SoftTech VC Closes $150M Across Two New Funds


This post is by Jeff Clavier from SoftTechVC


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Early in January 2016, I was thrilled to announce Stephanie Palmeri and Andy McLoughlin becoming Partners! At that time, we filed SEC Form Ds disclosing the creation of two new funds – SoftTech VC V and SoftTech Plus. We’re delighted to announce that both funds have closed at their hard cap, respectively $100M and $50M –  great news as we celebrate our 12-year anniversary. Most importantly, we are beyond excited by the myriad of new, radical innovations we see coming from early stage entrepreneurs and the opportunity we have to help them realize their vision with our active support and capital.

To share a bit of background: we invest our funds on a 3-year investment cycle and will be wrapping up Fund IV (that held a final close a couple of years ago) as planned sometime in Q316. Why raise a fund when we had plenty of dry powder in

SoftTech VC Fund V Sectors

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Stephanie Palmeri and Andy McLoughlin both made Partners!


This post is by Jeff Clavier from SoftTechVC


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You got the gist of it – now read on for more details.

2015SoftTechVC4211_C5x7PrintFirst, Stephanie: ever since I met her 5 years ago, I have been impressed by her drive, smarts and resourcefulness. Even though I sort of pushed her away initially, we were lucky enough to have Stephanie join us as Senior Associate then Principal – and sponsor 18 investments across Fund III and IV (including Niche [TWTR], Grovo, and ClassDojo), sourcing and supporting several more. Not only has Stephanie developed the fundamental skills that make a great investor (sourcing, board leadership, fundraising, legal), she has supported companies in good times and challenging ones, and become an invaluable contributor to both our SoftTech family and the broader ecosystem. Thanks to her hard work, Stephanie has demonstrated that she has earned the Title and I am very excited to share the good news: Stephanie is now my Partner.

2015SoftTechVC4135_C5x7Print copyAndy joined us last April as Venture Partner after co-founding Huddle eight years ago. In a few short months, he sourced and led a number of deals (including OnboardIQ and LaunchDarkly), and has delivered a lot of value to an even greater number of our SaaS companies by sharing his experience in sales, marketing, pricing strategy, etc. I am delighted to announce that he is now a Partner as well.

Charles Hudson transitioned to Venture Partner when he launched his own firm, Precursor Ventures. He will remain on a part-time basis at SoftTech until we wrap up the investment period of Fund IV later this year. We’re excited for Charles and wish him the very best with his pre-seed strategy.

While 2015 was a great year for SoftTech – it brought us our first IPO, we made large distributions to Limited Partners, we invested further in building up our events platform and closed a dozen very exciting deals – we already see signs that  2016 is going to be a tough year: the sheer market optimism that has prevailed for a while has taken a hit in the last six months of the year, and round sizes and corresponding valuations have started to deflate. We expect that it will be harder for startups to raise follow-on rounds, and the right mix of top line revenue growth and sustainable unit economics will be rewarded – as opposed to top line growth at all cost. Companies will stumble and will need the financial and operational support of their investors – who will have to show their experience and conviction. I look forward to working with my Partners on these challenges.

And while we are at it, everyone at SoftTech wishes you a Happy, Healthy and Prosperous New Year! Continue reading “Stephanie Palmeri and Andy McLoughlin both made Partners!”

Huddle’s Andy McLoughlin joins SoftTech VC


This post is by Jeff Clavier from SoftTechVC


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Image by Dan Taylor/Heisenberg Media

Image by Dan Taylor/Heisenberg Media

All of us at SoftTech are excited to announce that Andy McLoughlin (LinkedIn) will join us as a full-time Venture Partner on April 1st, 2015.

In 2006, Andy co-founded London-based Huddle, an enterprise content collaboration company which has raised over $80M to date. Over the years, he led technology, product, marketing, and strategy, eventually moving to San Francisco in 2010 to establish the company’s US presence.

About five years ago, Andy started his angel investing career. He has built a portfolio of 35+ pre-seed/seed stage investments, mostly in the Saas/B2B space but also covering e-commerce and mobile. He was the very first angel in our own Postmates. His other angel deals include Secret Escapes, Apiary, Tray.io, Buffer, Intercom, and Pipedrive.

When we spoke to founders he backed, Andy was consistently praised for the quality and relevance of his advice, and the value add he was able to deliver despite having “a day job”. We can’t wait to have him work with a number of our Saas companies on Sales, Marketing, Product, Growth,… and of course invest in awesome new opportunities.

Adding a new member to the investment team of a VC firm is tricky, especially in the context of a small operation. As our friend Mark Suster recently related, one needs to think about the assets, expertise, connections brought to bare by the existing team, and what a new addition will contribute to that mix. After SoftTech started its shift towards B2B with Fund III, we felt that adding a former Saas founder whose company has gone through several stages of scale would bring the most value to our portfolio companies. We also wanted someone with a substantial angel investment experience, and track record – learning on your own dime, both wins and losses, is truly formative. We got extremely lucky that Andy was the perfect match, fulfilling these two requirements, sharing our values and being all around awesome. We can’t wait for him to get started.

I also want to share some news about Charles Hudson. After nearly five years spent with SoftTech investing Fund III and the first year of Fund IV, Charles has decided to spin out and start his own pre-seed firm. Over the last couple of years, Charles has been keen on very early stage teams and ideas while SoftTech has anchored on the more mature, larger seed opportunities where you have seen us invest.

After discussing the situation and his personal interests, Charles has decided to start his own firm, with my support, focusing on the part of the market where his passion lies. In the interim, he will maintain responsibility for his current SoftTech companies. On October 1st, Charles will switch to a part-time, one day a week schedule until the end of Fund IV’s investment period. He will remain a close friend and advisor of our firm in the years to come.

Please join Stephanie and me in welcoming Andy to the SoftTech

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SoftTech VC Raises $85M For Its Fourth Fund


This post is by Jeff Clavier from SoftTechVC


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Our firm SoftTech VC hit three critical milestones in 2014: we opened our San Francisco office in April, celebrated our ten year anniversary in May, and now with great excitement, we are delighted to announce the close of our latest fund, $85M SoftTech VC IV. This brings our total capital under management to $155M.

Why $85M, which is quite a bit more than our $55M Fund III raised in 2010-11? That fund backed 55 companies over 3 years, as planned. About $25M were allocated to initial investments, and $30M were earmarked for follow-ons. Things worked perfectly until we saw the median size of A rounds increase from $5-6M to $8-10M in the last year – with a few of our companies raising up to $15M. Not a bad problem to have given the traction that they had developed, but these large rounds threw off our reserves model. So we decided to increase the size of Fund IV to allow for a larger follow-on budget.

With this new vehicle, we’ll have an initial minimum bite size of $500K, an average of $700K and the flexibility to go over $1M to reach our target ownership of 7-10%. We will then selectively invest our pro-rata, or buy up, in A and B rounds of companies that are scaling well. Our plan is to back 50 companies over 3 years, and we are off to a great start with our initial investments in DocSend, Panorama Education, Halo Neuroscience, Niche, Stitch, Soldsie and Sapho since our first close in October 2013.

We expect that  80% of the portfolio will be located Silicon Valley, with New-York, Boulder, Toronto-Waterloo and SoCal representing the balance.

Over the years, we have evolved from our initial B2C focus to a more balanced interest in B2B and directly monetizable B2C opportunities. Our key sectors are Software-As-A-Service (SaaS) – including mobile infrastructure and services, vertical SaaS and cloud infrastructure, B2C services and connected devices, and marketplaces. And we’ll continue to invest in many of the new wedges we began exploring in Fund III, like Digital Health, EdTech, and New Platforms (buzzword alert: drones, bitcoin/blockchain, glasses/VR).

Despite the ever-increasing “noise” in the seed market, Charles, Stephanie, and I are super excited about the variety of opportunities and high caliber of founders that reach out to us on a daily basis. Our job is to sift through a funnel of 2,000 to 3,000 opportunities per year, invest in 15, help them staff up, launch their product, and build their sales and marketing engine to successfully raise follow on rounds from the best VC firms.

We’re also most grateful for the people who make this possible: our LPs. SoftTech VC funds are backed by a mix of institutions, family offices and individual investors – often successful entrepreneurs from previous SoftTech portfolio companies. SoftTech VC IV’s anchor LPs, including Michael Kim at Cendana Capital, led a syndicate of 20 institutional LPs and 40 individuals (43% Fund of Funds, 23% Family Offices, 15% Endowments

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Why We Need an Entrepreneurs Visa


This post is by Jeff Clavier from SoftTechVC


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2012SoftTechVC26162_C5x7@300ppi

Since the pilgrims landed at Plymouth Rock, immigration has been the fuel that drives innovation and growth in America. Those first immigrants came to this country in search of the freedom to develop themselves as they saw fit, but also to develop America into the place full of opportunities we enjoy today.

I know this firsthand because that’s exactly the reason why I came to Silicon Valley. I was born and raised in France — certainly not one of the oppressive political systems we see in other parts of the world. I didn’t need to escape, and had been successful in France but I still came to to the Valley for what this amazing innovation ecosystem has to offer — and what I ended up offering in return as a venture capitalist.

I was lucky. I got in very easily because I happen to have the right visa. However, our broken immigration system often results in promising entrepreneurs being turned away. Entrepreneurs who could build the next major tech company, thereby creating many thousand jobs, are told there is no room for them in America. We are also experiencing a tremendous shortfall of qualified workers in STEM fields, yet we are forcing those who spent many years studying in our country to leave as opposed filling in much needed positions. Our immigration system is not connecting with the actual needs of the American economy and we have to change that in order to enjoy continued success.

We have been advocating for an Entrepreneurs Visa for a while now, a visa that will allow entrepreneurs who have raised funding from qualified investors to move to America, and develop their startup, create jobs, in our country. We have managed to do it a few times over the years, helping French, British, Australian founders to immigrate — but it is just too complex, costly. We need to remove these hurdles and make the Entrepreneur Visa a reality.

Recently, a group of four Republicans and four Democrats in the U.S. Senate known as the “Gang of Eight” introduced a bill to reform immigration in this country. For the sake of our economy, these reforms must become law. They are commonsense solutions to a seemingly intractable problem.

Please join me and thousands of others for a virtual march on Washington to let our elected representatives know we support commonsense efforts to modernize our broken immigration system. Go to www.MarchforInnovation.com. Once there, you can join the March and send a message to your elected officials through a host of social media channels.

An immigration system that welcomes the innovators of the world who can help us build an even stronger nation is just plain common sense. Let’s make this happen.

Originally published on The Huffington Post

Announcing Stephanie Palmeri’s Promotion to Principal


This post is by Jeff Clavier from SoftTechVC


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Just one year ago, we were happily announcing that Steph was joining us (OK, after I tried to dissuade her in a first place). She promptly took the lead on next generation commerce opportunities, as well as helping our companies with their marketing strategy. Overall, she has contributed a lot to our firm and our companies in such a short time.

That’s why today Charles and I are thrilled to share an exciting piece of news: Steph’s promotion to Principal. Join us in wishing her well! And follow Steph on Twitter at @stephpalmeri.

Crunchies 2012: Congratulations to category winners Fab and Fotopedia


This post is by Jeff Clavier from SoftTechVC


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 As it has been the tradition now for a few years, our industry gathered last night to celebrate the achievement of startups and founders at the Crunchies. In a choked full venue (and a completely saturated AT&T network because of the number of smartphones in the audience), we enjoyed a fast paced program going through 20 different categories.

We were extremely pleased to see porfolio companies Fab win Best Shopping Application, and Fotopedia win Best Tablet Application. Congratulations to our teams, who both saw an exploding growth this year.

I particularly appreciated the tribute to my friend Heather Harde, the former CEO of TechCrunch, who totally deserved her standing ovation. And the emotional moment of Fotopedia’s Jean-Marie Hulot who recalled that the last time he was in this venue, he was on stage with Steve Jobs to launch the NeXT  – but Steve was no more (JMH was the CTO of NeXT back in 1988, and then became CTO of Apple’s Application division).

Thanks again to TechCrunch, GigaOM and VentureBeat for keeping the tradition going. It would have been nice to have Mike Arrington in the audience, or somehow involved.

Announcing SoftTech VC III’s final close at $55M


This post is by Jeff Clavier from SoftTechVC


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All of us at SoftTech are super excited to share that we reached a critical milestone for our firm: we have wrapped up our third fund, SoftTech VC III. Back in January 2011 we announced Fund III, with an initial $35M target, then increased it to $50M and at investors’ demand, agreed to bump it up to $55M before closing it, oversubscribed. We can also – finally – talk about it since we’re no longer fund raising and aren’t subject to non-sollicitation restrictions any more – yeah!

So why raise $55M, when our second fund was $15M? I learned a lot investing Fund II from 2007 to 2010, and figured that even for seed funds, outsized returns are generated by having the right level of ownership, and a meaningful level of follow-on participation, in your portfolio companies. We therefore upgraded our strategy from Access (“get in the good deals”) to Ownership (“buy/keep enough of each company that any positive outcome is meaningful to the fund”).

We now have an initial bite size of $400K (sometimes a bit less, sometimes a lot more) and will selectively invest our pro-rata, or buy up, in follow-on rounds of  companies that are scaling well. Our roadmap is to invest in 60-ish deals over 3 years, and we are about 1/3 of the way there after one year of activity (23 deals since Fund III’s inception and already a number of follow-on’s). We will continue focusing on Silicon Valley, New-York, Boulder and SoCal – and will opportunistically invest in other geographies. Our key sectors are Mobile, Next-Generation E-Commerce and Cloud Services – but we’ll continue to be active in Monetization/Ad Network technology and Gaming as we always have.

I want to welcome, and thank, our brand new syndicate of institutional investors for backing us: Stepstone Group, affiliates of AMG National Trust Bank, Cendana Capital and Industry Ventures – as well a angel friends who joined us for the ride: Mitch Kapor, Steve Blank, Mike Arrington, Henri Moissinac, Geoff Ralston, Ben Smith, Oleg Tscheltzoff, Joshua Schachter, Loïc LeMeur… to name just a few. Several friends in the venture capital industry have also been more than generous with their time (and investor introductions) but I want to give a particular shout to Brad Feld (Foundry Group), Josh Kopelman (First Round) and Jon Callaghan (True) who have been mentors and supporters since the very early days of SoftTech.

Finally I want to add a personal thank you note to my kick-ass team: Steph, Ashley, and Charles. This would not have happened without you guys.

Related News
>> WSJ Blog: SoftTech VC Raises $55M Fund For Early Technology-Firm Investments

> TechCrunch: Jeff Clavier’s SoftTech VC Raises $55 Million For Fund III
> Fortune: Jeff Clavier Builds a Bigger Seed Fund
> Forbes: SoftTech VC Closes Oversubscribed $55 Million Third Fund
> GigaOM: How Jeff Clavier Will Spend SoftTech’s Biggest VC Fund Yet

PS: thanks to our portfolio company Visual.ly, here is an infographic that summarizes a lot of our activity.


 

Welcome Stephanie Palmeri, the gal I meant to dissuade taking a job in venture… and ended up hiring


This post is by Jeff Clavier from SoftTechVC


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Stephanie Palmeri We’re super excited to announce that Stephanie (“Steph”) Palmeri has joined SoftTech VC as Senior Associate, a brand new position in our firm which has grown 400% since January 1st. Steph is awesome: smart, workhorse, funny, New-Yorker, swear-proof, determined, Columbia MBA – in no particular order. And we can truly say that serendipity is responsible for that lucky find for us.

If you follow me on Twitter/Google+, you might recall a post I wrote a couple of months ago (which generated a lot of great comments):

A very smart MBA (who just graduated) wrote me asking if there was a job opportunity at SoftTech VC. She really wants a job in venture apparently, which I can respect, but I really think that venture (aka “the dark side”) is a gig you do after accumulating operating experience. Here is what I wrote her:

“In any case, I don’t think that we are going to be able to help: we are building the firm with Partner level investment professionals who have 12+ years of operating experience. We may at some point bring in a principal as well, but once again, we’d look at bringing in someone who has had at least 8 years of relevant operating experience. Why? Because you can’t really advise or provide perspective to a young CEO/founding team if you have not been exposed to “real life” yourself.

So what am I saying? That you should take that offer from <redacted> – they seem to see a rockstar in the making in you, and it is a great, promising company. And ask <redacted> to give you some exposure to the different facets of the business, and try to take on different challenges over the next few years.

If you really want to go for a venture role now, only sign up for a top firm. And after two years, cut yourself loose and join the most exciting portfolio company of theirs (or others) you have seen. You can’t really have a career in venture, you have to move in and out.

Sorry if it is not what you wanted to hear, but I’d hate you end up in venture too early – when it is not the most fun and rewarding.”

Yes, that gal I was referring to was Steph. Read on.

I figured in the first five minutes of our discussion that I was wasting my time (and hers) trying to dissuade her from joining a VC firm. Despite having opportunities in the New York scene, she had packed her stuff and was crashing with friends in the Valley determined to find a VC gig here. With almost 10 years in operating experience in Marketing and consulting roles (something Steph almost neglected to “sell” in her email intro to me), and a real passion for the investment side, I thought that she’d have a very decent shot despite the “local” competition.

Mind you, the venture world desperately needs more women – especially for those of

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