All of us at SoftTech are super excited to share that we reached a critical milestone for our firm: we have wrapped up our third fund, SoftTech VC III. Back in January 2011 we announced Fund III, with an initial $35M target, then increased it to $50M and at investors’ demand, agreed to bump it up to $55M before closing it, oversubscribed. We can also – finally – talk about it since we’re no longer fund raising and aren’t subject to non-sollicitation restrictions any more – yeah!
So why raise $55M, when our second fund was $15M? I learned a lot investing Fund II from 2007 to 2010, and figured that even for seed funds, outsized returns are generated by having the right level of ownership, and a meaningful level of follow-on participation, in your portfolio companies. We therefore upgraded our strategy from Access (“get in the good deals”) to Ownership (“buy/keep enough of each company that any positive outcome is meaningful to the fund”).
We now have an initial bite size of $400K (sometimes a bit less, sometimes a lot more) and will selectively invest our pro-rata, or buy up, in follow-on rounds of companies that are scaling well. Our roadmap is to invest in 60-ish deals over 3 years, and we are about 1/3 of the way there after one year of activity (23 deals since Fund III’s inception and already a number of follow-on’s). We will continue focusing on Silicon Valley, New-York, Boulder and SoCal – and will opportunistically invest in other geographies. Our key sectors are Mobile, Next-Generation E-Commerce and Cloud Services – but we’ll continue to be active in Monetization/Ad Network technology and Gaming as we always have.
I want to welcome, and thank, our brand new syndicate of institutional investors for backing us: Stepstone Group, affiliates of AMG National Trust Bank, Cendana Capital and Industry Ventures – as well a angel friends who joined us for the ride: Mitch Kapor, Steve Blank, Mike Arrington, Henri Moissinac, Geoff Ralston, Ben Smith, Oleg Tscheltzoff, Joshua Schachter, Loïc LeMeur… to name just a few. Several friends in the venture capital industry have also been more than generous with their time (and investor introductions) but I want to give a particular shout to Brad Feld (Foundry Group), Josh Kopelman (First Round) and Jon Callaghan (True) who have been mentors and supporters since the very early days of SoftTech.
>> WSJ Blog: SoftTech VC Raises $55M Fund For Early Technology-Firm Investments
>> TechCrunch: Jeff Clavier’s SoftTech VC Raises $55 Million For Fund III
>> Fortune: Jeff Clavier Builds a Bigger Seed Fund
>> Forbes: SoftTech VC Closes Oversubscribed $55 Million Third Fund
>> GigaOM: How Jeff Clavier Will Spend SoftTech’s Biggest VC Fund Yet
PS: thanks to our portfolio company Visual.ly, here is an infographic that summarizes a lot of our activity.