TVC Capital Raises $115M, Keeps Focus on Software, Value Investing

San Diego-based TVC Capital, a small private equity firm that specializes in growth-stage investments in software companies, has closed its third investment fund with $115 million in capital commitments.

All of the firm’s existing institutional investors participated in the fund, TVC Capital III, along with three new investors, according to Jeb Spencer, a co-founder and managing partner. The new investors include Horsley Bridge Partners, a global fund-of-funds institutional investor based in San Francisco.

In a statement, Horsley Bridge managing director Lance Cottrill says, “We find TVC’s uniquely differentiated strategy, disciplined approach and proven ability to add value to their portfolio companies to be very compelling.”

Spencer says the fund was oversubscribed, and closed 90 days after TVC began fund-raising. “We could easily have raised a $150 million fund,” Spencer said yesterday. “But we have to stick to our philosophy and keep our fund size small. We want to be able to continue to invest in software companies with $3 [million] to $15 million in revenue.”

The firm will still have to expand its staff, and is looking to hire professionals experienced in software and growth equity investment, Spencer said.

The nine-year-old firm raised $75 million for its second growth equity fund in 2012, and currently has about $225 million under management.

TVC has so far realized three successful exits from its first fund: the sale of El Segundo, CA-based Accordent Technologies to Polycom; the sale of San Diego-based Del Mar DataTrac to Ellie Mae; and the sale of Seattle’s Mercent to CommerceHub, a Liberty Media subsidiary.

TVC’s second fund saw its first exit in October, when San Diego’s Anametrix was acquired by San Jose, CA-based Ensighten.

TVC says its investment philosophy emphasizing operational value creation and working “in the trenches” with software management teams to accelerate growth, maximize value, and position companies for a profitable exit.

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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