Tidemark Fund I finished 64 percent above an original target of $350 million. The San Francisco private equity firm did this inside of five to six months and without using a placement agent, Yuan told Buyouts.
Yuan attributed the rapid pace to strong buy-in by limited partners who were aware of his “style of investing” in technology sectors during a 15-year tenure at TCV.
Fund I’s LPs included institutions, such as Massachusetts Pension Reserves Investment Management Board, which committed $75 million. Tidemark also raised capital from tech and PE executives, some of them members of Tidemark Fellows, an advisory group set up to contribute to portfolio growth.
Yuan left TCV in December after “an amazing run” to take what he had learned and “build a winning platform,” he said. He remains a senior adviser to the firm, representing it on the boards of six companies, among them CCC, LegalZoom and Toast.
TCV was supportive of his move and Tidemark’s launch, Yuan said, giving particular credit to founding general partner Jay Hoag. “I view them as friends of the firm,” he said, “and expect we will look at deals together.”
How Tidemark invests
Yuan led or co-led TCV deals in internet, software and tech-enabled services, with 16 of his 25 investments exited, often in high-profile IPOs and acquisitions. They include celebrity tech names like Facebook, LinkedIn and Splunk. Before TCV, Yuan was an investment professional with JP Morgan Partners.
This experience went into the design of Tidemark’s strategy, which focuses on providing growth equity to lower-mid-market tech businesses in North America. While it invests broadly, Yuan expects the firm to target small business vertical SaaS and enterprise SaaS opportunities with revenue approaching or in excess of $10 million.
Tidemark Fellows is key to the strategy, Yuan said, as a source of content and thematic advice as well as help in ensuring portfolio companies “win the category.” The group includes Jonathan Mildenhall, ex-CMO of Airbnb and chair of TwentyFirstCenturyBrand, and Alex Schultz, CMO of Facebook.
Fund I has made four SaaS investments, two of which have been disclosed.
In May, Tidemark was part of a syndicate led by Tiger Global Management that invested $550 million in Kajabi, a knowledge-oriented e-commerce platform. A couple of months later, it again joined a Tiger-led syndicate to invest $175 million in Contentful, a content management system operator.
Tidemark’s launch is timely in light of covid-19’s acceleration of digitalization that companies were already bringing to customer and supply-chain interactions, internal operations and product portfolios. The event, Yuan said, created “a really interesting time” for sectors emphasized by him and his firm.
“Technology is today infiltrating every part of business,” Yuan said, suggesting that the pandemic’s spurring of tech adoption is not “a one-time bump.” He expects it to instead “set the table for the second and third S-curves of adoption.”
Yuan oversees 13 Tidemark team members. They include partner Kevin Cheng, formerly with Sumeru Equity Partners, and partner Adam Smith, formerly with Lightspeed Venture Partners. There are also three investors, Blake Brown, Phil James and Richard Son, who joined from Summit Partners, TA Associates and TCV, respectively.
Tidemark will commit 10 percent of its profits to Tidemark Foundation, which makes donations to causes aligned with its investing.