Georgian Partners has secured US$375 million ($485 million) for its third growth equity fund, winning limited partners over to an investment strategy that adds to the firm’s pioneering focus on applied analytics.
The Toronto firm announced the close of Georgian Partners Growth Fund III today. It finished with more than twice the committed capital of its predecessor, which raised $200 million in April 2015.
Georgian’s Fund III is one of Canada’s largest private tech partnerships on record, according to Thomson Reuters.
The firm achieved this by expanding its LP base, especially south of the Canada-U.S. border, Georgian Managing Partner Justin LaFayette told PE Hub Canada. New and existing investors reflect a mix of North American corporations, endowments, family offices, funds-of-funds and pension funds, he said.
LPs were not identified. Previously disclosed backers of Georgian’s funds include BMO, Cisco Systems, Kensington Capital Partners, Northleaf Capital Partners and Teralys Capital.
LaFayette says success on the fundraising trail owes to the firm’s strategy, which zeroes in on a number of big trends expected to revolutionize business software.
Georgian built its reputation on its applied-analytics thesis, which encompasses the convergence of business process knowledge, big data and information rights. Over the past eight years, this thesis guided the firm’s investments in some 25 growth-stage IT companies in Canada and the United States, including e-commerce platform Shopify, which went public last year.
With Fund III’s close, Georgian will expand its strategy to include a focus on companies able to leverage opportunities in function-specific artificial intelligence, natural-language messaging, and an increased emphasis on security and privacy in software design.
“We’re interested in trends that are likely to have a pervasive impact on the performance of business-software companies and their ability to create value for customers,” LaFayette said. “If we’re right about these trends, every software provider will adopt the new capabilities or won’t be a market leader.”
LaFayette said this was the case with applied analytics, which today is well-established in certain verticals, such as e-commerce. Georgian will continue to focus on this trend as it gains maturity in other tech spaces.
Fund III’s proceeds will be used in part to boost resources that support the strategy, LaFayette said. The biggest investment will be made in Georgian’s impact team.
The impact team specializes in helping portfolio companies respond strategically to trends of immediate relevance to them, Chief Analytics Officer Chris Matys said. Matys, who heads the team, said it lends “tools and enablers” to companies to “facilitate the adoption of game-changing capabilities” in a short time frame.
Georgian deems this support activity effective when “the impact of trends is felt across the technologies and organizational structures” of companies, Director of Product and Strategy Ben Wilde said.
Fund III has already made its debut investments. They include Medgate, a Toronto provider of environmental, health and safety risk-management software. Georgian didn’t specify the amount it invested. The deal, announced in March, was led by Norwest Venture Partners.
A month later, Georgian led the US$25 million Series C financing of Silicon Valley’s FusionOps, a provider of cloud-based analytics applications for the supply chain. New Enterprise Associates and other investors joined the round.
LaFayette said more such investments are “on the way.”
Fund III aims to invest in about a dozen companies. With a larger capital pool, Georgian will have more flexibility in the size of cheques it writes, LaFayette said. It will also ensure the firm remains a deal leader, often in syndication with other growth equity and venture investors.
Georgian Partners was founded in 2008 by LaFayette and Managing Partners John Berton and Simon Chong. LaFayette and Chong were previously top executives at data integration software maker DWL, acquired by IBM in 2005.
Photo of Justin LaFayette courtesy of Georgian Partners
Photo courtesy ©iStock/StockFinland
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