With the $100 million close of its second fund,
The strategy of the San Francisco-based firm is “to take the Summit Partners cold-call model and apply it to the low end of the market,” says Jason Payne, who co-founded Mainsail with Gavin Turner. The pair worked together at Summit Partners in the mid 1990s after the classmates graduated from Stanford University.
Summit Partners, like
Payne and Turner will be shopping for opportunities in services and software, continuing the theme of their $33 million inaugural fund, which closed in September 2005. That fund has been invested in six companies, including IPS Solutions, a management training and consultancy firm, and 3DGeo, which sells seismic imaging services and software to oil and gas companies.
The firm will also be opportunistic when it comes to seeking out new sectors, as evidenced by its carve-out earlier this month of the sandwich chain Togo’s Eateries from Dunkin Brands Inc. Togo’s operates 261 stores, primarily in the western United States.
The firm typically backs companies generating EBITDA of $2 million to $5 million and generally shoots for a 10x return, Payne says.
A board seat is always mandatory, although Mainsail is “agnostic on minority or control” investments, he adds. Thus far, the firm has not co-invested alongside another shop. Mainsail’s first fund was raised exclusively from individual investors. Fourteen of those investors have returned for its new fund, along with a number of family offices.
New investors include Grove Street Advisors, acting on behalf of the Oregon Investment Council, for which Grove Street manages a $250 million discretionary fund; and Oak Hill Investment Management, on behalf of Sacramento Private Equity Partners, a 1-year-old fund launched with $500 million from the California Public Employees’ Retirement System.