In a move that underscores the continued influx of capital into venture capital funds, Scale Venture Partners has announced the successful closure of its eighth fund with $900 million in committed capital. This latest fund is the largest raised by the firm since its inception in 2000 and marks a significant milestone for the company.
Consistent Fundraising Cycles
According to partner Rory O’Driscoll, Scale Venture Partners has maintained a consistent fundraising cycle of every two years since 2016. However, with the closure of this new fund, the firm is looking to return to a more traditional three-year cycle. This decision was driven by the need for a larger fund size that can accommodate the firm’s investment objectives.
"We’d love to get back to a more normal two-and-a-half, three-year cycle," O’Driscoll explained in an interview with TechCrunch. "Our pace has been very consistent though deal size wasn’t all that good."
Investment Strategy
Scale Venture Partners is known for its focus on enterprise software and has invested in several legacy SaaS companies, including Box, DocuSign, HubSpot, RingCentral, and Bill.com. The firm also invests in younger companies, such as BigID, Dusty Robotics, and Honeycomb.
The new fund will be managed by a team of experienced partners, including O’Driscoll, Alex Niehenke, Stacey Bishop, Andy Vitus, Ariel Tseitlin, Jeremy Kaufmann, Eric Anderson, Sam Baker, Noah Gross, John Gianakopoulos, and Javier Redondo. The firm’s investment strategy will remain largely unchanged, with a focus on cloud and SaaS software companies at the Series A and Series B stages.
Cognitive Applications: The Next Generation of Software
According to Niehenke, cognitive applications are emerging as a new wave in software development. These applications leverage artificial intelligence and machine learning to provide more sophisticated solutions for businesses. Scale Venture Partners sees this trend as an opportunity to invest in startups that are building the next generation of software companies.
"We’re not abandoning the cloud," Niehenke emphasized. "In many ways, cognitive applications are just bringing that further. If we think about where the next decade is going to be, because that’s the time frame that we’re investing over, we just see an increasing percentage of our deals really focused on those cognitive applications."
Deployment Strategy
The firm plans to deploy capital from the new fund starting in early 2023. However, given the unpredictability of deal-making, Scale Venture Partners has chosen to raise its fund sooner rather than later. This will enable the firm to be more responsive to investment opportunities and minimize the risk of missing out on potential deals.
Conclusion
The closure of Scale Venture Partners’ eighth fund with $900 million in committed capital is a testament to the firm’s reputation as a leading venture capital investor. With its consistent fundraising cycles, experienced team, and clear investment strategy, Scale Venture Partners is well-positioned to continue making a significant impact in the world of enterprise software.
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