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Growth investor favored by tech elites eyes $5.75bn for new fund

Iconiq formed in 2011 as a family office catering to wealthy tech execs, such as Facebook's Mark Zuckerberg and Twitter's Jack Dorsey, before launching a series of private growth equity funds.

Iconiq Capital is targeting $5.75 billion for its seventh growth fund for investments in enterprise software, fintech and consumer tech, according to information from New Mexico State Investment Council’s meeting Tuesday.

The fundraising is part of a super-crowded market that has been especially receptive to sector specialization around tech and software, as well as healthcare and business services. Last year, fundraising tipped the scales with nearly $475 billion raised by 854 buyout, growth, venture and other PE vehicles, according to data from affiliate publication Buyouts. That was a 19 percent increase from 2020, and the highest tally except for 2019.

New Mexico SIC committed $25 million to Fund VII. Iconiq will make a 2 percent GP commitment to the fund in cash, according to David Lee, the New Mexico SIC director of private equity.

Iconiq was formed in 2011 as a family office that catered to some of the tech industry’s most famous and wealthiest names like Facebook founder Mark Zuckerberg and Twitter’s Jack Dorsey before launching a series of private growth equity funds.

“With approximately $83.5 billion in assets under management, we cultivate a community of some of the world’s most influential leaders to drive global impact and change,” Iconiq states on its website.

Iconiq’s partners include Divesh Makan, Michael Anders, Will Griffith and Matthew Jacobson.

Iconiq’s seventh Strategic Partners fund will target between 20 to 25 companies focused in enterprise software, fintech and consumer technology. Iconiq senior vice president Lee Hunold emphasized in the meeting the fund’s interest in moving enterprises to cloud platforms, especially noting the low number of financial services firms that have made the transition.

In recent months, some advisers and LPs have been worried about tech-centered private equity, noting the steep losses the sector has taken in public markets.

However, Amy Ridge, a principal at Mercer, which advises New Mexico SIC, said her firm has seen higher valuations in private equity markets, especially in the tech sector.

Fund VII may also participate in cross-fund investments involving assets from its fifth and sixth funds, especially to help it invest in late-stage companies, Ridge said.

“Companies are staying private for longer,” Hunold said.

Iconiq’s sixth fund, which targeted $3.75 billion in fundraising last year, has been active in recent months acquiring shares of construction management software company Procore Technologies and enterprise software company GitLab, according to Securities and Exchange Commission filings.

New Mexico committed $25 million to Iconiq’s sixth fund last year.

Hunold said that 27 of the companies Iconiq invested in have gone to an initial public offering while another 10 were involved in an M&A deal.

Ridge added that Iconiq’s first four offerings have performed in the top quartile of private equity funds.

This story first appeared in affiliate title Buyouts