Insight Venture Partners in 2013: $350 Million+ So Far
FORBES - In the past twelve months, growth stage venture capital firm Insight Venture Partners has made some confident investments from its multi-billion dollar fund. Managing director Jeff Horing took some time to speak with FORBES about the firm’s overall strategies and its ardent belief in software and internet companies.
Earlier this year Insight, whose successes include investments in Tumblr and Twitter, put $200 million into enterprise mobile device management company AirWatch. Several months later the firm invested another $25 million in the Atlanta-based firm. So far 2013 also saw Insight lead an $80 million round for software analytics firm, New Relic; $53 million on market data firm, SR Labs; $27.5 million on development training company and, this time last year, participated in a $225 million venture round for online sports merchandise retailer Fanatics.
Insight’s AirWatch play came down to some basic observations of macro-level trends that point to a need for companies to secure their mobile devices, Horing explained. “The shift in organizations is moving very quickly from feature phones that have very limited security risk to basically computers in your hand where people are bringing their own devices, usually mixing with personal—it’s a huge opportunity for productivity but at the same time creating a tremendous amount of potential security risk.”
Before pulling the trigger, Insight looked through three top players in mobile security and management, including Mobile Iron and Good Technology. “AirWatch represented, we thought, the most interesting product technology out there,” Horing said. “It had a hosted, fast solution that really scaled to the enterprise very nicely.” Horing himself had also been familiar with the company’s management team when it was running Manhattan Associates. AirWatch, a decade old company, is up to about 1,000 employees.
Insight’s current fund is a little over $2.5 billion and the firm sees past borders when looking for ways to spend it. About 60% of Insight’s investments are within the U.S. but not necessarily in firms based in the traditional tech hubs. “We thrive on businesses that are started outside of Silicon Valley,” says Horing. “We perceive it as an opportunity.” Silicon Valley’s glut of investment capital leaves other parts of the country under-served and, if reports of growing tech and startup communities are true, investors would do well to look beyond Northern California or New York’s Silicon Alley to find winners.
“We’ve invested in Tulsa, we’ve invested in Southern California, we invest everywhere,” said Horing. Lately, from a new company perspective, New York, Southern California and Texas are on Insight’s radar screen as fast growing hubs.
A couple of gems from Insight’s international portfolio include Brazil’s trip scheduler HotelUrbano.com, Swiss ecommerce platform Studio Moderna; Swiss IT automation firm Kaseya; France’s Photobox and UK-based Trivago, which was recently purchased by Expedia.
Last year’s investment into Florida-based Fanatics saw Insight sink $225 million into the sports apparel retailer, alongside Bank of America and Andreessen Horowitz. The firm had been familiar with the original company, Football Fanatics, which was sold to GSI Commerce, then Ebay then back to GSI’s Michael Rubin. “It’s probably one of the most attractive ecommerce sectors out there,” Horing said. “It’s a licensed model business so you have a good dynamic of having a finite number of people with limited ability to unabashedly discount things. By definition the people who shop there are fanatics, truly, they really care about sports so there’s a lot of passion behind the site.”
On The Horizon
Software as a service is going to continue to be a focus for Insight in the near future. “There’s more velocity in terms of growth,” Horing said. One force in that category is the tendency of enterprises to outsource services and maintain more mission-critical features outside of their firewalls.
Consumer internet services gives Insight a cautious pause (despite having enjoyed the benefits of Tumblr’s exit) but the potential for profit is too compelling to ignore. “You can’t beat the growth rates of some of these companies,” Horing said. “The adoption curve of these companies is riveting.”