Frontier Growth has begun marketing a sixth software vehicle, indicating the firm is perhaps looking to leverage the momentum behind growth equity in last year’s fundraising.
The Charlotte, North Carolina, private equity shop is targeting $850 million for Frontier Fund VI, according to a Form D fundraising document. If it meets that goal, the fund will be the largest in Frontier’s 21-year history, exceeding by 21 percent the $700 million collected three years ago by its predecessor.
Fund VI has not yet secured commitments, the document shows. Lazard is the placement agent.
Disclosed investors in Frontier Fund V included Employees’ Retirement System of Texas, which committed $65 million, according to Buyouts’ sister publication Private Equity International. In addition, Maryland State Retirement and Pension System committed $75 million.
Frontier acquires majority or minority interests in lower mid-market B2B software companies in North America, the firm’s website shows. Target opportunities generally have annual recurring revenue of $8 million to $30 million and yearly growth rates of 20 percent or greater.
Frontier invests $20 million to $75 million per deal, mostly in support of organic and acquisition-led growth initiatives and shareholder liquidity events.
A key aspect of Frontier’s investment approach has been its “smart-growth” strategy. Drawing on the operational experience of the firm’s team, the strategy focuses on partnering with founders and CEOs to scale software companies incrementally and over long horizons.
Frontier was in 2019 included in Inc’s inaugural list of the 50 Best Private Equity Firms for Entrepreneurs.
Growth equity was a popular strategy in last year’s global fundraising market, according to PEI Research data. More than $75 billion was secured in 131 fund closings, up 17 percent from the $64 billion collected in 2018. In fact, 2019 commitment levels in the growth equity space were the highest in more than a decade.
At present, Frontier holds 16 investments. They include three businesses added to the portfolio last year, among them GovQA, a Woodridge, Illinois, provider of government enterprise workflow software.
The other additions were Clearwave, an Atlanta self-service patient check-in and eligibility company, and Phone2Action, a Washington, D.C. digital grassroots advocacy platform. Frontier also recently sold SimplyWell, a Dallas employer health and wellness specialist, to Marlin Equity Partners-backed Virgin Pulse.
Formerly called Frontier Capital, Frontier Growth was founded in 1999 by Partners Andrew Lindner and Richard Maclean. Other senior team members include Partners Seth Harward, Scott Hoch, Joel Lanik and Michael Ramich.
Frontier did not respond to a request for comment on this story.
Action item: Check out Frontier Growth’s investment profile here.