True raises $290 mln amid improved environment for venture capital

SAN FRANCISCO, June 4 Wed Jun 4, 2014 3:28pm EDT

SAN FRANCISCO, June 4 (Reuters) - True Ventures said it raised $290 million for its fourth venture fund amid a climate of greater optimism for venture capital, which is digging itself out of an era of low returns and investor discontent.

True specializes in early-stage startups, investing in companies ranging from Automattic, which is behind online publisher WordPress, to book-oriented social network Goodreads, acquired last year by Amazon.Com Inc.

Returns for venture capital are steadily improving, helping to bolster the sector. Over the 10 years to Dec. 31, venture capital has returned 9.7 percent annually, compared with 7.4 percent for the Dow Jones Industrial Average, according to a report from consultancy Cambridge Associates.

Until last year, 10-year venture returns had lagged the stock market, reports from Cambridge Associates show.

While big venture firms that backed blockbuster companies such as Facebook Inc did not suffer when raising cash, smaller firms have had a tougher time in recent years.

A currently hot market for initial public offerings and acquisitions is now helping. Companies backed with venture cash held 36 initial public offerings in the first quarter, more than any quarter in at least five years, the National Venture Capital Association said in April.

Some 58 venture funds were raised during the first quarter, 10 more than a year earlier, the NVCA said.

True raised a $226 million fund in 2012 and a $213 million fund in 2008. The firm was founded in 2005 and has about 125 companies in its portfolio, including activity tracker Fitbit and drone maker 3D Robotics. (Reporting by Sarah McBride. Editing by Andre Grenon)