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Jul 26, 2016

Volition Capital Raises Its Largest Fund Yet, Seeks Bootstrapped Tech Cos.

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If you’re a fast-growing, mostly bootstrapped tech company, you may be in luck if you’re ready to accelerate. Volition Capital, the Boston growth equity firm formed by the former Fidelity Ventures leadership team, announced on Tuesday that it has raised a new $250 million fund, its third and largest yet.


Larry Cheng, Volition’s managing partner, told BostInno that the new fund was “significantly oversubscribed” and that all of the firm’s previous institutional investors have returned. He said a lot of that has to do with the fact that Volition’s focus on fast-growing, capital-efficient companies that have reached annual run rates of at least $5 million with little to no venture capital.

An average portfolio company for Volition has raised less than $2 million, Cheng said, and more than half of its 20 past and present portfolio companies have raised zero venture capital, showing you don’t always need a lot of outside funding —and dilution of a founder’s ownership in her company as a result —  to grow impressive companies.

Return have been strong so far, Cheng said, though he declined to provide any specific figures.

“We’re fundamentally challenging the notion that you have to take on more risk to have outsize returns,” Cheng said. Volition has had nine exits so far, including MindShift Technologies, which Best Buy acquired for $167 million in 2011 and later sold to Ricoh; Verid, which EMC acquired in 2007; and StyleSight, which was acquired by WGSN in 2013.

Volition expects to cut checks in the range of $10 million to $20 million for a total of 10 to 13 investments from this fund, Cheng said, and the funding is used for growth capital, acquisition capital and shareholder liquidity. The firm focuses on companies working on software and software-as-a-service,  enterprise and consumer internet applications, mobile technologies and technology-enabled products. Two of its current portfolio companies include open source software management company Black Duck and cross-channel marketing intelligence software provider VisualIQ.

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