Spectrum Equity IX hits $1.5bn hard-cap

Alessia Argentieri
28 May 2020

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US-based growth equity firm Spectrum Equity has closed its ninth fund on its hard-cap of $1.5bn.

Spectrum Equity IX is larger than its predecessor, Spectrum Equity VIII, which closed on $1.25bn in October 2017.

In addition, Spectrum has closed its second Discretionary Overage Program on $150m, enabling the firm to pursue larger transactions or follow on investments opportunistically.

"Having launched our fundraising earlier this year, the environment in which we closed Spectrum Equity IX has been particularly tumultuous," said managing director Vic Parker. "Despite the volatility in the public markets and broader economy, our investors' support has been unwavering."

Proskauer Rose advised the firm on the fundraising.

Founded in 1994, Spectrum Equity is headquartered in Boston, with an additional office in San Francisco. It targets growth capital, recapitalisation and buyout transactions across the internet, digital media, communications, entertainment, software and IT sectors. The firm has invested in 140 companies to date.

Investors
Spectrum Equity IX built a wide LP base composed of numerous institutional investors, as well as 65 founders and executives from the firm's current and past portfolio companies.

Most of the investors from Spectrum's previous vehicles re-upped to this new fund. LPs in other Spectrum funds include Abbey National, LGT Capital Partners, Missouri's school and education pension fund, the Washington State Investment Board and Texas County & District Retirement System.

"We deeply appreciate the continued support from our investors," Parker said in a statement. "We believe the strong demand for Spectrum Equity IX reflects confidence in our commitment to proactive origination, our focus on resilient, highly recurring revenue businesses and the ability to produce distinctive returns over many cycles. And in times of macroeconomic uncertainty like the present, we rely on the consistent execution of our growth equity investment strategy more than ever."

Investments
Spectrum Equity IX focuses exclusively on investments in internet-enabled software and information services businesses.

It targets companies based across North America and Europe, with scalable business models and which exhibit high growth with persistent customer relationships.

The vehicle makes growth equity investments ranging from $25m up to more than $150m, and targets both controlling and minority transactions.

"It's hard to know the magnitude or the duration of the Covid-19 impact on society and the broader economy," Parker said. "However, we are as passionate as ever about the transformative potential of business models delivering software and information over the internet."

"Our current portfolio has meaningful exposure to industry segments such as distance learning, enterprise collaboration and productivity, SMB enablement, delivery logistics and telehealth," he added. "Several of our businesses are helping critical parts of our economy function remotely during this pandemic. And when we do begin to recover, we are convinced our portfolio companies will play an important role in driving our economy forward."

Representative investments of Spectrum Equity include Ancestry, Bats Global Markets, Definitive Healthcare, Digital Marketing Institute, GoodRx, Grubhub, Lucid, Lynda.com, SurveyMonkey, The Knot Worldwide and Verafin.

People
Spectrum Equity – Vic Parker, Chris Mitchell, Ben Spero (managing directors).