Even Benchmark Goes Late-Stage

The “house” of Benchmark is widely regarded as one of Silicon Valley’s most successful VC firms. Among its many notable investments, Benchmark was an early backer of Cerebras Systems — a company that Fabrica Ventures also identified and invested in through the secondary market in 2022.

Benchmark has consistently raised relatively small venture funds — typically between $400M and $500M — to invest in early-stage startups. The firm’s model emphasizes concentrated portfolios and close involvement from its partners, each of whom typically serves on only a handful of portfolio company boards, allowing for deep engagement with founders.

But this week, Benchmark announced that it is raising its first growth-stage fund, targeting $1.25B in commitments.

Several factors help explain this shift toward late-stage investing:

* The tech IPO market has been largely frozen since 2022, creating a massive backlog of IPO-ready startups. Liquidity has been deferred, not destroyed

* The venture cycle has lengthened dramatically. Roughly 40% of unicorns are now more than nine years old, approaching the typical 10-year lifespan of a VC fund

* Valuations for late-stage startups have reached levels previously unseen in VC. Benchmark, as an early-stage investor, has consistently doubled down on its winners, but as these companies remain private for longer, the capital required to preserve ownership can easily run into the hundreds of millions of dollars per company

* Skyrocketing capital needs from AI startups. As leading AI companies raise multi-billion-dollar rounds, venture firms increasingly need larger funds to support their portfolio companies through later stages of growth

In reality, Benchmark’s move into growth investing did not begin this week. Earlier this year, the firm raised a $225M SPV to invest in Cerebras at a valuation of $23B, roughly half of where the company trades today.

Conclusion

Benchmark is not alone in making this shift. Several elite early-stage firms, including Khosla Ventures, have increasingly moved into growth-stage investing to support their winners for longer and capture a larger share of the value creation.

This evolution was inevitable. Welcome to Fabrica’s club, Benchmark.