Another Tiger descendent has launched a new venture capital fund.
Paul Hudson’s Glade Brook Capital Partners raised $400 million this month for Glade Brook Strategic Growth III, according to an investor.
Although the fund closed earlier this month, it may still take additional capital, the investor said.
Glade Brook specializes in earlier life-cycle investments, often at the Series B and C stages, as opposed to late-stage and pre-IPO financing.
The new fund will focus on entry-point market capitalizations ranging from $50 million to $500 million and will offer co-investment opportunities, according to a letter sent to investors in September and obtained by Institutional Investor.
The firm identified a half dozen key investment themes that the new fund plans to emphasize: financial technology and digital payments, e-commerce, next-generation software, digital media, online trust and safety, and cybersecurity.
“We believe the SG III vintage is unique in two ways,” Glade Brook stated in the letter.
It said that the pandemic has “fundamentally changed consumer/enterprise behavior and accelerated the adoption of new technologies.” It anticipates that the global economy will undergo “significant transformation” as digitation grows off a larger scale, “large TAMs (the Total Addressable Market) become addressable and disrupted, and digitally native generations enter their prime years.”
In addition, Glade Brook expects the withdrawal of monetary stimulus measures to create volatility and attractive entry points.
The new fund expects to back 12 to 15 companies, half based in the U.S. “We expect international exposure to favor large emerging TAMs that are hitting an inflection point in digitization,” the letter elaborated. That includes India, southeast Asia, Latin America, and, to a lesser extent, more developed markets in Europe, it added.
On the other hand, it expects its exposure to China to be “limited.”
Hudson founded Glade Brook in 2011. He is a so-called Tiger Grandcub because he previously worked for Tiger Cub Chris Shumway, who in turn previously worked for Julian Robertson Jr.’s Tiger Management.
Glade Brook started off as a hedge fund firm, but it morphed into more of a venture capital and private equity firm before shuttering its original hedge funds altogether nearly five years ago.
It launched Glade Brook Strategic Growth I in 2017. Since then it has generated a net annualized internal rate of return (IRR) of 43 percent, according to the letter. Glade Brook Strategic Growth II, launched in 2019, has generated an IRR of 122 percent.
For the past six months, Glade Brook has been aggressively harvesting earlier investments, in many cases selling its stakes in the secondary market to other funds specializing in late-stage financing, according to an investor. The valuations of many of these investments have swelled exponentially.
As of September 30, its first Strategic fund had returned 128 percent of fund commitments and distributions. Its second fund is nearing completion of its investing program.
Among its largest holdings these days are Patreon, a membership platform for artists and creators; Zomato, the Indian food delivery company, which went public earlier this summer; Capsule, an online pharmacy; the online news and information company Axios; Fenbeitong, a Chinese fintech and software company; and Facily, a Brazilian e-commerce platform.
