Tenaya Capital Closes ‘Oversubscribed’ $372M Fund, Seeks A New Kayak

Tenaya Capital, the venture fund spun out of Lehman Brothers in 2009 with a history of backing companies like Kayak, Palo Alto Networks and Zappos, has just closed its latest fund totalling $372 million — in its words, oversubscribed against an initial target of $300 million. Tenaya Capital VI is the company’s first fundraise independent of Lehman’s, with the two previous funds raised by the VCs for $300 million and $365 million.

The fund will be used to make investments in tech companies across a broad range of areas — from enterprise to consumer internet, as well as electronics and more — in their initial stages of revenue growth. Tom Banahan, the MD of Tenaya, tells me that the aim is to keep the range diverse. The average size of initial investments, typically made as a B- or C-round, will be between $5 million and $10 million. Tenaya may potentially also make earlier or later stage investment in portfolio companies, so the total amount invested in the lifetime of a company will be around $10 million to $15 million, it says.

Whatever the wider economic climate might be, right now is a still a strong time for tech. The news of this most recent fund for Tenaya comes right on the heels of August Capital closing a $550 million fund.

In terms of geographies, Banahan says that Tenaya has the option of investing up to 20 percent of the fund outside of the U.S., although it may not. The rest, he says, goes into Silicon Valley companies. It’s not for parochialism that this is the case: there are only five people at Tenaya and trying to cover too much would be “spreading ourselves too thin,” he says.

Although in the past Tenaya has invested in Wooga, the games company in Germany, for now, the main focus outside the U.S. is China. The company already has some holdings here — namely, the travel site Qunar, which Banahan calls “the Kayak of China.” He says that it’s growing so fast right now that it might be the next IPO target, although given that it’s also a main partner of Baidu, things could go in another direction.

Areas that Tenaya will focus on will follow from its past investment activities, and will cover enterprise software, consumer Internet, IT infrastructure, communications and electronics. Typically, Tenaya takes lead investor position when it makes an initial investment and likes to take board seats to act as directors or observers.

Banahan further tells me that there are certain areas that are catching their eye — and others that they are avoiding. “We have our eyes on companies in the cloud space and software-as-a-service, basically enterprise for the new generation of enterprises, looking at where the big shifts are coming,” he says.

On the other hand, in the area of consumer-facing technologies, “We probably won’t do much more ecommerce because that is difficult,” he admits. “It’s really hard to build another Zappos. Those guys were remarkable operators.” And mobile, it turns out, is an interesting but challenging area. “We have spent a lot of time looking at mobile and have chased a few things, but it’s a heated up area, so you need to be careful. But without a doubt it is the next titanic shift.” Travel investments, he notes, are “a little easier.”

The company has played a part in some very notable startups, including Cotendo, Endeca, InfoBlox, Isilon, Kayak (which just IPO’d last week), LifeSize Communications, ( Palo Alto Networks (also IPO’d last week), PowerReviews (acquired by Bazaarvoice), travel site Qunar, Wintegra, Zappos (now part of Amazon), Eventbrite and Wooga.

Tom Banahan, MD of Tenaya, says that its strong track record with these companies drove investors in past funds to come back for more, so the need to find new partners was not huge. “Our existing limited partners in Tenaya V came back strong in Tenaya VI,” he said in a statement, “which allowed us to target a small number of new limited partners.”

In total the firm has some $1 billion under management.