Emergence Capital raises 30 percent larger fifth fund at $435 mln

Emergence Capital has raised a $435 million fifth early-stage fund, completing the oversubscribed fundraise in a month, the firm said.

The new fund is 30 percent larger than the $335 million Emergence raised for its fourth fund in 2015. The larger vehicle is to accommodate larger Series A rounds. Its investment strategy, however, will remain unchanged. Emergence will continue to pursue enterprise companies that typically fit with its three present investment themes.

“We feel there is an amazing need and opportunity for firms centered on Series A,” said General Partner Kevin Spain.

Spain said the firm wanted to be able to write checks for Series A rounds that now average between $8 million and $10 million.

With the growth of institutional seed money, “you’re seeing some companies making more progress” and larger rounds are the result, he said.

Still, the fund will back about 20 companies, similar to the deal total of the fourth fund.

The number of primary investors will remain at five although General Partner Brian Jacobs will not make new investments from the fund. Partner Joe Floyd will step up into a more active role with the new fund. Joining Spain and Floyd on the partnership team are Jason Green, Gordon Ritter and Santi Subotovsky.

Spain said the firm’s present investment themes include:

  • Coaching networks, the notion of using machine learning and artificial intelligence to create business apps that utilize data to deliver more value to end users;
  • The deskless workforce, which addresses workers that don’t sit at a desk; and
  • The industry cloud, the idea that industry-focused business applications can be tailored to specific industries.

In recent years, Emergence has benefited from exits of Veeva Systems, ServiceMax and Box. Investments include Textio, Chorus.ai and Drishti.

“For us, it really boils down to focus,” Spain said. “We’ve always been focused on enterprise. We’ve always been focused on Series A.”