Insight Bite: $22.8bn record tech-fund raised by Thoma Bravo

Chicago-based private equity firm Thoma Bravo has secured a total of $22.8bn from investors across three funds in a record-breaking technology and software-focused fundraising round.

The firm’s flagship Thoma Bravo Fund XIV, which is expected to target large equity investments, has raised $17.8bn making it the largest fund in the firm’s history. It surpasses the previous tech-focused fund record set by an independent private equity firm, Vista Equity Partners, of $16bn.

A further $3.9bn was collected for the firm’s Thoma Bravo Discover Fund III which will invest in midsize enterprise software and technology businesses. And the $1.1bn Thoma Bravo Explore Fund will target smaller businesses in the tech sector.

Given the challenging economic times caused by the pandemic, it might come as a surprise that each fund reached its hard-cap and was significantly oversubscribed. But there are good reasons for the scramble to invest.

In recent years, technology companies have tended to stay private for longer reshaping the venture market and pushing firms to raise ever-larger funds. And now the pandemic has created two conditions which have exacerbated this trend and set the scene for a record-breaking fund.

Firstly, lockdowns have accelerated digital transformation initiatives across all sectors creating strong investor appetites for technology funds. According to data provider Dealogic, up to 5 September 2020, 46% of the $100bn raised by US-led deals has been focused on technology companies.

Secondly, in a world where investors can’t meet newer managers in person, they’re instead seeking the security provided by established investment businesses. This plays into the hands of long-standing firms like Thoma Bravo.

With strong relationships built over the course of its 40-plus year history, the firm counts some of the US’ largest state pension managers, sovereign wealth funds, multinational corporations and insurance companies among its investors. Nearly all of which committed capital to its latest fundraising round which, in an ironic twist, was carried out almost completely virtually using digital technology.

“The accelerated digital transformation across all industries has underscored how essential software is for commerce and business continuity as well as its continued resilience,” said Jennifer James, managing director, head of investor relations and marketing at Thoma Bravo. “Our investors recognize that our deep experience and track record in enterprise software has positioned us to take advantage of these industry dynamics and the opportunities in the market.”

Having secured this record-breaking fundraising round, Thoma Bravo now manages more than $70bn in assets. The question is, which software firms are set to benefit?

Matt Stamp, Head of Software at Acuity Advisors commented,

“Thoma Bravo’s record breaking fundraise is testament to global investors’ faith in software and technology continuing role as digital transformation is accelerated by the pandemic. Great to see Thoma Bravo’s raising of 3 funds focused on deployment across both large cap and mid cap investments.”

Matt Stamp, Partner

About Acuity Advisors

We know technology and are experts in selling businesses, securing equity investments and raising debt finance. Our partners are senior players: skilled at getting to the heart of a technology business, understanding what will attract buyers and investors, and building long-lasting relationships. We have an unrivalled understanding of the industry’s complexities and personalities – our track record and client feedback are compelling evidence of that. We’re an international firm – most of our deals are cross-border, from offices in London, Munich, Shanghai and Silicon Valley – but we’re grounded in our approach. We move quickly when it’s needed, and we’re around for the long haul when patience is a virtue. We’ve maintained a very high success rate across hundreds of deals while keeping our focus on doing what’s right for our clients. From first meeting to successful exit, we earn the trust that clients and investors put in us. Learn more here.

© 2020 Acuity Advisors Limited

A conversation is never wasted. We’re confident that we can give you all the help you need, but we’ll tell you if we think there’s a better option for you.

Get in Touch Get in touch now