Edison Partners closed the largest growth equity fund in its history with $450 million in commitments.
Edison Partners X builds upon the firm’s historic 2021 that saw the $1.6 billion Princeton, N.J. firm chart record proceeds that were 65% higher than the firm’s 2020 record. It was also Edison’s fifth consecutive year of record proceeds.
The firm cemented its unique growth equity model back in 2015 and is previous fund close was in 2018 totaling $375 million, officials said.
“Fund X continues Edison Partners’ successful track record, some would call an ‘old-school,’ disciplined approach to investing in and growing capital-efficient, high-growth businesses in fintech, healthcare IT, and enterprise SaaS outside Silicon Valley,” said Edison Partners Managing Partner Chris Sugden.
Fund X targets a notable gap in the $10 million to $30 million emerging growth equity investment market in geographies outside of the Silicon Valley with deal flow leadership in underserved markets with few capital sources across the U.S.
So far seven investments have been made: Kaiyo (New York), MacroFab (Houston), Prepaid Technologies (Birmingham), Recycle Track Systems (New York), Slingshot Aerospace (Austin), Solutions by Text (Dallas) and Spiffy (Charlotte, N.C.).
“Our strategy of thoughtful, high growth, but not growth at all costs, and building enterprise value through value-added service, is the antithesis of the current growth equity environment,” Sugden said. “Capital formation tied to the business’ growth strategy, not fund size, is our mantra. We go far beyond writing checks, through meaningful partnership with our portfolio companies.”
The firm also offers portfolio clients key business operational assistance via the Edison Edge platform. These services include executive education programs and a director network for independent board director formation and development. Edison said that more than 90% percent of its portfolio companies are actively engaged with the Edison Edge platform, and these companies average 70% to 80% annual revenue growth.
According to Kaiyo Founder and CEO Alpay Koralturk, the Edison Edge program will help the online used furniture retailer to accelerate its growth trajectory and unlock new opportunities to help the planet.
Edison Partners is the first institutional capital and lead investor for most of its investments. Edison’s strategy has also attracted other investors of course including Rutgers University, American Family Insurance, New Mexico Educational Retirement Board and Renaissance Venture Capital Fund.
“Our continued support for Edison Partners speaks volumes to their strategic and unique approach to growth equity,” said Steve Neel, deputy chief investment officer, New Mexico Educational Retirement Board. “We’ve invested multiple times in the past with Edison Partners and always see a strong ROI because of their capabilities and the value-add they deliver to the companies they invest in.”
According to public documents, New Mexico Educational Retirement Board has invested in four Edison Partners vintages prior to Fund X with a total of $129 million in commitments to the firm as of Sept. 30, 2021.
The firm is also committed to diversity as the private equity team is led by 17 investment professionals who are sector experts and have spent their careers investing or operating in growth-stage tech companies. Over two-thirds of the team are women and minorities.
Edison Partners committed $30 million to $50 million of Fund X investments to include the most underserved tech CEO populations: women and minorities.
Edison Partners is also committed to diversity across both the management team and the board of directors of its portfolio companies. Seventy-two percent of management teams are gender and/or ethnically diverse, while 72% of portfolio companies’ boards are diverse; 55% include women; 43% are ethnically diverse and 55% are gender diverse.
Since its inception in 1986, Edison Partners has invested in more than 240 companies and completed 180 total exits. Recent exit successes include TripleLift, Zelis, HRS, Solovis, Clearpool, Jornaya, Bento for Business, Gambling.com, and MoneyLion.
The firm’s active portfolio currently consists of 53 companies with an aggregated market value exceeding $10 billion.