Lead Edge makes room for New Mexico in Fund VI that closed last year

New Mexico State Investment Council approved a $50 million commitment to Lead Edge Capital’s sixth flagship fund that combines growth equity and secondaries strategies and is fueled by an LP base of individual investors.

Many LPs and GPs need liquidity as distributions have slowed in a sluggish exit environment. Lead Edge’s “backdoor” approach in obtaining growth equity shares in its targeted investments looks to capitalize on that trend.

New Mexico’s commitment came at its council meeting held November 29. Buyouts viewed a webcast of the meeting.

Lead Edge Capital VI closed in April 2022 at $1.95 billion in commitments, according to a company announcement. New Mexico was able to score a late commitment, said Chris Cassidy, New Mexico’s director of private equity.

“They were able to carve out a small allocation for us to start a relationship with them in their late close,” Cassidy said.

Fund VI has already made seven investments with one early write-up, according to Amy Ridge, a partner at New Mexico’s private equity consultant Mercer,

“You get some capital immediately. We’ve had some portfolio visibility into the investment in the fund, along with the effect of positive write-ups that push you forward on the J-Curve,” Ridge said.

Unique LPs and Strategies

A majority of the fund’s LPs are individuals who have built and managed businesses, said Lead Edge partner Brian Neder.

According to Lead Edge’s presentation, Fund VI has more than 700 LPs, a base that is a “who’s who” of corporate America, he said.

Some of the names include the former CEOs of ESPN, Sunoco and Charles Schwab; the former presidents of Visa, PayPal, Dell and eBay; the current CEO of Target; and the owner of the New England Patriots.

“We use a lot of our LPs to introduce us to businesses we’re interested in. Our LPs help us develop investment opportunities,” Neder said.

Neder said Lead Edge’s approach in investments incorporate a three-pronged approach – the primary one focused on a company prepping a funding round.

If that’s not available, Lead Edge will approach company shareholders such as its earliest employees with a bespoke deal to acquire their stakes, according to Neder.

Lead Edge will also reach out to LPs in older funds that own stakes in companies its targeting, Neder said.

“Our secondaries strategy has really been amplified because of how badly a lot of GPs and LPs need liquidity,” Neder said.