Redpoint raises $400 mln Web services, green fund

Tue Feb 9, 2010 1:00am EST

* New Redpoint IV fund targets Internet and clean tech

* Firms says it closed fundraising on schedule

By Alexei Oreskovic

SAN FRANCISCO, Feb 8 (Reuters) - Redpoint Ventures said on Monday it has raised $400 million for a new venture capital fund aimed at fast-growing Internet services, including social networking and mobile products, as well as clean technology companies.

The Menlo Park, California firm's latest fundraising comes on the heels of one of the worst years on record for the venture capital industry and amid continuing challenges in the initial public offering market.

But Redpoint Founding Partner Geoff Yang said the November IPO of Fortinet Inc (FTNT.O), a company it had backed, and the recent acquisitions of several of its portfolio companies, had put the firm in a good position to tap investors for a new fund.

Yang said the firm began talking to investors about a new fund last fall and closed the funding round on schedule with more demand from investors than it could accommodate.

"We were prepared for a much tougher environment based on all the horror stories we had read and if you look at the macro conditions," said Yang.

The new fund, dubbed Redpoint IV, will focus on early stage companies involved in social networking, mobile computing, cloud computing and clean technology.

Partners at Redpoint, which was a backer of News Corp's (NWSA.O) MySpace, said that social networking and mobile services designed for smartphones like Apple Inc's (AAPL.O) iPhone are transforming industries from entertainment and e-commerce to video games.

While acknowledging that the business models for many social networking sites are not yet fully developed, they stressed that many social media firms are already generating significant revenue.

Mark Andreessen, a board member at Facebook, the world's No. 1 social networking site, said in July that the company was on track to generate more than $500 million in annual revenue.

"I think maybe people would be surprised how real these businesses are," said Yang.

In 2009, venture capitalists made $17.7 billion in investments -- a 37 percent drop from the year before and the lowest level since 1997, according to a report by PricewaterhouseCoopers and the National Venture Capital Association.

(Reporting by Alexei Oreskovic; Editing by Richard Chang)

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