Kleiner Perkins Caufield & Byers is splitting in two, a surprise rupture that reflects the storied venture-capital firm’s struggle to balance making smaller bets on young startups and jumbo investments in companies on the cusp of initial public offerings.
The Silicon Valley firm’s growth-investment team focused on later-stage funding is leaving the firm, spurred partly by internal differences over investing strategy and resulting in the departure of famed former Morgan Stanley analyst Mary Meeker. The split is the firm’s most striking move in its four decades, restoring it to its smaller, early-stage roots, best known for initial bets in Google GOOG, -0.24% GOOGL, -0.35% and Amazon.com Inc. AMZN, -0.99%
The move is indicative of the changing fortunes in venture capital, as funds over the years ballooned to levels not seen since the dot-com boom and startups stayed private longer with money that in past eras would have been raised in the public markets. Big firms such as Kleiner have sought to wrangle both ends of the startup market, adding growth funds to capture larger pre-IPO deals that traditional early-stage vehicles weren’t designed for.
At Kleiner, tensions brewed between the two sides of the firm over investing approaches, particularly as the flagship early-stage fund’s hits have been meager, relegating the firm’s once-stellar returns to a middling rank in the market, according to people familiar with the matter.
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