Battery Ventures Stays Keen On B2B Software, Raises Billions

Michael Brown is a general partner with Battery Ventures, and these days, he is feeling pretty good. His firm recently raised two funds totaling $2 billion for B2B software investments, and the future is bright. “We have always thought of B2B as the sexy market,” said Brown, a small dig at venture firms focused on consumer-facing investments but are now expanding their enterprise portfolios. “For us, it’s more of the same.”

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Some may question the wisdom of trying to raise those kinds of funds after Softbank's multi-billion dollar stumble with WeWork. Still, Brown denies that it impacted Battery's ability to collect capital. He also believes the global concerns related to Coronavirus will run its course in short order. Additionally, low-interest rates are making venture capital more attractive than ever to investors. The tailwinds continue to blow.

The two funds consist of the $1.2 billion Battery Ventures XIII and an $800 million side fund to top up more significant investments. He stated the larger of the funds would be reserved for early-stage investments while the $800 million would divert towards more mature investments – often in tandem with Battery's main fund. The focus will be on business-to-business software, information infrastructure, and cybersecurity startups. Brown also sees the potential for technology in "blue-collar" sectors.

“Seventy percent of the world’s population doesn’t sit behind a desk. So, there is a whole wave of innovation in software that will blossom over the next five to 15 years,” said Brown.

Battery Ventures is a VC firm with offices based in Boston, Silicon Valley, and Israel. The firm makes venture capital, growth, and private equity investments in the technology sector. They focus on leading-edge, category-defining businesses in application software, IT infrastructure technologies, consumer-internet, mobile services, and industrial technologies. Founded in 1983, the firm makes investments ranging from a couple hundred thousand for seed stage to majority-ownership deals of $100 million and more.

Some of Battery’s earlier successes include tax software provider Avalara which the firm brought on board in 2012. The company IPO’d in June 2018 and shares are now trading at an estimated $90 – almost four times the amount it was a year and a half ago. Other notable exits include WebPT, ClearCare and Glassdoor which were all acquire by larger companies or private equity firms.

While Battery has done well with raising funds for its B2B venture investments, it hasn’t emerged unscathed from the consumer-business slump. The venture firm was one of the investors in Wag Labs, a dog-walking app provider suffering through hard times.

Along with the new capital, the business also promoted Boston-based Zack Smotherman to partner. Chelsea Stoner is the VC's only female partner and when asked about the gender ratio, Brown stated the firm is committed to hiring from within the ranks.
He added the firm had launched an internal diversity committee to begin addressing the issue, however.