Ignition Venture Partners is raising a so-called annex fund to double-down on investments made from its fourth fund, which already has some gems in it.
The firm, which earlier this year raised a $200 million sixth fund, has so far raised $16.8 million of a potential $60 million for Ignition Venture Partners IV Annex Fund, according to an SEC filing Friday.
“We have about 10 very fast growing companies that are really scaling,” says Ignition managing partner John Connors in an e-mail to Xconomy. “We and our LP’s wanted to be sure we participated in all future funding opportunities.”
He lists “top prospects” including Chef, the Seattle-based IT automation company that raised a $32 million Series D round in 2013; Xamarin, a San Francisco-based maker of tools for developing mobile apps; Palo Alto, CA-based big data company Cloudera, which took in a huge investment from Intel as part of a $900 million financing round last year; Troy, NY-based Apprenda, an enterprise platform as a service company; Snaplogic of San Mateo, CA, which helps companies integrate applications; Cupertino, CA-based Bromium, an enterprise security company; Motif Investing, also of San Mateo, an online broker that builds portfolios around ideas and economic trends; Coho Data, building private cloud scale-out storage, with offices in Palo Alto and Vancouver, BC; Palo Alto-based payments company WePay; and Couchbase, headquartered in Mountain View, CA, and making NoSQL databases.
Ignition raised the $400 million Fund IV in 2007. That was back when Ignition invested in a broader range of companies in both consumer and enterprise software. Almost all of the companies Connors listed fall squarely in the latter category.
The company marked a turning point in 2013 with its $160 million fifth fund led by Connors, Frank Artale, and Nick Sturiale. Since then, it has focused exclusively on enterprise software. All but one of the firm’s founding partners—Cameron Myhrvold—as well as most of the Fund IV partners left as Ignition transitioned to more of a boutique model.
Original investors in Fund IV include Princeton University Investment Company and Harvard Management Private Equity Corporation, according to an SEC filing. The filing for the annex fund lists 10 investors so far. Connors says, “Ignition individual partners are also big investors in the annex fund.”
In an interview last year, Artale described Fund IV as a potentially “world-class fund,” not just because of the exits that have occurred already. These include Swype, acquired by Nuance Communications for around $100 million; Appature, acquired by IMS Health for what investors called “a very good” return; Heroku, snapped up by Salesforce.com for $212 million; Cisco’s $415 million acquisition of Whiptail; Facebook’s acquisition of Parse; CenturyLink’s scoop of Tier 3, said to be for $200 million; Microsoft’s buy of StorSimple; Zenprise, which Citrix bought for a reported $355 million; and Likewise, purchased by EMC Isilon.
All these likely provided a solid return to Ignition and its investors, but, as Artale explained, to be considered a great venture fund, a single investment needs to return the entire amount raised by a fund. “And Ignition Ventures IV has not had that sort of exit yet,” Artale said. “We believe there may be a company or two sitting in the fund—Cloudera as an example—that could provide that marquee that you need to have the fund considered, from a subjective perspective, to be a world-class fund.”
