Accel Partners is known in the industry as a firm that embraces a competitive spirit within its ranks and with other firms. While not as old as some of its fellow VC firms, Accel Partners has set several precedents since its founding in 1983. Two years after its launch, Accel Partners set up the first ever telecommunications fund. In 1993, Accel chalked up another notable, if trivial, first in becoming the first venture capital firm with a site on the World Wide Web. Accel launched the first ever Internet venture capital fund: Accel Internet Strategic Technology fund in 1995. Since then, Accel has launched 2 more funds dedicated to Internet investing.

Investment Strategy: making Microsoft look good

While the firm offers financing to companies at all stages of maturity, from seed through bridge financing and buyout, it seems to have taken a particular interest in emerging companies through its Internet Technology Funds. Accel Partner's Internet Technology Fund II drew attention as the second ever formed from capital provided by major technology partners. Compaq, Microsoft, and Lucent Technologies all chipped in, thereby creating a stark contrast to Kleiner Perkin's Java fund, which counts Microphobes Netscape, Sun Microsytems, and Oracle as partners. All rivalries aside, Microsoft's investment prompted some head-scratching on the part of industry watchers. Upside's ebullient Tish Williams noted: "As in all Microsoft dealings, we have to first guess 'PR Ploy.' Gates gives Accel $10 million to invest, showing his good faith in Silicon Valley and technology competition. The DOJ gets amnesia, Janet Reno heads off to Aruba, global warming ends, and world hunger is over." Microsoft returned as an investor for Accel's Internet Technology Fund III. In December 1999, Accel announced the fund had raised $120 million from corporations like Microsoft, Nortel Networks and Disney, as well as 50 top company executives, including Michael Dell of Dell Computers.

Two-pronged portfolio

Accel Partners focuses its investments in two areas: communications and Internet & Intranet. The firm's communications portfolio sub-divides into three categories: networking and telecommunications, optical communications, and communications services. Within the communications area, Accel's investments during 1999 included $17 million of early-stage financing for Amber Networks (a company which offers broadband IP access systems) and $12 million of early-stage financing for Noosh Communications (a company which offers communications services for printing). Accel's Internet & Intranet investments are divided into 2 categories: Internet software & services, Intranet and enterprise and rich media. For the Internet and Intranet sector, investments in 1999 included $29 million of start-up financing for Desktop.com (an Internet application platform company), $14.3 million of start-up financing for Fort Point Partners (an e-commerce services company), and $3 million of early stage financing for Arbor Software (a decision support software company).

In June 2000, the company announced its biggest fund to date, a $1.6 billion behemoth which will focus, not suprisingly, on Internet infrastructure, optical networking and digital communication services. Once these funds are doled out, the company will have about $3 billion in investments.

Partners: in the news