Top 25 Growth Funds

Today GrowthCap released their list of the top 25 growth funds for 2020.

If you haven’t had a chance to check out the article, you can do so here — The Top 25 Growth Equity Firms of 2020 | GrowthCap (growthcapadvisory.com)

I’m not sure there are too many surprises when it comes to this list. The big guys again prevail as leaders in the space.

It may be productive to first explain how this list was decided. Over 350 firms were considered for the GrowthCap 2020 awards process. Ultimately, awardees were selected based on a thorough evaluation of the nominations received. They focused on the uniqueness of each firm’s approach to growth equity investing as well as how effective and consistent they were in building value for their portfolio companies. The best firms were able to consistently produce exceptional results by having institutionalized strong firm cultures, systems and processes defined by a steadfast commitment to excellence.

Lets first look at the top 5.

  1. TPG
  2. Blackstone
  3. Summit
  4. GA
  5. Insight

Background on the top 5:

TPG: TPG Growth has been partnering with innovative entrepreneurs, founders, and management teams to grow and scale their businesses. The team brings an established perspective and differentiated blend of conviction, flexibility, and partnership to growth equity that allows them to invest behind unique opportunities early, particularly in markets that are at points of inflection, disruption, or significant change. TPG Growth takes a thematic approach, focusing on identifying compelling business models and opportunities across Consumer, Healthcare, Business Services, Software and Enterprise Technology, and Internet, Digital Media, and Communications. Post-investment, the team aspires to transform companies for the better and drive value by connecting fragmented marketplaces in a strategic, and integrated way.

BXG: BXG invests in fast-growing companies, helping them expand their potential through the power of the global Blackstone platform. BXG has recently invested in the online dating platform Bumble, oat milk pioneer Oatly, and enterprise software company ISN. It gives growth-stage companies access to a massive base of global resources that is afforded to it by virtue of being the largest alternative asset manager in the world.

Summit: Summit Partners is a global alternative investment firm that is currently managing more than $23 billion in capital dedicated to growth equity, fixed income and public equity opportunities. An early industry pioneer, Summit helped to establish the growth equity category and has since invested in more than 500 companies across growth sectors of the economy, including technology, healthcare, e-commerce, consumer, financial services and other industries.

GA: Global growth equity firm focused on partnering with companies that are shaped by and driving technological innovation across its five core investing sectors: Consumer, Financial Services, Healthcare, Life Sciences and Technology. The firm pioneered the growth equity asset class over 40 years ago, and partners with entrepreneurs to scale their vision with the support of its patient capital, operational expertise and global network. General Atlantic currently has $40 billion in assets under management, with more than 175 investment professionals based in New York, Amsterdam, Beijing, Greenwich, Hong Kong, Jakarta, London, Mexico City, Mumbai, Munich, Palo Alto, São Paulo, Shanghai and Singapore.

Insight: Global venture capital and private equity firm investing in high-growth technology and software ScaleUp companies that are driving transformative change in their industries. Founded in 1995, Insight Partners has invested in more than 400 companies worldwide and has raised through a series of funds more than $30 billion in capital commitments. Insight’s mission is to find, fund, and work successfully with visionary executives, providing them with practical, hands-on software expertise to foster long-term success.

You’ve likely heard of all of these names and I’m sure these can be interchanged in order. All of these groups had a big 2020 despite the pandemic and they persevered on the back half of the year. Groups like Insight closed a tremendous amount of deals in Q4 and continued that train well into Q1.

The list is helpful really for a few reasons at its core. I’d imagine for funds this is a small boost when pitching founders on why they should take their capital and be their partner. Any leverage funds can find is useful in todays market with the incredible surplus of capital. Alongside that if you are debating making the move towards growth investing then using this list as a benchmark is a good use as well.

I myself would be intrigued to see a list of rising growth funds. Especially first time funds that have been launched by executives with a history in space. That would be a really interesting list to dive into. The inherent problem with a list like that is you just don’t have enough data to run off of. I guess the speculation would be on the team, and the fund raised, etc.

So frequently we tend to overlook smaller players in the space and they’re having great years as well. Some returns of smaller funds line up or exceed the big players in the space.

Getting back to the list, on the back half we see some smaller names and international funds. Groups like Five Elms Capital and France based fund Eurazeo. The majoirty of the list is made up of SF & Boston based funds, primarily over $10B in assets under management.

I feel a few groups were definitely left out of the list, likely based on size and the spread of their specialties. Groups like ICONIQ capital deserve to be recognized for both the fund size and major investments made.

All things considered this list shares a lot of light on which funds were the most active and most recognized in 2020.