Sydney venture capital fund manager EVP, formerly Equity Venture Partners, has launched fundraising for a new $100 million target fund, EVP Fund IV.
The firm raised $50 million for its third fund in 2020 and that fund is now fully allocated. Assuming the new fund raises its target, EVP will then have total funds under management of more than $250 million.
EVP specialises in making early-stage investments in business-to-business (B2B) software companies. The firm was an early investor in global workforce management software company Deputy. More recent investments include Biteable, VendorPanel, Pendula, Foodbomb, Hnry, Shippit, Coassemble, Zipline.io and Explorate. Overall, the firm has now invested in more than 40 companies.
EVP was founded in 2014 by Les Szekely, a long-time angel investor who had been the first external investor in Siteminder (ASX: SDR) in 2007, and Howard Leibman, previously a corporate advisor with Growth Equity Partners and also an angel investor.
The firm raised its initial $25 million fund in 2016 and invested that across 11 B2B software companies. Over five years, that fund has already achieved three exits and is currently sitting on a valuation uplift of 3.1x.
Fund III has been invested across 13 early-stage software companies in less than two years. So far, the investee companies have performed well overall with average revenue growth of 185%.
With the size of Series A investments having roughly doubled over the last two years, EVP expects to invest in a similar number of companies with the new fund.
Leibman said: “Over the past ten years we’ve had the privilege of partnering with some of Australia’s most successful technology entrepreneurs. We’re incredibly grateful for the ongoing support of our investors, many of whom have backed us since the start.”
Leibman said EVP did not believe that the current fundraising would be adversely affected by the current downturn in values of listed technology companies. Most of the firm’s capital to date had been raised from family offices and individual sophisticated investors, many of whom had invested in each fund. He expected many of the same investors would back the new fund. The firm had a total investor base of around 400.
Turning to investment performance, Leibman said: “We’ve been fortunate to partner with outstanding founders across all three funds. We’re seeing exceptional growth across the portfolio and we’re incredibly pleased with how all three funds are performing.
“A number of our companies are already emerging as clear category leaders. Businesses like Ignition, Lumary, Shippit and Hnry already underpin strong returns across all three funds, with each likely to return a multiple of the funds’ entire committed capital in due course.
“Venture capital is about the long game. We’ve had numerous opportunities to take early exits on some of our best companies, but we’ve seen time and time again that the real value comes from holding on to great assets for as long as you can. Our founding portfolio, which includes companies such as SiteMinder and HotelClub, has seen a 25x valuation uplift.”
EVP partner Justin Lipman said the increased capital allocated to the venture sector over recent years had not reduced the quality of investment opportunities. As the start-up ecosystem had matured the number of high quality investment opportunities had grown.
“Our pipeline is as strong as it’s ever been,” he said.
“We meet about 100 new founders each month. But for EVP, the metric we really care about is the pool of founders that align entirely with our B2B software focus that we’re tracking and cultivating relationships with. At present that pool of warm relationships is at about 300, and it’s almost certain that a majority of our Fund IV investments will come from this group. We take our time to get to know founders. We knew 50% of our Fund III founders for two years before we led their Series A.
“Our position in the market is very clear. We’re the only entirely software-specialised venture fund in Australia – we invest almost exclusively in B2B SaaS or marketplace companies. This clear focus helps ensure that we serve as genuine value-add partners to our founders – not just through the programs and services we offer, but through the relevance of the experience that we bring to the table. We’ve seen the B2B software scaling journey play out over 40 companies and have a deep understanding of the playbook.”
As in its previous funds, EVP’s partners expect to make up the largest investor bloc in the new fund.
Leibman said: “Our message has always been ‘invest alongside us’. I think our investors appreciate that the EVP partners have material skin in the game.”
Image: EVP partners Daniel Szekely, Les Szekely, Justin Lipman and Howard Leibman.