With New $875M Fund, JMI Equity Maintains Focused Strategy on Software Deals

“We don’t spend a lot of time on our story,” JMI Equity’s Paul Barber told me last week in the investment firm’s La Jolla office. It’s another way of saying the firm maintains a low profile, and during my 20 years in San Diego, I can’t remember JMI ever stepping voluntarily into the media spotlight.

But times change, and Barber—who is the firm’s managing general partner in San Diego—has good reasons to step forward now—875 million of them, in fact. That’s how much cash JMI raised from its investors for its seventh fund, at a time when the capital markets remain slushy, if not exactly frozen.

“In this very challenging fundraising environment, we are grateful for the continued support of our longstanding investors, as well as the substantial interest from new investors,” Harry Gruner, who is the firm’s managing general partner in Baltimore, MD, and a JMI co-founder, said in a statement last month.

The firm’s ability to raise $875 million in this era of capital scarcity is due largely to JMI’s record of successful returns on past investments, Barber says. More than 50 limited partners have invested in the current fund, officially known as JMI Equity Fund VII, including college endowments, foundations, pension funds, and family investment funds.

John Moores, the software industry magnate (and JMI namesake) who provided the entire $30 million for the firm’s first equity fund, is still an investor in JMI. But the latest Moores family investment represents less than 5 percent of JMI VII, Barber said.

JMI's Paul Barber

JMI's Paul Barber

There is “plenty of capital out there for investment firms,” Barber says. “But to access that capital, you have to demonstrate a consistency in your team, your focus, and your performance. Increasingly it’s about results, and we have been fortunate to have performed very well over many years with largely the same team.”

Barber attributes JMI’s investment performance to its narrow focus on software, Internet business services (for example, business-to-business and software-as-a-service), and healthcare IT. “We’re a big believer in focused strategies,” he says. JMI also confines its venture investments to what the firm calls “growth equity”—innovative companies with steady revenue from established customers that are poised for growth. Barber says JMI looks for opportunities where … Next Page »

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Bruce V. Bigelow was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Follow @bvbigelow

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