Austin-based Silverton Partners announced this morning that it has closed on $144 million in capital across two funds.
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Crunchbase News reported last September that the firm had filed paperwork to raise two new funds: $120 million for Silverton Partners VI LP and another $20 million for an opportunity fund.
Today, Silverton announced it has raised $127 million for its oversubscribed sixth fund, and $17 million for its first Opportunity Fund, which will make “pro rata investments in some of the firm’s highest potential portfolio companies,” according to Silverton General Partner Morgan Flager.
Silverton Partners is Austin’s most active early-stage VC firm, with $403 million under management. This new fund marks the largest flagship venture capital fund raised by the firm since its inception in 2006.
In May 2018, we reported on Silverton closing on its fifth fund, in which it raised $108 million in an oversubscribed round of funding. Previous funds raised $75 million in 2006 and 2013.
Ninety-five percent of the capital in Fund VI comes from top-tier university endowments, foundations and health systems. Five percent is from individual and family offices, but mostly entrepreneurs that Silverton has worked with in the past, according to Flager.
“The vast majority of the capital is from return backers. We did, however, add several new institutional investors in SPVI to further diversify our LP base,” he told Crunchbase News.
Building on momentum
Silverton Partners–led by general partners Kip McClanahan, Mike Dodd and Flager–expects to add 20-25 companies to the Fund 6 portfolio, and up to eight positions in the opportunity fund.
Average investment will be in the $6 million to $7 million range.
“We typically reserve about two times the initial capital for follow-ons,” Flager told Crunchbase News. “This isn’t going to change at all. The Opportunity Fund capital will allow us to go beyond that average for a select few investments.”
By forming an Opportunity Fund, Flager said, Silverton can invest in later-stage funding rounds for existing portfolio companies, “partnering with marquee firms, without diluting Silverton’s core focus of seed and Series A investing.”
As in Fund V, Silverton plans to invest about 25 percent to 30 percent of its capital outside of Texas. The firm has recently backed startups in New York, Southern California and Utah.
Silverton has made 135 known investments over its 14-year lifetime, leading at least 44 of them–and had 29 known exits.
Since the start of 2018 alone, Silverton was the seed investor in a set of companies that exited for a combined $3.2 billion. Those exits include Ping Identity going public last September, WP Engine being recapitalized by Silver Lake Partners and TrendKite being purchased by Cision in January 2019 for $225 million.
In 2019, Austin saw record venture funding, according to Crunchbase data. Venture funding in Austin totaled $1.84 billion for the year. That was up 19.5 percent compared to the $1.54 billion raised in 2018 and an impressive 87 percent compared to $983 million in 2017.
Illustration: Li-Anne Dias
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