The Boston venture firm General Catalyst has raised nearly $1.4 billion for its latest investment fund, another sign of the escalating competition among venture firms as money continues to flow into the industry from investors looking for big returns.
General Catalyst reported the funding in a recent filing with the Securities and Exchange Commission . Company officials did not respond to requests for comment.
One of the region’s best-known venture firms, General Catalyst was an early investor in companies including Airbnb, Snap, HubSpot, and Warby Parker. The fund comes as venture firms are facing seemingly insatiable demand from pension funds, endowments, and foundations that form the core of their investor base.
“Oftentimes, when you see a fund closed at $1 billion, that fund could have been $2 billion if they accepted all of the interest that was out there on behalf of investors,” said Mike Larsen, managing director at Cambridge Associates, an investment firm that serves institutional investors.
Many venture-backed companies are delaying public offerings of stock and instead are raising ever-larger amounts privately — leading to a proliferation of once-rare “unicorns,” or private companies worth more than $1 billion. That in turn has forced venture firms to continue investing in them if they want to stay involved as the stakes grow higher.
And now, Larsen said, traditional venture capital firms are competing with corporate investors, sovereign wealth, and mutual funds that want in on the next Uber and Airbnb.
Meantime, venture firms are finding plenty of interest from large investors that are looking for better returns than what they can get in the stock market.
“Some of the typically public market investors have been crossing over in search of growth,” said Kirsten Morin, co-head of global venture capital at Aberdeen Standard Investments, a global asset manager.
PitchBook, which follows the industry, said the new General Catalyst fund is the largest in Boston in more than a decade. Last month, Boston-based Battery Ventures announced it had raised $1.25 billion in two funds.
And the numbers have been even bigger out West. New Enterprise Associates in Silicon Valley raised $3.3 billion last year, and The Wall Street Journal reported in December that Sequoia Capital was looking for $5 billion in an upcoming fund.
However, those gigantic pots of money look like peanuts compared with the $100 billion being spread around by the Japanese conglomerate SoftBank.
General Catalyst last raised a fund in 2016, when it took in $845 million. The firm is active in the Boston area but also has a significant West Coast presence. It has offices in Cambridge, San Francisco and Palo Alto in California, and New York.
If raising money is relatively easy for venture capitalists these days, analysts say there are pitfalls when it comes to investing it. Investors are going to want the company to use the money quickly to get returns rolling in soon.
Cameron Stanfill, a venture analyst at PitchBook, said the question for General Catalyst will be: “How are they going to deploy all this in a timely enough fashion without overpaying and just throwing cash onto a deal that maybe messes up the economics?”
But he noted that with new fund coming so close on the heels of the 2016 round, it’s likely investors are happy with how General Catalyst has handled their money.
Andy Rosen can be reached at email@example.com.