TLDR:
- Summit Partners is nearing a $9 billion fund close for its Growth Equity Pioneer Summit.
- This would surpass their previous $8.3 billion fund.
Growth equity has evolved into a popular asset class, bridging late-stage venture capital and traditional leveraged buyouts. Summit Partners aims for a 30 percent IRR for its new fund amidst a fundraising slowdown in the industry. While growth equity fundraising fell to its lowest in 2024, Summit’s fund is expected to close next month, exceeding the $9 billion target. The firm has invested in various sectors, including technology, healthcare, and financial services, and is known for its success in generating strong returns for its investors.
Full Article:
Growth equity has been attracting attention from investors and fund managers alike, driven by the success of Summit and two other early adopters of the investment strategy: General Atlantic and TA Associates. This transformation has been driven by outsized returns and growth equity’s risk-return profile. The leverage-light strategy targets established companies with proven business models and strong growth potential, offering investors the opportunity to participate in rapid expansion without the high risks associated with early-stage startups. A growing number of venture capital firms and LBO shops alike have shifted their strategies to encompass growth equity, which requires more cold calling and high-volume dealflow than most strategies. That’s because the most attractive targets are usually profitable companies not in need of capital infusions, especially in the technology and healthcare sectors. Summit boasts of meeting with 1,300 companies a year. Since its inaugural $160 million fund in 1984, Summit has grown to $37 billion AUM and has generated a gross IRR of 48 percent, according to LP documents. It was an early investor in Uber, McAfee, and Arista Networks.
Summit played its part, investing $1.6 billion in 25 companies last year and orchestrating eight exits. This year the firm has made more than a dozen investments, including bets on the tech-enabled financial services firm Earned Wealth, fintech company Celcoin, and software company Revizto. It will also cash in on the final four percent of Darktrace (LON: DARK) it holds when Thoma Bravo closes its $5.3 billion take-private acquisition of the U.K.-based cybersecurity giant, expected later this year. Summit has netted more than $1 billion from Darktrace after initially investing $22.5 million in 2015 and growing its interest in the company to 22 percent before its 2021 IPO.
