Tag: Accel-KKR

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After closing its $2.2 billion latest tech fund, KKR adds top Cisco exec to its leadership team

KKR, the multibillion dollar multistrategy investment firm, is beefing up its technology practice with the appointment of Rob Salvagno as a co-head of its technology growth equity business in the U.S. 

It’s a sign that KKR is taking the tech industry seriously as it looks for new acquisition and investment opportunities.

Salvagno, the former vice president of corporate development and head of Cisco Investments, was responsible for all mergers and acquisitions and venture capital investments at the company.

Over a twenty-year career Salvagno helped form and launch Decibel, the networking giant’s early stage, several hundred million dollar investment fund.

“Our business has evolved significantly since we first launched our technology growth equity strategy over five years ago with a small team of five. Since that time, the growth of our business and the number of compelling investments we’re seeing around the globe have allowed us to not only expand our team, but also our technology experience, network and geographic reach,” said Dave Welsh, KKR Partner and Head of Technology Growth Equity, in a statement. “With the addition of a tech industry veteran like Rob to our team, we’re excited to continue to build for the future and position ourselves well to capture the many investment opportunities we see ahead.” 

To date, KKR has invested $2.7 billion in tech companies since 2014 and established itself as a player in late stage tech investment with a team of nineteen investment professionals. Earlier this month, the firm closed its $2.2 billion fund dedicated to growth technology investment in North America, Europe and Israel.

“Rob has an extensive background in security, [infrastructure] software and app dev and dev ops, a background which we believe will complement the existing teams’ skillset very well,” said Welsh in an email. “[And] our focus areas for our second firm will be similar to the prior fund, namely a heavy focus on software with some additional focus on consumer internet, fintech/insurtech and tech enabled services.”

Application development software and security technologies will also remain a core focus for the firm, according to Welsh.

“Additionally, we will be ramping up our time spent on infrastructure software (i.e. software used to run modern data center / cloud environments), application dev and development operations (i.e. app dev and dev ops solutions) as well as software solutions focused on certain vertical industries (such as real estate, legal, construction, hospitality),” the KKR co-head wrote in an email.

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HotelTonight, Slack stakeholder Accel stays on top with $2.5B fund

Invest early and stand by your bets. Don’t buy logos or chase unicorns. That’s the Accel philosophy. At 35 years old, it has served them well, bagging the firm dozens of high-profile exits, including nine IPOs and 12 acquisitions in the last four years.

Now, sources confirm to TechCrunch, the respected venture capital firm has nabbed $2.525 billion — its largest pool of capital yet — for three new funds: $525 million for its fourteenth early-stage fund, $1.5 billion for its fifth growth fund and $500 million for its second Leaders Fund, or a dedicated pool of capital meant to help the firm strengthen its positions on particularly competitive bets.

Accel, which operates offices in Palo Alto, San Francisco, London and Bengaluru, is hot off the heels of a big exit. Its portfolio company HotelTonight, in which it was the very first institutional investor, is selling to Airbnb in what is the home-sharing company’s largest acquisition yet. The deal is said to be worth roughly $465 million, or just above the $463 million valuation the on-demand hotel booking application garnered with a $37 million Series E in 2017.

This VC went long on HotelTonight and it paid off; here’s how.

The firm can thank Brian O’Malley, now a general partner at Forerunner Ventures, for introducing Accel to HotelTonight back when he was a general partner at Battery Ventures in 2011. Accel and Battery co-led HotelTonight’s Series A, and O’Malley went on to become a partner at Accel. The firm subsequently invested in HotelTonight’s Series B, C, D and E financings, holding true to its promise to stand by its bets.

Today, Accel is the largest stakeholder in HotelTonight and can expect a decent payout in the coming months. Workplace messaging platform Slack, however, is Accel’s true portfolio standout. The company, worth more than $7 billion, is expected to go public this year. In February, the San Francisco-based unicorn filed confidentially with the U.S. Securities and Exchange Commission to make its public market debut; whether that be via a traditional initial public offering or a direct listing, a newfangled approach to going public, is still up in the air.

Accel, at consumer technology investor Andrew Braccia’s recommendation, invested in Slack when it was still Tiny Speck, a seed-stage gaming startup that would go on to become an office necessity. When Tiny Speck pivoted to become Slack, the company’s chief executive officer Stewart Butterfield offered to pay back it’s Series A and B investors, including Accel. Braccia declined.

“The reason we invested in Tiny Speck was because we were investing in that team,” Braccia told TechCrunch in 2015. “I told Stewart, ‘if you want to continue to be an entrepreneur and build something, then I’m with you.’ ”

Now owning a roughly 20 percent stake in Slack, Braccia’s faith in Butterfield will result in a billion-dollar payday for the firm.

Some other high-profile wins for Accel include Qualtrics, which famously accepted an $8 billion acquisition offer hours before completing a Nasdaq IPO. According to Qualtrics’ IPO paperwork, Accel owned a stake worth more than $1 billion. PagerDuty, which is said to have confidentially filed in January, and CrowdStrike, a cybersecurity business that reportedly hired banks for its IPO last fall, are among Accels’ upcoming exits.

Since Accel’s 2016 fundraise got them a fresh $2 billion to invest in startups, the decades-old firm has nabbed some younger talent to help it navigate an inevitable generational transition. Shortly after that fund announcement, Accel added principals Amit Kumar and Steve Loughlin, a pair of co-founders of Accel portfolio companies CardSpring and RelateIQ, respectively. In 2018, the firm hired Maya Noeth as a principal to lead its consumer growth investments, Ethan Choi to back startups in the enterprise and consumer-subscription spaces and Cherry Miao as a vice president focused on growth-stage companies. 

Its newest cohort of dealmakers — poised to become partners down the line — indicates Accel is conscious of an impending generational transition and prepared for the older investors to pass the baton to the younger folk.

Accel is among several incumbent venture funds to raise money from limited partners in the last year. Bessemer Venture Partners, one of the oldest players in the game, closed on $1.85 billion for its tenth flagship fund in October; Insight Venture Partners brought in $6.3 billion in July; Kleiner Perkins raised $600 million for its eighteenth early-stage fund in late January; and Menlo Ventures grabbed $500 million for Series B and C rounds in February. Other outfits, NEA for example, are in the process of closing up big, big funds.

At a time when nouveau venture funds are raising funds equipped with innovative investment strategies and young teams, Accel and some of its counterparts are proving old dogs can learn new tricks — or, at least, continue to lead the pack with no new tricks at all. 

The death of once high-flying VC funds