which about 36% were lead investments, and has a total of 333 exits.

New Enterprise Associates Investment Profile

NEA invests globally, with an overall focus on healthcare and technology. It invests across the entire life cycle, from seed to IPO. Some of its investment categories include consumer and enterprise software, SaaS, healthcare, biotechnology, internet, and information technology.

The most common investment industries for New Enterprise Associates are:

• Software: 188
• Healthcare: 143
• Biotechnology: 113
• Internet: 93

New Enterprise Associates describes its focus as specifically related to technology and healthcare, which is reflected by the overall tenor of its investments. Its Debut Growth fund, announced in December 2018, raised $1.35 billion with a charter to invest in growth-stage businesses.

Investments & Exits

New Enterprise Associates has had 333 successful exits, and is in elite company with an investment-to-IPO rate of 20.96%. While not as significant as Kleiner Perkins and Intel Capital, investments where New Enterprise Associates took the lead have a higher success rate of 57.41% investments-to-exit.

New Enterprise Associates has made the following investments and exits:

• Total investments: 1,589
• Lead investments: 580
• Total exits: 333
• Investment-to-IPO: 20.96%
• Lead investment-to-IPO: 57.41%

New Enterprise Associates is another large VC firm that counts many household names among its notable exits. Included in the list of successful exits are Uber; Workday, the SaaS-based human resource (HR) and financial management platform for enterprise; and Onshape, a team-oriented, cloud-based 3D CAD design suite.

Total Funds Raised

NEA announced its largest fund in March 2019, the New Enterprise Associates 17 fund. The target for this fund is $3.6 billion, which is slightly larger than the NEA 16 fund, which closed in 2017 after raising its $3.3 billion target. These large funds join its relatively smaller Debut Growth Fund.

The estimated number of funds and total funds raised by New Enterprise Associates are:

• Number of funds: 12
• Total funds raised: $18 billion

Accel

Located in California and with funds operating in London, China, and India, Accel was founded in 1983. Accel is one of the longest standing VC firms, and notes some high-profile exits from its portfolio, including Facebook and Dropbox. With more than 1,300 investments, Accel favors early- and growth-stage companies, as well as some seed investments.

Accel Investment Profile

Accel is focused primarily on consumer and enterprise software, internet, and mobile technologies. According to Crunchbase, it has made over 200 investments in software, and roughly 300 investments in the latter three categories combined.

The most common investment industries for Accel are:

• Software: 208
• Internet: 120
• Enterprise software: 100
• Mobile: 88

Accel describes its investment strategy as targeting early- and growth-stage companies around the world. It has committed a large percentage of recent investments into what it calls “category-defining” companies, and overall is a likely fit for consumer- and enterprise-facing companies, including marketplace related startups like Etsy, Jet, and Fiverr.com.

Investments & Exits

Accel has a strong track record of success, joining the other venture capital firms on our list in the 20% and over investment-to-IPO club, at 20.77%. It enjoys a strong correlation between being lead investor and having a successful exit, with a 55.56% lead investment-to-IPO rating, which puts it right about the middle for VC firms on our list.

Accel has made the following investments and exits:

• Total investments: 1,348
• Lead investments: 504
• Total exits: 280
• Investment-to-IPO: 20.77%
• Lead investment-to-IPO: 55.56%

Accel has had a total of 280 exits, the most notable of which include Facebook, CrowdStrike, and Animoca Brands. Accel was the lead investor of Facebook’s Series A funding round, which raised a total of $12.7 million.

Total Funds Raised

Accel is notable for having both a diversified assortment of funds as well as for the total amount raised in its funds, with estimates clocking its total fundraising at about $12.3 billion across 28 funds. Most recently, Accel raised $2.5 billion for three funds, which feature a growth fund that raised a total of $1.5 billion; its Accel Leaders Fund II, focused on follow-on rounds for existing portfolio companies; and its latest flagship venture fund.

The estimated number of funds and total funds raised by Accel are:

• Number of funds: 28
• Total funds raised: $12.3 billion

Sequoia Capital

Located in Menlo Park, California, Sequoia Capital was founded in 1972. Sequoia invests in both private and public companies, and has funds operating in India, Israel, and China, in addition to the U.S. It has made 1,275 total investments, and was a lead investor in about 33%. It has had 265 successful exits.

Sequoia Capital Investment Profile

Sequoia Capital describes its philosophy as broad, partnering with companies at early- and late-growth stages across a wide swath of industries. Recently, it has had a focus on energy, healthcare, financial, internet, and mobile companies. Its largest category to date is software.

The most common investment industries for Sequoia Capital are:

• Software: 184
• Internet: 104
• Mobile: 96
• Information technology: 91

Investments & Exits

Sequoia Capital has had a total of 265 exits with a strong investment-to-IPO percentage of 20.71%, and a strong history of IPOs where it is a lead investor, with a rate of 63.31%. This rate puts its results near those of Bessemer Venture Partners and higher than New Enterprise Associates and Accel.

Sequoia Capital has made the following investments and exits:

• Total investments: 1,275
• Lead investments: 417
• Total exits: 265
• Investment-to-IPO: 20.71%
• Lead investment-to-IPO: 63.31%

Sequoia counts among its exits a large number of consumer and enterprise software and hardware companies. Included in its most notable exits are Instagram; NVIDIA, the chip and hardware manufacturer most well-known for its gaming cards; and ServiceNow, a cloud-based enterprise management and automation suite.

Total Funds Raised

Sequoia Capital has one of the largest total funds raised on our list, following its largest fund to date, the Sequoia Capital Global Growth Fund III, which has raised $6 billion since its June 2018 announcement. The overall target for the fund is $8 billion, and analysts say to expect the fund to invest back into existing portfolio companies, as well as some new opportunities.

The estimated number of funds and total funds raised by Sequoia Capital are:

• Number of funds: 22
• Total funds raised: $15.3 billion

How Financing With a Venture Capital Firm Works

Venture capital firms consist of groups of investors, known as limited partners, who create pools of capital to be invested in early-stage, high-growth firms, typically in a high-tech field. The traditional venture capital model has four key parts: entrepreneurs, venture capitalists, private investors, and investment bankers. Entrepreneurs win the funding after pitching their business to investors. In exchange, they give up equity, usually in the form of preferred stock.

A VC firm typically has a profile of businesses it seeks to add to its portfolio, known as its investment profile. The profile will cover variables like what industries the VC firm will invest in, with a typical focus on high-growth segments. It also dictates the type of funding (i.e., seed, early-stage, or late-stage funding), as well as the general logic employed in its deals, such as the percentage of equity and common amount of funding.

How Venture Capital Firms Make Money

Venture capital is typically a shorter-term investment, meant to fund a business and create cash flow to build out that company’s business model and user base; the goal is to create a company with enough value that the VC firm can exit. Exits typically are achieved by selling to another company in a mergers and acquisitions transaction (M&A), or by way of an initial public offering (IPO), which transfers the business from the private equity model to public equity.

When a VC firm exits a company, investors in that company (known as limited partners) will receive their share of the proceeds based on their investment. These returns come from the amount of equity the VC firm negotiated in return for the investment. If a pool of 10 investors all invested an equal amount (10%) in a company, then when that investment is exited, each investor would receive 10% of the proceeds from that exit.

Management Fee vs Carried Interest

VC firms make money by charging a fee to manage the firm’s investments, known as a management fee, as well as carried interest. A management fee is typically charged by a VC firm for its duties in managing a fund and is guaranteed income for a VC firm. Carried interest, on the other hand, is only earned by the VC firm once a fund has reached a certain threshold, and can be quite lucrative for VC firms.

Who Should Work With a Venture Capital Firm

Generally, entrepreneurs who are in the early stages of growing a company and have limited access to traditional debt equity may wish to consider venture capital. Of equal importance is whether a business will be suitable for a VC investment. Industry trends show that venture capital firms are beginning to favor more mature startups, with early-stage and seed rounds dropping off and late-stage activity remaining constant.

The top five industries that receive VC funding are:

• Software: At 36.5%, software companies still make up the lion’s share of total deals, netting 32.9% of total funding.
• Pharmaceuticals and biotech: Coming in second with 7.7% of deal volume and 11.9% of deal funding, pharma and biotech have remained steady over the last several years, while deal size has shrunk since its peak in 2018.
• Commercial services: Commercial services are up year over year in both total deals at 7.5% in 2019 as well as total funding at 11.5%, compared to 4.5% of total funding in 2018.
• Healthcare services and systems: VC activity has continued to increase in healthcare services and systems, growing to 7.3% of deals in 2019, up from 6.4% in 2018. Funding is also up slightly at 5.6% of total funding year to date.
• Healthcare devices and supplies: In tandem with services and systems, healthcare devices and supplies continue to earn greater VC attention, at 6.7% of total deals, while total funding is down slightly to 4.3%.

Software firms still retain the majority of VC investments, with the percentage of unique investments in software companies hovering around 36% in second quarter 2019; however, this is down from 39% in 2018 and 38.7% of total funding in 2017.

Disadvantages of Venture Capital Firms

Venture capital holds significant advantages over debt financing as well as other means of raising capital to grow a company. However, there are several distinct disadvantages to using VC to fund a business. For one, it is a difficult form of funding to obtain, and many will find getting a startup business loan a simpler prospect.

Another disadvantage is the entrepreneur seeking funding must sacrifice equity in the business—and potentially control. On average, VCs owned 50% of a company at the time of exit according to a study of 105 tech companies by Crunchbase, which analyzed the percentage of equity that venture capitalists take. Losing this stake when you later sell the company could prove much more costly than taking out a loan.

How We Evaluated Venture Capital Firms

When researching our article, we chose to measure the success of a venture capital firm by measuring its ratio of investments that led to an exit, which is a primary goal of all VCs. As secondary metrics, we also focused on each firm’s lead investor-to-exit numbers, as well as total fund size, among others.

Choosing the top venture capital firms is highly nuanced, as firms can be set apart by myriad variables. Which firms are considered the top venture capital firms by a company targeting investment can also come down to the categories each invest in. For example, a startup in the healthcare space will want to focus on VC firms that deploy investments in its industry, while a startup in the mobile space may focus on different investors altogether.

The data used to create this article was sourced from a variety of different institutions and resources. Primary metrics were gathered using the databases provided by Crunchbase Pro, with secondary metrics coming from PitchBook Data as well as each firm’s own publications.

Bottom Line

There are many venture capital firms, and choosing the top firms is highly qualitative. We’ve focused on the investments-to-IPO metric as a measurement of success; however, many different variables go into choosing the right venture capital firm, including its investment portfolio, available funding, and appetite for early-stage versus late-stage growth companies.