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Gilt Groupe co-founders Alexandra Wilkis Wilson and Alexis Maybank. Gilt Groupe is among the companies in which Norwest Venture Partners has invested.

Norwest’s new $1.2 billion fund ‘allows us to weather the storm’

May 13, 2014

FORTUNE -- Norwest Venture Partners announced on Tuesday the formation of a new, $1.2 billion fund focused on early- and late-stage venture and growth equity investments.

It's the twelfth such fund for the 53-year-old firm, which is headquartered in Palo Alto, Calif. and invests in an array of technology sectors, including business/IT, consumer, financial services, and healthcare. The announcement brings the firm's total capital to about $5 billion, and comes after a year in which 11 companies in the firm's portfolio were acquired or made an initial public offering.

"We have a longevity that we bring to the table," NVP partner Matt Howard tells Fortune. "We're sticking to our process, which has quite frankly worked really well for us over the years. Our firm is stage-agnostic -- we write large checks, we write small checks. And those small ones are just the beginning of the relationship. We just had an exit for a company after 14 years. It allows us to remain committed."

The firm has been on a roll as of late with more than a dozen exits in 2013 and 2014. Among them: the cybersecurity firm FireEye (feye), the digital coupon company RetailMeNot (sale), and the network services company Virtela, which sold to NTT Communications for $525 million. It also profited from a number of high-profile acquisitions, including Apple's 2013 buy of wireless semiconductor company Passif, Palo Alto Networks' 2013 purchase of Morta Security, and Spotify's 2014 acquisition of music intelligence company The Echo Nest.

"The big fund allows us to weather the storm and preserve those relationships," Howard says. "We think that what this country's gone through -- the Great Recession, 9/11, mortgage-backed securities -- was a tremendously difficult period. We think we're in a stronger position now, but one of the beauties of being a private investor is building without being whipsawed by the public market. When stocks are turbulent, it's good to be a private investor."

Norwest wants "to be active in all our food groups" and use the new funds to invest in a diverse selection of technology companies, Howard says.

"You try to build a great surfboard, you paddle out there in the ocean, and you can't always time the wave," he says. "You try to back fantastic entrepreneurs and comfort them with quality capital and build something that lasts. We invested in enterprise when enterprise wasn't hot. We did The Lending Club, the largest peer-to-peer lending platform, and I don't think anybody knew what that was about. You try to squint your eyes and back people that believe in the vision."

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