Accel-KKR has closed on at least $300 million for a technology buyout fund, its first fund raised from a diverse base of institutional investors. The Menlo Park, Calif.-based firm was formed in 2000 by VC firm Accel Partners and buyout shopKohlberg Kravis Roberts & Co.
The second fund wasn’t an overnight success. The firm set out to raise Accel-KKR Capital Partners II early last year, after deciding to transition from a strategy of pursuing both venture and buyout deals to one more trained just on technology buyouts.
An investor in the fund had expected the firm to close on $300 million on Nov. 10. However, a second source says that the firm has raised more than $300 million for the partnership, ahead of its initial target. Accel-KKR declined to comment on its fund-raising.
It’s unclear exactly what that initial target was. The investor in the fund pegs it at $250 million. However, Buyouts (a sister publication to PE Week) reported last year when it was launched that the firm had a goal of $400 million, based on its having filed documents with the Securities and Exchange Commission for two affiliated funds, each stating a target of $200 million. SEC filings are not definitive sources for a fund’s goals, but do provide a general overview of a firm’s plans. Firms often list the maximum amount of capital they will accept for a given fund, rather than their target. Also, the goals and caps often change during fund-raising.
When the joint venture was launched, before the tech bubble burst, KKR said that the firm planned to avoid pure dot-com business models in favor of companies that were combining brick-and-mortar businesses with online opportunities. KKR and Accel provided equal amounts of funding for the venture. KKR used its own capital rather than money from its fund so as to not stray from its buyout mandate.
Accel-KKR invests mostly in tech companies with between $15 million and $150 million in revenue. It acquires non-core tech assets from public companies, buys and recaps private companies, and takes small and micro-cap companies private. This is the strategy the firm adopted after the hybrid tech venture/buyout model proved unpopular among investors.
The firm has remained active throughout its fund-raising. Accel-KKR invested $54 million in testing software provider Applied Predictive Technologies in September. Accel-KKR’s portfolio also includes 3D graphics company Alias, supply chain software and service provider iTradeNetwork, revenue-execution software provider Model N and government software and service provider Saber. —Matthew Sheahan