Investors are flocking to Silicon Valley’s venture capital funds, but they’re taking a wait-and-see approach on a sector with a lot of challenges.
The 2nd-largest tech fund in the world, StumbleUpon, has the fastest-growing share price of any VC firm, up more than 60 percent since March, and its investors are taking a cautious approach to the sector.
The fund has raised more than $5 billion from more than 100 investors since it began offering in 2015, according to data from FactSet.
Investors have been watching the fund closely because it’s one of the best performing tech funds in the industry, up about 25 percent over the past year.
StumbleOn also leads the industry in the percentage of equity investors, with a 20 percent average return.
In its first two years, the fund’s average return has averaged 18.4 percent.
The company, founded in 2014 by two students at Stanford University, has been an online community that provides a platform for startups and investors to share ideas.
The fund’s success has raised questions about the sustainability of a fund that has been focused on investing in tech and technology companies since the early days of the Internet.
It’s not clear whether StumbleHere’s growth will last.
The investment firm has a long history of underperforming.
In the first half of 2018, it failed to close on a $1 billion Series B round led by Goldman Sachs.
Investors had hoped that the firm would be able to take advantage of a rebound in the tech sector.
Investors may be disappointed with the fund this year.
In March, Stumbleshare announced a deal to buy Instagram for $1.6 billion.
The deal closed the company’s initial public offering.
The IPO was a failure, and the fund is expected to take a hit as a result.
Stumbleshere’s investors have been holding off on any more big-ticket investments, including a new round of stock purchases, said Jeff O’Brien, Stumshere’s founder and chief investment officer.
“There’s been some skepticism about Stumbles here,” O’Connor said.
“I would expect there to be some skepticism, but it’s a fund where we do a lot in-depth analysis.”
Stumbleshere is one of several large tech funds that have raised money for the past few years, but the majority of its funds have underperformed.
Some investors have even expressed concerns about Stumblehere’s ability to deliver on its growth targets.
Investment firm Kleiner Perkins Caufield & Byers, a venture capital firm that’s known for helping investors turn their ideas into companies, recently raised $250 million in venture capital from more then 30 investors.
In April, it said that Stumblesomething is a “high risk, high reward investment” that can’t be guaranteed to succeed.
The Kleiner team and Stumblesheres founder, Michael Moritz, both said in a statement that the fund has proven its viability, and they expect the fund to “continue to invest aggressively and consistently” to deliver value.
But the fund hasn’t performed as well as its peers, including more established VC funds like Benchmark, Sequoia Capital, Sequon Capital, and Draper Fisher Jurvetson.
Investors are still skeptical about the fund because of the high-risk nature of the fund.
The stakes aren’t just in the technology sector, said O’Conner, who previously worked at Stumbleson.
There are also other sectors in tech that are struggling, such as healthcare and healthcare-related technology.
“The healthcare space has been struggling for some time, and that’s why I see it as a high-value opportunity,” he said.