Advent International will pursue smaller investments in disruptive and high-growth emerging businesses with its debut tech fund.
The Boston-headquartered firm raised $2 billion for Advent Global Technology, beating its $1.6 billion target, according to a statement. The fund closed on its hard-cap after six months in market.
Most of the capital – 95 percent – came from existing investors, Advent managing partner Bryan Taylor told Private Equity International.
The firm has also opened an office in Palo Alto, California, in conjunction with the fundraise.
The fund will invest as little as $50 million in equity in targets, in addition to co-investing in mid-sized to large tech companies with Advent’s GPE IX which closed on $17.5 billion in June. The tech fund will split its deals on a roughly 50-50 basis with GPE IX, Taylor said.
“We have one tech team, one tech strategy, two pools of capital. All of the learning we get from going after large incumbents or small disruptive up and comers, it’s all within one team,” he said.
It is understood the fund will target a 3x money multiple on deals.
Advent declined to comment on return targets.
Around half the capital for Advent Tech came from North American LPs with Europe and Asia-Pacific at roughly 20 percent each and 14 percent form the Middle East. Public pension funds were the largest LP type at 29 percent of capital. Funds of funds accounted for 13 percent of capital.
Taylor said cybersecurity was an area the fund would focus on for investment opportunities, describing it as “one of the existential threats of our time”.
“When I started looking at cyber investments over a decade ago, the biggest threat we faced was underachieving but very bright teenagers trying to show the world just how smart they were. Today, our adversaries are nation states and organised crime and highly paid, highly capable mercenaries,” he said.
Every year the surface area of attack goes up exponentially and every year the value of that information goes up exponentially, Taylor added.
“I think that will be a really interesting area of investment for the rest of our lives.”
Advent’s tech team comprises 20 individuals across Palo Alto, New York and London and the firm plans to add another five people over the next year. The team will source, execute and managing tech investments for both the technology fund and flagship GPE IX.
The two funds can deploy $2 billion or more together in a single transaction, according to the statement.
The tech fund has already agreed two deals alongside GPE IX: healthcare data and analytics provider Definitive Healthcare, and Transaction Services Group, a business management software and payments solutions provider.
Global tech companies traded at an average 22x EBITDA last year as of November, according to data from S&P Global Intelligence.
Asked how Advent Tech will find attractive investments amid a competitive and high-priced environment, Taylor said the firm would examine each deal on its own and only invest when it feels passionate about the opportunity.
“If we do that and if we stay true to this strategy of being integrated [with the wider Advent platform]…I think we’ll continue to deliver compelling returns for our investors in any environment.”