Robert Smith’s Vista Equity Partners Fund Could Become Largest Tech-Focused Fund Ever Raised By An Independent PE Firm

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Written by Dana Sanchez
Vista Equity Partners
Billionaire Robert F. Smith announces he’s paying off student loans for the class of 2019 at the Morehouse graduation ceremony. Photo: Morehouse College Youtube

Vista Equity Partners, the buyout firm founded by billionaire investor Robert Smith, has raised more than $14 billion of a $16 billion upper limit for its seventh flagship fund, according to The Wall Street Journal.

The firm has already exceeded its record $11 billion raised for its previous buyout fund and blew past a $12.6 billion tech fund raised by Thoma Bravo earlier this year.

“Smith is close to taking the crown as private equity’s largest tech investor,” William Louch and Laura Cooper reported in the Wall Street Journal.

Two billion dollars may not be a “close” gap to fill for everyone, but Smith is no ordinary entrepreneur and no ordinary philanthropist.

At a recent Morehouse College commencement address, Smith shocked the
2019 graduating class when he promised to pay off their student loan debt — an estimated $40 million worth.

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At $16 billion, Vista Equity Partners Fund VII LP would be the largest tech-focused fund ever raised by an independent private-equity firm, according to WSJ. It would surpass Silver Lake, which raised $15 billion in 2017.

Silver Lake, which backed fintech firm Credit Karma, holds the record for tech funds.

North American private equity funds raised $101.7 billion in 2018 for tech funds, and $137 billion in 2017, the two highest years on record since the financial crisis. So far in 2019, they’ve raised $65.6 billion in capital for tech funds, according to data provider Preqin, WSJ reported.

Private equity investments in the U.S. IT sector have increased every year since 2010, according to PitchBook. In 2018, those transactions made up a larger proportion of U.S. private equity deals than any time since at least 2010.

The tech sector now makes up 26 percent of the S&P 500 – its highest weighting since it peaked at just above 29 percent in the year 2000. Including Amazon, the industry is a bigger part of the index than it was at the internet bubble peak, CNN reported in September 2018.

“Vista’s ability to capture such a large pool of money speaks to an increasing appetite for tech-focused investments,” Pitchbook reported.

Vista has completed more than 300 investments and never lost money on a buyout, Smith said.

As CEO of one of the world’s most successful investment firms, Smith said it’s his company’s philosophy to listen to every employee.

Vista manages more than $46 billion, overseeing a portfolio of 50-plus software companies that employ 60,000 people worldwide.