"When we created Benchmark," firm literature says, "we rewrote the book on venture capital." Although some VCs might beg to differ, Benchmark Capital certainly has earned its bragging rights since its founding in 1995. Its $5 million investment in eBay, a 22 percent share, turned into $2.5 billion after the online auctioneer's public offering. In light of this rather impressive home run, many industry observers cooed that Benchmark would overtake Kleiner as the premiere venture capital firm. An unfazed John Doerr noted to Business Week: "You're only as good as your last fiasco." Red Herring recently described "Benchmark envy" as a desire by the more established firms to match Benchmark's dynamic personality and stellar returns. Benchmark has certainly impressed many with its non-hierarchical structure. All partners share all proceeds equally. In the eBay deal, for example, Benchmark partners earned $120 million.

Big-leaguers

Benchmark reached another milestone recently that places them in the elite stratosphere of VC firms. The company closed a $1 billion dollar fund in September 1999. Most of the money - $650 million - came from institutional investors, with the other $350 million coming from Benchmark partners and Silicon Valley high rollers. Benchmark will get a 30% stake in the fund's returns. Benchmark also expanded internationally in March 2000. The company launched a $500 million fund devoted exclusively to European investments and opened an office in London to manage it. "The opportunity to help the most talented entrepreneurs build great companies in Europe over the next several years is a great one," general partner Bruce Dunlevie said in a release at the time of the fund's inception.

Investment strategy: slugging percentage, not batting average

The success of the eBay investment seems to mark Benchmark's investment strategy. While describing his firm's outlook to Techweb, general partner Andrew Rachleff spun yet another of venture capital's many baseball metaphors. "We want a great slugging percentage, not a great batting average." He later added, "We'd rather hit .215 with 50 home runs and 100 RBIs, than hit .300 with a few home runs." (Note to non-baseball fans: slugging percentage = number total bases per at bat. Benchmark is looking for several great investments, as opposed to many that have O.K performance.) Rachleff later told Red Herring "We're looking for visionaries, not operating execs, at our stage." While Benchmark indicates a willingness to invest as little as $100,000, the firm's investments typically range within the $2 million to $4 million range. Finally, in addition to rewriting the book on venture capital, Benchmark prides itself on providing guidance to its investees without threatening their autonomy. One entrepreneur told Business Week: "My hunch on Benchmark was that it would be much more constructive and cooperative in helping us build the company. The rap on Kleiner is that they pretty much do what they want to do."

Portfolio: eBay and the others

Benchmark's all-tech portfolio breaks down into seven areas: application services (Critical Path, PointCast, When.com); consumer devices (Handspring, Palm Computing); e-commerce (Ariba Technologies, Art.com, eBay, Sparks.com); networking equipment (Alacritech, Juniper Networks); semiconductor (Abrizio); software (Allegis Broadbase Information Systems, Red Hat Software, Xantel); and telecom services (Equinix, NorthPoint).

Partners: All for one and one for all