Thinking About Thinking

Announcing Volition Capital’s Newest $250 Million Growth Equity Fund, Volition Capital Fund III

Posted in Growth Equity, Volition Capital by larrycheng on July 26, 2016

Today is a big day for Volition as we announce our latest fund, Volition Capital Fund III, with $250 million in capital commitments. This fund will have substantially the same strategy and focus as all of our prior funds – which we call small cap technology growth equity.  We invest in high growth, principally bootstrapped, technology companies that are poised for market leadership.  This is the same strategy that we have been executing on since Day 1.  This strategy has been born from our collective experience over decades of investing, in up cycles and down cycles, with lots of success and lots of scar tissue.  Our small cap technology growth equity strategy is not a marketing pitch – it’s our genuine, feel-it-in-our bones, part-of-our-DNA, belief about how to best steward the capital of our investors.

Nonetheless, we had to make an important decision with this fund.  It was clear before our fundraising process even began that there was substantial demand from investors for what we do.  If our primary goal was to be bigger, we probably could have raised a $500 million to $750 million fund – but it would have taken us away from our focus and who we are as a firm.  Instead, we decided that bigger wasn’t our goal – our goal, as it has always been, is to be excellent at what we do.  Our goal is to be the best small cap technology growth equity fund in the market – and ultimately, we decided that a $250 million fund would best suit that goal.  So, we opted for a focused fund with a quick fundraising process – less than six weeks from opening the data room to a single close at our hard cap of $250 million all the while having the privilege to be able to add some of the most reputable investors in the industry to our LP roster.

As we look forward to deploying this new fund, Volition will continue to be a study in contrasts.  Some folks at Volition refer to this as our yin and yang.

We will continue to be a conservative and aggressive firm.  We are conservative in that capital preservation is baked right into the heart of our investment strategy.  Quite plainly, we don’t like to lose money on any investment.  However, we are an aggressive firm in that we will not make any investment that we don’t think has tremendous upside potential.  If you’re with a Volition portfolio company today, it’s because we think your company can be an absolute home run.  We are not just a conservative firm, nor are we just an aggressive firm.  We strive to be both at the same time in equal proportion, and it’s that marriage which will help pave the way for unique success.

We will continue to be a creative and focused firm.  We endeavor to be creative because you don’t generate great returns through commodity thinking.  We have to think different to be better.  We have to have differentiated ideas to have differentiated returns.  We are committed to this belief.  However, we are equally and deeply committed to focus because focus is the key to excellence.  And our goal is to be excellent at small cap technology growth equity investing.  We have complete clarity on who we are and, equally so, who we are not.  Once again, we can’t just be abundantly creative without focus. And, we can’t just be abundantly focused without creativity. But, it’s the two together that is a foundational to our long-term excellence.

Finally, we will continue to be a firm that looks backwards and forwards at the same time.  We look backwards to remind ourselves of the patterns of our success and to remind ourselves of the mistakes we aim to not repeat.  We look backwards to remind ourselves every day of what got us here and to be consistent about who we are.  Importantly and simultaneously, though, we look forwards with absolute certainty that the world of technology will change – change is the constant.  We look forwards with the understanding that our pace of learning must exceed the accelerating pace of change that is endemic in technology markets.  We look forwards with complete conviction that we can’t stand still – we must constantly grow as a firm and as investors.  It’s this tension of looking backwards and forwards at the same time that we don’t just embrace as a firm, but is something we aim to thrive within.

This is who we have been and will continue to be as we take our next step forward with this fund.

We couldn’t possibly conclude an announcement of a new fund without a substantial word of thanks.  To the founders and executives who provide the leadership, vision, and heart for our companies – we are here because of you.  On behalf of all of us at Volition, we love what we do because we have the privilege to work with people like you.  Thank you for your perseverance, fearlessness, and unbridled commitment.   We appreciate that your companies are not just companies – they are part of who you are as people.  And we are incredibly grateful for the very personal invitation to partner with you on your journey.

To our LPs and investors – we hope that many years from now, you will be able to make one primary statement about Volition: that we did exactly what we said we would do.  That we executed on the strategy we said we would execute on.  That we generated the returns that we said we would generate in the way that we said we would generate them. That we were the type of people we said we would be from the very beginning.  Thank you for your substantial vote of confidence by entrusting your reputation and capital to us.

Finally, to all the Volition team members – thank you for all of the efforts that you make every day to help make Volition’s success a reality.  Thank you for going above and beyond when no one is watching.  Thank you for not just doing your job but also caring deeply about and taking immense pride in what you do.  Job well done.  It’s a joy to be on the same team.  Onwards and upwards…