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KKR, a global investment powerhouse, tells TechCrunch exclusively that it recently closed the final closing of its third and latest technology growth fund – KKR Next Generation Technology Growth Fund III – with approximately $3 billion of capital commitments. , $400 million of which came from KKR itself. Employee.
The team, which includes more than 35 investors focused on growth-stage companies in North America, Europe and Israel, along with a dozen other investors focused on the APAC region, have been raising the fund since early last year.
The group’s first, the Tech Growth Fund, sized at $711 million, currently claims an IRR net of the firm’s fees of 26.6%, including realized and unrealized gains, according to a regulatory filing. It has already returned more than its committed capital to investors. Its second attempt, a $2.2 billion vehicle closed in 2019, has mostly unrealized gains and shows a net IRR of about 18%.
Some of the organization’s previous stakes include Darktrace, a cybersecurity firm that went public in London in 2021, ForgeRock, a digital-identity software company that went public in the US in 2021, and Lyft, which went public in 2019. Another bet, OneStream, which builds software tools and services designed for chief financial officers, reportedly tapped Morgan Stanley in late 2021 to lead preparations for a stock market launch, but The company remains privately owned.
If kicking off the latest fund with its mix of backers including sovereign wealth funds, public pension plans, insurance companies, endowments and private wealth platforms was a challenge, fund chief Dave Welsh doesn’t explicitly say so, though in earlier conversations. This week, he was relieved at the completion of this latest fundraise. “Not to get too Pollyanna-ish about our own hands here, but we’re very pleased that we’ve got a new fund and we’re not raising it right now. I think it’s difficult,” he said.
KKR’s technology development group focuses primarily on minority transactions, but typically holds about a third of its capital in majority ownership positions. (OneStream, based in Rochester, Michigan, is an example of the latter scenario. KKR bought most of the young company in 2019.)
Not surprisingly, Welsh says the focus is on companies with “really strong growth prospects for the long term”, and businesses in the earlier stages of their lives may be interested in KKR’s much larger buyout funds. A typical check can range from $50 million to $250 million, for example, with the firm’s even larger funds typically writing checks of $500 million or more.
The ideal holding period is four to five years, although Welsh says the team can be flexible. By the time KKR joined, Ideal Goals was already generating millions of dollars in revenue. Welsh estimates that two-thirds of the group’s portfolio companies have previously raised venture or institutional backing, with the rest looking like traditional PE targets, meaning they’ve worked their way to success or raised small amounts from friends and family. Funding has been raised in.
As far as areas of focus going forward, Welsh suggests the mix will likely remain the same as to date, with 70% of his unit’s capital flowing into software companies and large-scale cybersecurity companies, where the opportunity is always changing. Is. The rest of its stakes he refers to as “the Internet”.
Overall, KKR’s technology development pipeline has now raised just under $6 billion from its backers. Its other bets include big data analytics company Optimal+, tour-booking platform GetYourGuide; and cloud integration software company Jitterbit.
