Ten Coves, which launched in the pandemic, closes debut independent fund

As the economy convulsed in 2020 amid the raging pandemic, the partners of Ten Coves Capital were planning to spin out from their parent company, Napier Park Global Capital, embarking on a venture as an independent firm.

It was a fraught time for any business, but especially one moving into the world on its own. Ten Coves had planned to launch fundraising for its first independent fund in 2020, but had to delay plans and focus on its existing portfolios, Ten Coves founder and managing partner Steve Piaker told Buyouts.

“We had planned to raise a fund beginning in 2020 but we hadn’t yet formally launched. We spent that spring working on portfolio companies and making sure we had plans in place to ride out a very big shock to the system,” Piaker said.

As Piaker and the firm found, even in the depths of the pandemic, limited partners were willing to take their call to hear about the plans. “We engaged pretty quickly with existing LPs, everyone learned how to do desktop diligence.” The firm officially launched in December 2020.

Emerging from that rocky start, Ten Coves will announce today it raised its largest fund to date, closing what it’s calling Fund III on $293 million. The Ten Coves team raised two funds at Napier Park, closing its first fund on $133 million and Fund II on $192 million. The team is managing the two prior funds as well.

Ten Coves’ fundraising was perhaps less challenging than some other emerging managers because the team had worked together at Napier Park Financial Partners, which formed in 2013 out of Citigroup. Other partners in Ten Coves include managing partners Ned May and Dan Kittredge, as well as founding partner and senior adviser Manu Rana – all who previously worked at Napier Park.

Many of the LPs in the prior funds came on board to the new fund, Piaker said. Ten Coves also added a few new LP relationships to the roster, Piaker said. The firm worked with Forum Capital Securities as placement agent on the fundraising.

Strategy

Ten Coves is a growth investor targeting financial technology. The firm seeks to invest around $20 million to $30 million on average, with the ability to flex up and down across specific situations. It generally makes minority investments.

The firm invests in venture-backed growth companies, as well as founder-led businesses where it represents the first institutional capital, Piaker said.

The firm has made five investments from Fund III so far, which, accounting for reserves to invest into its growing businesses, puts the pool’s deployment level at around 50 percent, Piaker said. Fund III investments are Boosted.ai, Canopy Tax, Cassini Systems, Sentieo and TealBook.

The pandemic helped to drive interest in technology firms, especially those helping to facilitate online shopping, education, work and healthcare. “Covid-19 has served as an accelerant, dramatically increasing the pace of innovation and adoption of next-gen fintech platforms,” said Ned May, Ten Coves managing partner, in a statement.

Tech funds have helped drive the strong fundraising environment. So far this year, 363 vehicles raised $172 billion through the third quarter, Buyouts previously reported. The record was the $194 billion raised last year.