Sevin Rosen Funds
| Company type | Private |
|---|---|
| Industry | Venture capital |
| Founded | January 1, 1981 in Dallas, Texas, United States |
| Founder | L. J. Sevin, Benjamin M. Rosen |
| Fate | Winding down operations |
| Headquarters | Dallas , United States |
Area served | United States, international through subsidiaries and portfolio companies |
Key people | John Bayless, Steve Domenik, John Jaggers |
| Products | Venture capital investments (early-stage technology startups) |
Number of employees | 35 (as of 2003) (2003) |
Sevin Rosen Funds (SRF) is a venture capital firm headquartered in Texas, established in 1981 in Dallas by founders L. J. Sevin, formerly an engineer at Texas Instruments, and Benjamin M. Rosen. The firm gained recognition for supporting influential companies such as Compaq Computer Corp and Electronic Arts, playing a crucial role in the 1980s personal computing boom and significantly impacting venture capital activity in Dallas. At one point, SRF was among the foremost investors on the US West Coast.
Prominent leaders within the firm have included John Bayless, Steve Domenik, and John Jaggers. Despite its early successes, SRF has not launched a new fund in over sixteen years and is currently undergoing the process of winding down its operations. The company’s investment approach concentrated on early-stage ventures, utilizing strategic guidance from its founders and leadership team to establish a strong position within technology startups.
SRF’s organizational framework supported international activities through various subsidiaries and portfolio companies, focusing on market expansion and growth in the technology sector. The firm's legacy is marked by significant business accomplishments and recognition as a pioneering force in venture capital investing.
Investments
Prior to co-founding Sevin Rosen, Ben Rosen worked as a technology analyst at Morgan Stanley, where regulations regarding conflicts of interest restricted his capacity to invest in companies he endorsed, including Apple. After departing Morgan Stanley, he made a lucrative $20,000 investment in VisiCorp, which he eventually sold for $800,000. In 1980, Rosen joined forces with L. J. Sevin, co-founder of semiconductor firm Mostek, which had been acquired for $345 million. Their initial plan was to establish a semiconductor company; however, they pivoted to raising $25 million for SRF’s first two venture funds with assistance from Thomas Unterberg. These funds delivered an impressive 75% annual compounded return, fueled by early stakes in Compaq and Lotus Software. Jon Bayless became part of the team in 1981, with subsequent funds including his name.
Since 1995, Sevin Rosen has invested in more than 542 ventures, producing returns amounting to billions of dollars. Key investments encompass Alder Biopharmaceuticals, Capstone Turbine, Ciena, Citrix Systems, Compaq, Cyrix, Cytokinetics, Electronic Arts, NetLogic Microsystems, Silicon Graphics, MetaCarta, Splunk, Cypress Semiconductor, Vitesse Semiconductor, Slacker, Wayport, Inc., XenSource, and YouSendIt. The portfolio underscores the firm’s emphasis on technology industries such as semiconductors, software development, and telecommunications.
By April 2003, Sevin Rosen had successfully raised eight funds, managed assets totaling $1.6 billion with over $1 billion deployed into investments, and maintained offices in Dallas and Palo Alto staffed by nine general partners and thirty-five employees. The firm specializes in ventures involving complex technologies with elevated technical risk and prefers to be the initial investor in startups, prioritizing strategic leadership within emerging sectors like semiconductors and telecommunications.
Controversy: Funds IX & X
SRF secured $305 million for Fund IX in 2004. At that juncture, John Jaggers stressed the importance of restricting venture capital allocations to achieve outstanding returns, voicing concerns about the surplus of capital within the sector. By October 2006, under 20% of Fund IX's capital had been deployed, and SRF returned over $200 million in commitments during the fundraising efforts for Fund X.
In October 2006, partner Steve Dow told the New York Times that "the traditional venture model seems to us to be broken," igniting a discussion across the industry about whether excessive capital was pursuing too few investment opportunities. While some industry participants concurred, others criticized SRF for not evolving, pointing out that all partners were over 40 years old and implying a lack of innovation in its strategic approach.
In 2008, the California-based partners Steve Dow, Nick Sturiale, John Oxaal, and Steve Domenik separated from the Dallas group and were named "partners emeriti." By 2014, Jon Bayless set out to raise as much as $150 million for SRF’s first new fund after an eight-year hiatus.
By 2018, SRF’s team page showed eleven members; six had retired or moved on to new ventures such as Workhorse Capital, Ignition Capital, and CIC Partners. Some partners still list SRF as their current affiliation on LinkedIn, although Jon Bayless also promotes his second fund, Bayless Capital.
Offices
Sevin Rosen’s Dallas location in Two Galleria Tower served as a central hub for startups and investors and housed the region’s largest cluster of venture capital firms until the company reduced its presence and exited in late 2009. Additionally, the firm shuttered its Silicon Valley office in Palo Alto in 2008.
Community
Sevin Rosen created and funded an award at Berkeley honoring "innovative technical achievement with potential for entrepreneurial success," alongside providing a grant that supports membership in the Austin Technology Incubator, demonstrating its dedication to promoting innovation and entrepreneurship.