Slowdown? What slowdown? Menlo Ventures bags $761M for its largest-ever opportunities fund

Startup founders and laid-off tech workers know all too well about the funding slowdown of 2022, but the boom times aren’t over for everyone. U.S. venture firms in particular are amassing more cash than ever, and Menlo Ventures is perpetuating the trend.

The 46-year-old Bay Area firm, known for its early bets on companies like Uber and Warby Parker, told regulators this week that it has secured $761.4 million for its third “special opportunities” fund. It appears to be Menlo’s largest such fund to date.

Menlo did not respond to requests for comment on its plan for the money, but an earlier statement offers a hint. When Menlo closed its initial special opportunities fund in 2016, the firm said it would use the cash to back the “most promising entrepreneurs and companies at the Series B and C stages.”

Opportunity funds and similarly named vehicles can mean different things to different firms, which makes it tricky to know exactly what Menlo plans to do. SoftBank, for example, launched a $100 million opportunity growth fund in 2020 to exclusively “invest in companies led by founders and entrepreneurs of color,” but that doesn’t seem to be what Menlo is up to. Of course, the firm could simply respond to my emails, but never mind that!

A January filing indicates that Menlo once sought to raise $750 million for its third special opportunities fund; it wound up raising about $11 million more, from 29 undisclosed investors, per the firm’s latest filing. The fund marks a 53% jump from Menlo’s previous special opportunities vehicle, which closed at $496.7 million in 2019 and was also oversubscribed. Menlo’s funds often tap out at around $500 million, per PitchBook data and filings with the Securities and Exchange Commission. In 2020, the firm revealed its fifteenth early-stage fund, a vehicle it closed with $500 million in capital commitments.

To date, the venture firm has backed hundreds of companies across numerous sectors and stages. Recent Menlo-led deals include a $37 million round for Polly, a SaaS startup focused on the mortgage industry, as well as a $19.5 million raise for Eppo, maker of software testing tools. According to its website, Menlo has backed more than 75 public companies and has a portfolio that includes over 160 M&A deals and more than $5 billion under management.