Silverton Partners Raises $248 Million Fund to Invest Primarily in Texas-based Startups

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Silverton Partners announced this week it has closed on Fund VII at $ 248 million, its largest fund ever.

The Austin-based venture capital firm, founded in 2006, closed on Fund VI in 2000 worth $ 144 million, and Fund V at $ 108 million in 2018.

Silverton plans to invest about two-thirds of the fund’s capital to support Texas-based early-stage startups.

“We’re excited to put Fund VII’s capital to work in supporting the growth of companies in Texas and beyond,” Morgan Flager, managing partner at Silverton Partners, said in a news release.

“Though the current economic conditions are complex, there’s never been a better time to invest. History has shown that the best companies are often created in difficult times, and we remain committed to serving extraordinary entrepreneurs. We’ll keep investing and delivering exceptional results for our partners. ”

Silverton Partners plans to allocate $ 177 million to Fund VII and $ 71 million to Silverton Opportunities II, which is earmarked as follow-on funding for existing portfolio companies.

To date, Silverton Partners has more than $ 950 million in assets under management. It has had 30 acquisitions and four Initial Public Offerings including SailPoint, Ping Identity, and Vacasa.

Silverton Partners is led by partners Kip McClanahan, Mike Dodd, Roger Chen, and Flager.

In addition, Silverton Partners announces the promotion of Matthew Saitta to Principal, Alyssa Dadoly to CFO and Operating Partner, and the addition of Aneesh Desai as an Associate on the investment team.

Via email, Flager answered a few more questions about the new fund.

Q. You’ve raised Fund VII just two years after your last Fund VI, which was $ 148 million, this one is $ 248 million – the largest ever. The fund size is getting bigger and bigger, why has Silverton Partners’ fund size grown so big?

A. Flager: First we are excited to announce SPVII and Opportunities ii because of what it means for Austin. The local ecosystem is growing quickly, and the increasing set of world-class entrepreneurs here need more capital to compete and win. As the most active and longest-standing firm in the region, we want to ensure we can meet that need and help take Austin to the next level.

While we have grown assets under management, we have not changed our strategy since we started investing in 2006. We are still focused on being the first institutional investor and want to roll up our sleeves and serve as a true partner to our founders. We still invest early, primarily at the seed stage, and continue to support our companies as they grow.

Q. A lot of capital from a variety of VCs has flowed into the Austin market in the past few years, why do you think that is happening now?

A. Flager: Capital flows to where the best opportunities are… ..Austin has proven itself as a leading destination for top-quality entrepreneurs and investors have followed the talent. Since I moved to Texas from California in 2006, Austin has been growing, but the past couple of years have seen that growth accelerate dramatically. While some elements of growth always pose challenges, it is hard to not be excited about what is in store for this city. ”

Q. In the news release, Silverton states that the firm plans to use the bulk of the fund to invest in Texas-based startups. Are there any particular industries that Silverton is focused on investing in?

A. Flager: We tend to back the best entrepreneurs and focus on people, rather than verticals, we have been particularly active in SaaS software, Fintech / Insuretech, HealthTech, Web3, and many digital marketplaces.

Q. What is the $ 78 million Silverton Opportunities II fund?

A. Flager: “Our Opportunities fund allows us to continue to invest in existing portfolio companies as they scale. We’ve been fortunate enough to have been involved in several exciting companies from the seed stage that have gone on to grow quickly and raise large, growth rounds. Historically, we’ve sat those rounds out because the focus of our flagship funds is and has always been early-stage investments. Our Opportunities fund allows us to continue to invest in these exciting projects. We raised our first $ 27 million Opportunities fund and started investing out of it in 2019. Due to the success we had with that fund and the volume of interesting deals we have access to, we decided to increase the size up to $ 71 million in Opportunities II .

Q. How many companies did you invest in with Fund VI?

A. Flager: We invested in 22 companies in SPVI.

Q. How many companies do you plan to invest in with Fund VII?

A. Flager: We expect to have a similar number of portfolio companies in SPVII as we’ve had in prior funds. I’d anticipate we’ll make 18-25 new investments.

Q. Do you see any major trends developing in Austin as the tech industry continues to flourish here?

A. Flager: The biggest trend is the growth and increasing diversity of the tech ecosystem. When I moved here in 2006, Austin was primarily a B2B software and semiconductor town. Today, the city has market-leading companies in Fintech / Insuretech, HealthTech, Web3, CPG, PropTech, and many other verticals. We have been fortunate enough to back some of the companies that paved the way in these sectors like Self, The Zebra, TurnKey / Vacasa, and Wheel. Also, there is a lot more B2C and marketplace expertise in Austin now-which is great to see. The more diverse the talent pool here, the stronger and more resilient Austin will be to market changes and different economic cycles.

Q. How many employees does Silverton Partners have now? Do you plan to add more staff?

A. Flager: We currently have 11 employees. We are actively looking for an executive assistant. We also expect to add to the investment team later this year.

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