Fund V seeks to raise US$400M to target widening gap between bank lenders and VC equity funding
Vancouver, British Columbia and Toronto – December 13, 2023 – Vistara Growth (“Vistara”) today announced an initial closing at over US$150 million for Vistara Technology Growth Fund V LP (“Fund V”) towards its target of US$400 million. The closing was completed in 4 weeks from launch and was anchored by increased commitments from existing Vistara limited partners.
Since inception in 2015, Vistara has raised over US$500 million, primarily from non-institutional sources such as family offices, entrepreneurs, and private foundations, predominantly based in British Columbia. With the ongoing growth of its platform, Vistara is now seeking to broaden its investor base by targeting pension funds and other institutional investors, and geographically by launching vehicles for both US and international investors. Vistara is targeting completion of its fundraise during the first half of 2024.
“We are extremely grateful for the ongoing confidence from a core group of limited partners who have invested increasing amounts throughout our journey, and new ones who have joined along the way. Our investors clearly recognize the growing market opportunity for our differentiated investing strategy of providing flexible growth capital to technology companies, and the proven track record of delivering strong realized returns across each of our prior funds” said Randy Garg, Founder and Managing Partner.
Vistara has maintained a consistent focus on mid-later stage enterprise software companies across North America seeking flexible and typically less dilutive forms of growth capital such as term debt, convertible debt, and/or structured equity. The market dislocation created by the collapse of Silicon Valley Bank has created opportunity for private direct lenders, at the same time as equity valuation declines have led to decreased access to funding from venture capital. With far less growth capital available between bank lenders and VC funds, the gap that has historically been served by alternative non-bank capital providers like Vistara has widened dramatically as Fund V enters its investment period.
For investors, Vistara has provided the benefits of downside protection, regular cash income distributions, and an inflation hedge through its floating rate loans, while also providing the upside of investing in the technology sector through warrants and conversion features. Vistara’s differentiated strategy has a proven track record across four funds with 34 investments, 15 exits, and zero losses, producing a mid-teens Net Annualized IRR to date across all four funds (including realized and unrealized investments).
As noted by Preqin, the global Private Credit market is currently estimated at US$1.5 trillion and is considered one of the most attractive asset classes as historical returns indicate similar or better returns with less volatility to public debt and equity strategies, while offering shorter duration compared to private equity and VC funds. The growth in demand for Private Credit has also been fuelled by the higher interest rate environment and ongoing challenges for regulated bank lenders.
With its Fund V target raise, Vistara expects to be strategically positioned to invest in 18-24 companies across North America at US$10-$30 million per investment. Vistara also continues to grow its team, now 14 professionals and staff on both the west and east coasts, to support the deployment and management of Fund V.
As Vistara (Sanskrit for “expansion”) embarks on this exciting new chapter with Fund V, we remain steadfast in our mission of enabling growth for the ambitious technology entrepreneurs we invest in, our investors, our people, and the communities we operate in.
Daniel McQuade – Director, Marketing
Notice to Readers
This news release and the information contained herein do not constitute, and do not form part of, an offering document and must not be construed or relied upon as such and are being provided for informational purposes only. This news release does not constitute an offer to sell interests in Fund V or any other security. In considering the prior performance information contained in this news release, bear in mind that past performance is not indicative of future results, and that there can be no assurance that Fund V or future funds sponsored by Vistara will achieve comparable results, be able to implement its investment strategy, or be able to avoid losses. Nothing contained in this news release should be deemed to be a prediction or projection of future performance.