Georgian Partners Growth Fund II, the second fund of Canadian venture firm Georgian Partners, is expected to surpass its target in an imminent final close, thanks to an investment strategy that has resonated with LPs.
The fund, which had its initial close a year ago, is likely to be wrapped up by mid-March, said Justin LaFayette, co-founder and managing partner of Georgian Partners.
Fund II is also expected to shoot well past its $120 million target and raise more than $170 million of committed capital, he said. If that happens, it will greatly outdistance the size of Georgian Partners Growth Fund I, which raised $67 million in 2010.
LaFayette believes success on the fundraising trail owes to an investment thesis that has increasingly caught on with LPs since Georgian Partners launched seven years ago.
“We feel fundraising has gone well because of our differentiated strategy and track record to date,” he said. “To get the attention of limited partners, you need to be right about a technology trend. And it must be a big trend.”
The trend in question is the emergence of applied analytics as a source of opportunity to high-growth IT companies.
Applied analytics refers to the convergence of business process knowledge, big data, and broad information rights. Georgian Partners invests in expansion-stage software, Internet and information companies that are zeroing in on these capabilities.
Justin LaFayetteIts thesis is that companies that can effectively leverage more value from their accumulated data assets, and apply it to new analytical offerings, will gain a huge competitive edge in the marketplace.
“Applied analytics is as big as the cloud, mobile and software-as-a-service,” LaFayette said. “When Georgian Partners was starting out, the concept was not well understood. Now it’s rare to meet companies that don’t want to talk to us about it.”
LaFayette said the potential of applied analytics was demonstrated in early examples in online retail and social networking. Today, it is has traction in multiple sectors; from education technology, where it is relatively new, to cybersecurity, where it is more advanced.
Companies that are the first in their vertical to seize on “analytic opportunities” will establish “a major differentiation advantage” over rivals, he said.
Companies backed by Georgian Partners must have senior managers that show a serious commitment to executing on an applied analytics strategy. Once in the portfolio, they have access to operational and technical resources from the firm’s team of investment pros and advisors.
LaFayette said Fund II’s larger capital pool will allow the firm to write bigger equity cheques and take greater investment stakes than in the past.
Since its initial close in early 2014, Georgian Partners’ Fund II has made eight investments. In most cases, the firm has led rounds. They include the $10 million Series B financing of Top Hat, a Toronto-based classroom engagement tool, and the $14 million Series C financing of eSentire, a Cambridge, Ontario-based provider of cybersecurity solutions.
Georgian Partners also led its most recent deal: the US$30.7 million Series D financing of U.S. enterprise tag management platform Tealium, which closed in February.
LaFayette said applied analytics “will eventually be ubiquitous.” In the meantime, he sees a sizeable window of opportunity for an investor that has “applied analytics in its DNA.”
Georgian Partners was co-founded in 2008 by LaFayette and Managing Partners John Berton and Simon Chong. LaFayette, Chong and Steve Leightell, a principal at the firm, were previously top executives at DWL, a Canadian software and data management business acquired by IBM in 2005.
Since inception, Georgian Partners has invested in 18 North American companies, two of which have been exited. Among its highest profile Canadian investments are e-commerce platform Shopify and customer intelligence provider Vision Critical.