Sunstone Partners is furthering its technology-enabled services and software company strategy with the $925 million close of its third fund.
The latest close is the largest in the firm’s seven-year history with Fund I closing at $310 million and Fund II attracting $475 million.
Sunstone Partners III will focus on growth equity and growth buyout investments in profitable technology-enabled services and software companies, typically founder-owned. Sunstone is targeting investments of $50 million to $150 million of equity capital per portfolio company.
The San Mateo, Calif.-based firm has deep expertise in several sectors including cloud services, health care IT, cybersecurity and marketing technology.
The oversubscribed fund brings the firm’s total LP capital raised since its 2015 inception to $1.7 billion. The firm added a number of new institutional investors, officials said, all while attracting capital from its existing investor base of endowments, foundations, family offices, fund-of-funds and pension funds.
Since its inception in 2015, Sunstone Partners has made 39 investments, including 13 platforms and 26 add-ons. The team has achieved full or partial realizations on its first three platform investments: Onica, a cloud consulting and managed services company, which was acquired by Rackspace in 2019; UserZoom, a SaaS platform focused on the digital user experience and usability testing, which was acquired by Thoma Bravo in 2022; and NETSPI, a leader in enterprise penetration testing and attack surface management, which announced its acquisition by KKR in October 2022.
“We have a thesis-based investment approach focused on partnering with exceptional founders to help them scale their businesses and accelerate their growth,” said Arneek Multani, managing partner at Sunstone Partners. “We look forward to continue adding value to the businesses we invest in by utilizing our sector expertise, providing operational resources to drive growth initiatives, and focusing on follow-on add-on acquisitions.”
Typically, Sunstone is entrepreneurs first institutional capital partner and with its investment aims to accelerate organic growth, develop strategy and fund acquisitions.
“The growth that Sunstone Partners has achieved is a testament to the hard work and commitment of our expanding team, currently 35 professionals,” said Mike Biggee, managing partner at Sunstone Partners. “We are excited about the opportunities that this new fund will provide to the members of our Sunstone team and portfolio companies.”
