Money continues to flow into new venture capital funds. For example, in the past month Runa Capital, Learer Hippeau, Razor Edge Ventures, First Star, Th Crowd, Northzone, Django Capital and Kapor Capital all announced new funds.
Now it’s the turn of Scale Venture Partners, announcing that it has secured $900 million in committed capital for its eighth fund, the largest since it was founded in 2000. The fund was raised over 120 days over the summer, partner Rory O’Driscoll told TechCrunch.
Known for supporting enterprise software, the company was an early investor in some SaaS companies, including Box, Docusing, HubSpot, RingCentral and Bill.com. It has also invested in young companies such as BigID, Dusty Robotics and Honeycomb.
The timing of the new fund is right for the firm, which has raised new funds every two years since 2016.
“We want to get back to a normal two-and-a-half, three-year cycle, and that’s one of the fund’s aspirations,” he added. While the deal rate wasn’t that great, our speed was pretty consistent.
Scale is still investing from its seventh fund, and partner Alex Niehnke told TechCrunch that it plans to deploy capital from the new fund as early as 2023. Unexpected amount” So the company wanted to raise the money quickly so that in the fourth quarter if there were any entrepreneurs who would install the company, the money would be locked up and ready.
Fund VIII was backed by new and existing investors. O’Driscoll said the limited partners were on board with the new fund, though they wanted to make sure Scale wasn’t raising a bigger fund than it could successfully deploy.
“Fund size is the enemy of financial performance,” he added. “Our goal for this fund is to get north of 20 deals and be well diversified, across fields and timeframes.”
Subsequently, the company’s sixth and seventh funds were spread over two years, but they were making few deals. For example, he said that there are still four investments left in Fund VII and the last one will be deployed for some time in early 2023.
O’Driscoll said: “This fund is the right amount to achieve our goals and do something different.
Niehenke said no investments have been made yet from the new fund. However, he said the capital will deploy to cloud and SaaS software companies in Series A and Series B rounds in the same way as Scale’s previous funds.
However, he and O’Driscoll say cognitive applications are “the next generation of software companies,” and many of the investments will go into startups focused on that. In the past five years, the company has seen “a new wave emerge” around cognitive apps, and while Scale continues to invest in enterprise technology and cloud software, apps are “another layer on the cake,” Niehenke said.
“We are not abandoning the cloud,” he added. “In many ways, cognitive applications are bringing more of that. If we think about where the next decade is going to be, because that’s the time frame we’re investing in, we’re going to see an increasing percentage of our deals focused on those cognitive applications.”
Meanwhile, the fund is managed by O’Driscoll, Niehenke, Stacey Bishop, Andy Vitus and Ariel Tseitlin, as well as recently promoted partners Jeremy Kaufman and Eric Anderson. He also joined Sam Baker as principal, Noah Gross and John Giannacopoulos as vice presidents and Javier Redondo as principal.
