Back in January, we told you that SoftTech VC, a San Francisco-based seed-stage fund founded 11 years ago by investor Jeff Clavier, had promoted two of its senior investors to full partners: Andy McLoughlin and Stephanie Palmeri. The move seemed geared to bolster the firm during a time when it was out seeking more capital from its own investors.
Fast forward to today, and SoftTech is announcing that it has raised $100 million for its fifth and newest seed-stage fund. The firm has also gathered up another $50 million in capital commitments for a “breakout” fund that it will use expressly to invest in between 12 to 15 deals involving its successful portfolio companies. (Palmeri notes that the firm will never lead these deals but rather join them as follow-on investors.)
The funds effectively double the amount of money that SoftTech has been actively managing. Its last fund closed with $85 million. Its second-to-last fund closed with $55 million.
That limited partners were willing to write the firm larger checks isn’t a big surprise. SoftTech saw its biggest exit ever when the wearable fitness company Fitbit went public a year ago. It was a seed and Series A investor in the company, alongside True Ventures, another early-stage San Francisco venture firm.
Others of SoftTech’s most recent exits include Gnip, a data company that was acquired by Twitter for $134 million in 2014; Brightroll, a video ad platform acquired by Yahoo for $640 million in 2014; and LiveRamp, a maker of data onboarding software that was acquired by data management firm Acxiom for $310 million in 2014.
In a call with Clavier and Palmeri yesterday, both suggested that little will change at SoftTech, despite that it’s managing more money than in past years. The firm will still aim to secure between 7 percent and 10 percent ownership of the companies it funds. Initial checks — of between $750,000 and $1 million — will remain unchanged in size, though the firm is likely to invest in a few more companies this time around.
They said SoftTech has already written one later-stage check from its breakout fund, too. In January, it plugged $3 million into the $35 million Series C round of Vidyard, a video marketing platform that SoftTech first backed as a seed investor. The check represented three times SoftTech’s pro rata.
While we were chatting, we asked the pair about the fundraising process. With institutional investors being hit from all sides by firms raising funds, we wondered whether the team had witnessed or talked with their limited partners about venture fatigue.
Yet Clavier said fundraising was easier than ever for SoftTech, even in the face of some uncertainty about the market. “It was measurably different from the miserable experience of previous fundraises,” he said. Certainly that bet on Fitbit helped. But just as importantly, “Because it’s fund number five, it’s strikes people that you’re real.”
Pictured: SoftTech’s entire team, including, far left, Charles Hudson, a longtime partner with SoftTech who last year transitioned into a part-time venture partner and is now investing his own debut fund under the brand Precursor Ventures.