Since launching Insight Partners Fund XIII in 2022, the technology specialist has slashed its hard cap from $20 billion to $15 billion amid a sector slump. It also lost high-profile bets on cryptocurrency exchange FTX and WeWork Inc., suffered a longtime LP defection and paid a fee-related SEC penalty. Here’s what’s giving the firm a hard time.
Through it all, the New York firm has managed to amass more than $10 billion in fund and co-investment commitments, according to a slew of SEC filings Aug. 12.
Insight launched Fund XIII in early 2022 amid a continued technology runup and just a few months after it closed Fund XII at $20 billion, counting co-investments. Fund XI closed in 2020 on $9.5 billion.
Insight has $90 billion in AUM and has invested in more than 500 tech companies, including several AI businesses, since its launch in 1995. It is one of the biggest tech-focused private equity shops.
It was particularly hard hit by a post-Covid tech valuation slump and a PE fundraising slowdown in general.
By June 2023, Insight had raised just $2 billion for a fund targeting $20 billion. That’s when Insight told institutional investors it was slashing the fund’s hard cap by 25 percent.
It also said it would slow its dealmaking pace because of what it calls a “great reset” in tech valuations and the availability of quality assets in a crowded PE and venture capital sector.
H.I.G. Capital last year scrapped plans to raise technology-focused funds.
Other investment firms continue to manage technology-focused funds, including JMI Equity, Silver Lake, Thoma Bravo and Vista Equity Partners.
In July 2023, the Pennsylvania Public School Employees Retirement System, under pressure from Democratic Gov. Josh Shapiro, reversed its earlier approval to commit $130 million to the latest fund.
PennPSERS trustees pointed to the firm’s recent returns, investments in FTX and the $1.5 million fine it paid to the SEC, which alleged Insight overbilled its fees. Insight also returned $864,958 in fees collected.
LP records show Insight reporting in March a -4.35 IRR for Fund XII, an improvement from -7.37 percent reported in January. Fund XI reported an IRR of 14.4 percent.
FTX filed for bankruptcy in November 2022 and its founder and former CEO Sam Bankman-Fried is in prison for fraud.
PennPSERS had committed $633 million to previous Insight funds since 2018.
Roughly $8 billion of the capital committed to Insight’s latest fund was raised over the last year as tech valuations began to turn around and are modestly trending upward.
Insight writes a wide range of checks, from $5 million to $500 million and makes a wide range of investments, from early-stage venture capital to late-stage buyout. It recently invested in SaaS company Exiger and cloud analytics company Alteryx Inc. (NYSE: AYX), which purchased it with Clearlake Capital Group for $4.4 billion in a take-private deal.
It has also been active recently with exits.
EQT AB is nearing a deal to acquire a majority stake in AMCS, a software provider focused on waste management and recycling partially owned by Insight, which is expected to retain a minority position.
In March, Francisco Partners acquired Jama Software, a requirements management and traceability services provider, from shareholders including Insight and Madrona Ventures for $1.2 billion.
Insight is also raising its second structured equity vehicle with a lower target than its predecessor fund. Insight Partners Opportunities Fund II is targeting $1.5 billion with a $2.5 billion hard cap. It has raised $600 million so far, according to LP documents.
Fund I closed in 2021 at $1.56 billion.
