Norwest Venture Partners announced Tuesday it has closed its largest fund ever, a $3 billion pool it will deploy over the next two to three years that brings its total assets under management to $12.5 billion.
Based in Palo Alto and San Francisco, the venture capital firm focuses on “transformational businesses” in four sectors: health care, consumer products, enterprise solutions and India as a region.
Norwest said it has already invested in 13 startups with capital from this new fund. That includes three Bay Area startups — Babylist, Connect the Dots and Habu — focused on consumer products, AI and software, respectively.
The fund, Norwest Venture Partners XVI LP, is the firm's 16th, coming amid a surge of VC activity in Silicon Valley and across the nation. Its last fund, a $2 billion effort, closed in November 2019, shortly before the pandemic began.
"This is a transformational time in our history," said General Partner Ryan Harris. "We as a partnership, when Covid really hit in March 2020, had to sit and really carefully think about who we are and what do we change and how is it that we're going to contribute to the world and how is it that we're going to grow companies?"
Ryan, who has been with the firm since 2010 and has a degree in medicine from UCSF, said the pandemic left conflicting realities in health care. On the one hand, telemedicine services accelerated for some people and allowed for remote care. On the other hand, fewer people sought care for nonemergency health issues.
For Harris, who studied health research and policy at Stanford and oversees investments in growth equity with a focus on health care, the next step in health care will be bridging the gap between remote and in-person care.
"What's becoming clear is that the models that tend to work in health care, the transformational models, are ones that synergistically blend the online and offline models," Harris said. "You can't get your teeth cleaned online. But you can do emergency assessments of what's happening with you online."
Even in the mental health space which has seen a lot of movement toward remote care, patients with the most critical needs still need to been treated in person, Harris told me.
Today the firm also formalized a longstanding tenet of its investing strategy by announcing a commitment to investing in startups with a focus on environmental, social and governance (ESG) standards — including diversity, equity and inclusion.
The policy states that later-stage companies the firm invests in will be expected to prioritize and make progress on ESG goals more quickly than earlier-stage startups. It is also applying these standards to itself.
"We and our affiliated investment funds will also apply the policy to our internal operations, based on the belief that effective ESG management begins with diverse and inclusive governance and team environments," according to the policy.
The firm told me it has nearly doubled the number of female-founded startups that it has invested in over the past two years to 52. And while it didn't provide similar figures for other underrepresented founders, the firm said it is also working to increase diversity on portfolio company boards and has established working groups and committees that are dedicated to increasing DEI outcomes. It also supports organizations like BLCK VC, a nonprofit supporting Black investors, and the Synergist Network, an organization supporting female investors.
