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Scale Venture Partners Raises $900 Million Fund to Back the Next Wave of Software Innovation

Scale Venture Partners announced that it has closed its Fund VIII with $900 million in committed capital. The fund, which was oversubscribed from a combination of existing and new investors, will be invested in cloud and SaaS software companies, with a particular emphasis on cognitive apps, which combine machine learning, API connectivity, and sensors to transform how enterprises work.

“We are delighted to have the capital to support entrepreneurs as they seek to build the next generation of enterprise software companies” said Scale Partner Rory O’Driscoll. “The last nine months have been a sea change in terms of the funding environment but tech innovation remains strong. Valuations are impacted by interest rates but innovation is not. That is the long term bet we are all making, entrepreneurs and investors alike.”

Fund VIII will build on Scale’s track record of investing in emerging market leaders like Honeycomb, Observe.ai, Papaya Global, and Motive. Scale focuses on identifying leading companies early in their development – typically at their Series A or B – and helping them evolve from founder-led growth to a go-to-market machine. Scale has maintained a consistent pace of new investments per year for the last decade and is currently on track to do the same this year.

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Spotting the Future

During the last downturn, the first generation of SaaS companies rose to prominence. Scale was fortunate enough to invest in startups like Docusign, Box, Bill.com, and Hubspot, companies that have gone on to become the software layer that firms rely on every day. Today, the firm is looking to do the same with the next generation of software: cognitive apps.

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Cognitive apps are a new breed of software that often sit on top of today’s SaaS platforms to automate simple tasks and augment users performing complex tasks. These new applications seek to make predictions about the world using machine learning algorithms, thereby changing the way that software is both built and consumed. Scale has already invested heavily in the space, with companies like Forter, Comet ML, Locus Robotics, and Observe.ai and the firm is actively seeking new investments.

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“SaaS companies exploded in the last downturn, but we see the potential for this new breed of cognitive apps to dwarf that growth trajectory,” said Alex Niehenke, Partner at Scale. “Software that actually works for you is the future.”

To back this new generation of software companies, Scale has expanded its team as well as promoted from within its own ranks. Scale Fund VIII will be managed by the same five Partners as Fund VII – Stacey Bishop, Rory O’Driscoll, Andy Vitus, Ariel Tseitlin, and Alex Niehenke – as well as Jeremy Kaufmann and Eric Anderson, both of whom have been promoted to Partner. Additionally, Sam Baker has been elevated to Principal, while Noah Gross and John Gianakopoulos were promoted to Vice President. Javier Redondo joins Scale as a Principal, Craig Rosenberg as the new Chief Platform Officer, and Hillá Watkins has been named Chief Marketing Officer.

Additionally, Scale Studio, the firm’s proprietary benchmarking platform, has become the go-to tool for private cloud companies seeking to better understand their performance. The dataset that powers Scale Studio’s benchmarks has grown significantly and today contains financials and metrics on more than 1,000 private companies across 10,000 fiscal quarters. That massive dataset delivers a high degree of precision — and thus value — for founders and company leaders using it to support their decision making.

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[To share your insights with us, please write to sghosh@martechseries.com]

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