Light Street Capital Management is raising money for a new venture capital fund.
The Tiger Grandcub led by Glen Kacher is passing the hat for Beacon III, its third VC fund, according to two people knowledgeable about the launch. Details such as fundraising targets, investment timeline, and terms remain undisclosed.
Light Street declined to comment.
The hedge fund firm launched Beacon I in 2019 amid a hot market for private investing. It has been a huge success, generating an annualized internal rate of return of 43 percent, two sources say. Investments in Beacon I include messaging platform Slack, Pinterest, Unity Software, and software and fintech company Toast.
Light Street launched Beacon II, a late-stage growth fund, in 2021. The fund would seek to invest about $25 million apiece in companies that are two to four years from an initial public offering, says an investment letter obtained by Institutional Investor at the time. It also planned to offer “significant” co-investment opportunities, with key themes in e-commerce, fintech, cloud application, cloud infrastructure, and security.
According to an ADV filing, Light Street’s VC funds stress themes that the firm believes are reshaping technology and media and extend to sectors where technology disrupts industry-competitive dynamics. On top of the sectors that Beacon II targets, these industries include semiconductors and emerging markets.
“The VC funds also focus on investments in private technology companies with proven business models,” typically those with at least $50 million in run-rate annual revenue, Light Street adds in the document. “But a VC fund could invest in companies with smaller revenues.”
It says the key investment criteria are a large total addressable market, network effects, strong barriers to entry, global scope, significant intellectual property, and brand identity.
Light Street has been quiet in the private market in recent years. It has made no new private investments this year and had just two in 2024, according to Crunchbase. Its activity peaked in 2019, when it made nine new private investments.
The hedge fund was rocked by the tech bear market several years ago. After gaining 61.7 percent in 2020, it lost 26 percent and 54 percent in the two ensuing years, respectively.
Since then, it has been on a tear as it tries to return to its high-water mark. The fund surged 45.7 percent in 2023 and 59.4 percent in 2024. This year, it is up 11.5 percent through September.
Despite this three-year rebound, Light Street managed only $796 million as of December 2024, according to a regulatory filing. This was down from $3.25 billion at the end of 2020.
