Scaleworks raises $80 mln for sophomore fund

Scaleworks has closed its second flagship fund at $80 million. Based in San Antonio, Scaleworks is a B2B SaaS-focused venture firm.


SAN ANTONIO, Feb. 25, 2019 /PRNewswire/ — Today Scaleworks, the B2B SaaS focused venture equity firm based in San Antonio announced the closing of its second flagship fund, Scaleworks Fund II with $80M in capital commitments.

With the firm’s $60M Fund I, the majority of which was deployed by the end of 2017, Scaleworks’ portfolio grew to eight companies.

Scaleworks has established itself as a leader with its hybrid model to acquiring companies and applying strong common sense business practices. Revenue across its portfolio rose to $80M in 2018 to go along with two exits, Assembla and FollowUp.

“In 2018, we saw a 52% growth in revenue across our portfolio, which surpassed our very modest goals when we raised our first fund and began acquiring companies,” Scaleworks general partner and co-founder Lew Moorman said. “We very much enjoy bringing in fantastic companies with solid products and putting new leadership in place to scale them into well-rounded businesses.”

Scaleworks’ current portfolio includes Chargify, Earth Class Mail, Filestack, Keen, Mailgun and Qualaroo.

“We absolutely know our sweet spot. Applying our strategies from Fund I, we’re excited to do deals, perhaps bigger details this time around, that most others will miss. We take a different approach – buying companies too small for traditional PE, but our hands-on approach allows us to do these deals as we work very closely with the teams and build out new leadership. We see those intangibles as a huge advantage.”

In addition to its venture equity fund, the firm formed a debt fund in 2018 which provides alternative funding for B2B and SAAS companies. “Traditional debt providers look for assets and profits to lend against, not dynamics which many high growth B2B and SaaS businesses have. On the other side of the coin, raising traditional VC funding can be expensive. Using the recurring nature of the revenues of these companies provides a future asset base on which to lend. We’re excited to offer an alternative that actually makes sense for both the business owners and for Scaleworks,” said Director of Venture Finance and General Manager, Europe John Gallagher.

Scaleworks is a venture equity firm specializing in investing for controlling stakes in B2B SaaS companies and operating them for high-growth. Venture equity, a term coined by Scaleworks, sits at the intersection of venture capital and private equity. Where the venture capitalist succeeds by getting outsized returns on a very small number of their investments, and the private equity fund acquires proven businesses with upside from smart financial engineering and operational discipline; venture equity takes the VC interest in growth opportunities, with the private equity focus on already proven businesses.