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Veteran tech investor TCV targets $3.25bn for Fund XI amid ideal environment

The fund has already attracted commitments from MassPRIM and Louisiana Teachers.

Technology Crossover Ventures is only slightly raising the target size on its latest technology fund, although it oversubscribed its previous fund and its technology growth strategy is ideally situated for a post-coronavirus economy.

Technology Crossover Ventures XI is targeting $3.25 billion, according to materials from the September 9 meeting of Massachusetts Pension Reserves Investment Management Board. Its previous fund targeted $2.5 billion but ended up raising $3 billion, as Buyouts reported. Before that, Fund IX closed on $2.5 billion in 2016.

Fund XI will make growth equity investments in technology companies in the US and Western Europe. It will target minority equity positions in both public and private companies. According to a presentation given to Teachers’ Retirement System of Louisiana September 3 by its PE consultant, Hamilton Lane, the TCV vehicle will target companies with between $250 million and $1 billion in enterprise value and will make between 20 and 25 investments of $50 million to $250 million with an expected hold of five years per investment. Hamilton Lane is also MassPRIM’s PE consultant.

MassPRIM has invested in five other TCV funds, all of which it says have been in the first or second quartile. The Louisiana Teachers presentation confirms this. The firms’ seventh, ninth and tenth funds are all in the first quartile and the eighth fund in the second.

As of June 30, Fund VII was a 2008 vintage and had a 23.2 net internal rate of return and a 3.0 total value to paid-in multiple. Fund VIII, a 2014 vintage, had a 17.9 percent net IRR and a 2.1x TVPI. Fund IX began investing in 2016 and had a 23.6 percent net IRR and a 1.5x TVPI. Fund X had a 2019 vintage and a 28.3 percent net IRR and a 1.2x net IRR. Louisiana Teachers committed $50 million to the fund.

So far, Fund XI has also attracted a commitment from Merced County Employees Retirement Association. MassPRIM’s board voted to commit $200 million to the fund Wednesday.

TCV was founded in 1995 by Jay Hoag and Rick Kemball. It is based in Menlo Park, California, with offices in New York and London. The firm did not respond to a request for comment for this story.

Action Item: read TCV’s form ADV here.