It used to take a while to amass $5 billion in assets under management. Not so for Lead Edge Capital, a 12-year-old California- and New York-based growth-equity firm that just surpassed that amount, closing its sixth and newest fund with a whopping $1.95 billion in capital commitments from roughly 500 investors.
The pool follows a $950 million fund that Lead Edge closed in October 2020 — also from around 500 investors — and which brought the firm’s assets at the time to $3 billion. (Lead Edge also runs a $150 million “public-only” fund that it created at the behest of its investors last year, according to firm founder Mitchell Green.)
Even in a day and age where money is flowing freely to tech investors — as mentioned on Monday, venture firms are managing more money than outsiders may realize — the amount is notable.
The firm credits recent exits in part, including the fashionable medical-wear retailer Figs, which went public last May; the direct listing of workplace collaboration software company Asana last September; the highly successful IPO of dating service Bumble in February of last year; and the sale in October 2020 of the security monitoring company Signal Sciences to the publicly traded outfit Fastly for $775 million in cash and stock. (According to Crunchbase data, Signal Sciences had raised roughly $60 million from investors.)
Earlier returns came via Alibaba’s IPO, Spotify’s IPO and the sale of Duo Security to Cisco. Green has said the firm invested $300 million into Alibaba in the years leading up to its IPO; more than $150 million into Spotify in the years leading up to its IPO; and more than $90 million into Duo.
Big bets aren’t unusual for Lead Edge, which has long prided itself on leaning into the investments it makes. “In the private world, we’ll run a fund with, like, 20 investments in it,” Mitchell told us during a podcast conversation in January. When it comes to public companies — which Lead Edge backs with its public company fund, the occasional special purpose vehicle, and also up to 25% of its main fund — the team takes an even more distilled approach. “You should think of our public fund as wanting to own 5 to 10 positions. We run it concentrated.”
Not all of these investments have panned out as planned. Though Lead Edge poured $160 million over the years into the Alibaba affiliate Ant Group — which was expected to become the world’s largest IPO in the fall of 2020 — that offering was completely derailed by China’s securities regulator and it’s unclear if Lead Edge will ever get its money out.
Green, who cut his teeth as an associate at Bessemer Venture Partners and at a Tiger Fund-affiliate called Eastern Advisors, said he isn’t concerned. When we talked in January, he said that Lead Edge had not sold any shares, had no interest in selling its shares, and was even thinking about “buying more of it.”
Indeed, Green and his team see China-based startups as a massive buying opportunity precisely because they’ve been so hard hit by China’s tech crackdown. That has seen them snap up secondary shares of TikTok’s parent company Bytedance from earlier backers and invest more money in Alibaba, which is “ridiculously cheap right now,” as Green noted during our conversation. (For months, Alibaba’s shares have been trading at around $110 each, roughly the same price where they traded two months after the company’s 2010 IPO; days before China yanked the $37 billion IPO of Ant Group in November 2020, they were trading at $310 per share.)
Clearly, the firm’s gun-slinging approach appeals to Lead Edge’s many backers, including former Xerox CEO Anne Mulcahy, former Charles Schwab CEO David Pottruck, and former ESPN CEO Steve Bornstein. (Even a neighbor of this editor, upon hearing that recent podcast, disclosed that Green is managing some of his money and said he has been happy with his returns.)
Said one limited partner — Bill Grabe, a retired managing director at General Atlantic — to the WSJ in 2017 of Green: “It’s the energy, right? I have never met a guy that talks so fast and seems to make sense.”
Green, Grabe added, has “made me a lot of money.”