JMI, with fresh $1.2 bln pool, seeks software talent outside established hubs

  • Closed Fund IX on $1.2 bln hard cap
  • Significant opportunities in cloud-based software
  • Seeks opportunities around the country

JMI Equity, which just closed its ninth fund on $1.2 billion, is seeking tech opportunities outside the established meccas.

The firm, which has been investing in software for 25 years, has invested in companies in 26 states and three Canadian provinces, according to Paul Barber, co-managing general partner at JMI. Barber spoke with Buyouts recently about the new fund.

“Companies in secondary cities are often more capital-efficient, they have lower-cost headcount and they often have lower turnover,” Barber said.

“Software today is a global business. There’s software talent everywhere and not dependent on Silicon Valley or the Northeast.”

The firm closed JMI Equity Fund IX in December on its $1.2 billion hard cap and Fund VIII in 2014 on $1 billion.

Fund VIII was generating a 17.63 percent internal rate of return since inception as of March 31, 2018, California State Teachers’ Retirement System performance information shows.

North American-based tech funds raised about $6.6 billion through Q3, Buyouts research found.

JMI reviews around 700 companies each year and makes six to eight new investments, Barber said. The firm invests $15 million to $100 million of equity in each deal.  

Cloud-based platforms are the big opportunity today, Barber said. JMI first invested in cloud computing in 2004 and has invested more than $1.5 billion total in 50 cloud software companies, Barber said.

“Across verticals there’s this shift moving software from on-premise licensed maintenance to on-the-cloud,” Barber said.

Those investments include Cosential, the Austin maker of proposal-automation software for architecture, engineering and construction. JMI in July invested $34 million in the company.

In April, JMI led a $55 million investment in CampusLogic, the Phoenix student-financial services-platform.

One growth area for JMI is healthcare tech. The firm invested $500 million across over 10 investments over the past 10 years, Barber said.

Action Item: Check out JMI’s Form ADV here: