Scaleworks Adds $80M for Second “Venture Equity” Investment Fund
San Antonio—[Updated 12:32 p.m. See below.] Scaleworks has raised $80 million to acquire more startups, three years after Lew Moorman and Ed Byrne founded the business as a “venture equity” investment shop.
Scaleworks branded its investment style as a mix of private equity and venture capital because it buys its targets outright like a private equity shop and will invest additional capital if needed to help a business grow, like a VC firm. The San Antonio company has been buying software-as-a-service businesses with between $4 million and $10 million in revenue and moderate growth, working closely with the companies to bolster their operations.
Since it was founded in 2016, Scaleworks has acquired eight businesses and sold two of them: FollowUp in May of last year and Assembla in November. Assembla sold to Houston-based Idera, a business that owns various business-to-business, developer-focused software companies. Scaleworks also has made five bolt-on acquisitions for its portfolio companies.
The remaining six companies that Scaleworks operates now have 307 employees and recorded $80 million in combined revenue in 2018—which was up 52 percent from the prior year, according to the firm. Scaleworks also has offices in Krakow, Poland. [Updated to include most recent employee total.]
Scaleworks raised an initial $60 million fund, which it closed in January 2017. Moorman and Byrne are co-founders and general partners of Scaleworks and they closely work with each of the portfolio companies they invest in, getting involved in everything from sales calls to interviewing new hires. Moorman is the former president of cloud computing company Rackspace and met Byrne through another investment firm Byrne previously ran, Xenon Ventures.