Can Any Other Software Private Equity Firm Hold a Candle to Vista Equity?

Vista Equity Partners, a middle-market Austin-based private equity firm focused on investments in software, data and technology companies, was years ahead of its peers executing its now famous 'playbook' for nearly a decade before others caught on.   Now they're on to a new strategy, one in which their competitive advantage is likely to last a whole lot longer.  Its secret to success has been driven in large part by its Chief Executive Officer and founder Robert Smith, who focused early on the idea of specialization.

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The value of “niche investing” helped Vista Equity surpass its $8 billion target for its newest tech buyout fund, closing at over $11 billion as one of the largest tech-focused PE funds in history. Since Smith formed the Vista playbook in 2000, the firm has since evolved its strategy after analyzing years of trial and error. Over the same period, others have tried to copy its playbook, comprised of over 50 proprietary standard operating procedures in areas such as product development, sales and marketing, customer support, professional services and general administration. The low volume, high value-add firm with over $30 billion in capital commitments has maintained a strictly disciplined focus on targeting a limited number of companies with the ability to transform into predictable, high cash flow businesses.

Robert Smith’s business acumen includes a six-year tenure at Goldman Sachs in technology M&A, where he handled deals with tech titans such as Apple, Yahoo! and eBay. The founder’s expertise has helped shape VEP’s unique style in which it strategically identifies, acquires and merges companies through a series of smaller deals. An example of this is in 2016, when the the PE firm merged Fiverun, Marketlive and Shopatron to form cloud-based retail platform Kibo.

Boston, Mass.-based Spectrum Equity, also focused on deals in the internet, software and information services segments, closed a $1.25 billion fund earlier this month, surpassing its $1 billion target. Previous investments include online survey company SurveyMonkey Inc., link management platform Bitly, and  But how do firms such as Spectrum compete with Vista Equity, whose strategy and operations go deep into building category winners.

And now Vista Equity has moved on to a new phase and strategy assembling a team which can absorb and analyze data coming off of the software ecosystem and through their holdings.  Akin to machine learning, their firm is getting smarter, better, faster through data and through each iteration they observe as the software industry evolves.  It is no surprise that the cerebral, technical and ambitious Robert Smith has figured out a way to extend his lead over competitors.