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Understand how Vista Equity has been driving returns for over 20 years in software growth equity
Key Takeaways
- Monti Saroya and Michael Fosnaugh, co-heads of the Vista Equity Flagship Fund, discuss Vista's growth equity investment strategy.
- Vista invests in enterprise and infrastructure software companies - and has been for over 20 years. They are one of the few investors targeting large check sizes to high growth, cloud-native software companies with limited revenue.
- They have an in-house consulting group that specializes in sourcing management talent and go-to-market strategy - which they have tested and developed over years of practice.
- They look at every company over $1M in revenue, and focus on winning deals by positioning themselves as value-creators. They are a private equity firm which focuses on growing a business, versus cutting costs.
Transcript
Welcome to our discussion on Vista's Flagship Fund. I'm joined by Michael Fosnaugh and Monti Saroya, senior managing directors and co-heads of the flagship fund.
The software landscape has evolved, and software development has evolved. And so you see software companies now being created in the cloud and creating a much more high growth and larger addressable market. Since you've seen us evolve with that from a flagship standpoint to invest in those types of businesses and improve them. If you think about the size of the checks, we're writing and the market that we're going after, there's no direct competition from a GP. Right. So we're really the only folks that are going after growth at scale businesses with high growth revenue models that are Next-Gen Cloud-native that don't have a ton of EBITDA. Doing deals is not the hard part, right? Buying companies isn't hard. You just have to pay the highest price. What's hard is how are you going to buy these companies and actually create value with them? And then, ultimately, can you exit them?
We've always prided ourselves and always created and generated our returns using best practices. Now, the way we've done that has evolved and scaled over time. And so what we've done now is that we've combined our VCG team, our Vista Consulting Group, with our OMD teams to create what we call our value creation team. And the way to think about that is our value creation team is in charge of creating all the different value creation plans that we have within our businesses and helping transform those businesses early in the transformations, early in our ownership.
Specifically, I think one of the things I hear consistently is that more often than not, you know, all the companies I invest in have massively underinvested in the go-to-market side of things. So think sales, you know, think marketing, think customer success. So things that are going to drive revenue. And so, you know what they're able to glean from talking to the other, you know, CEOs and founders in our network is just how much we can help them accelerate and optimize that go-to-market motion to really drive growth. So we've been doing this now for over 21 years, and that you know experience you know helps beget expertise that helps us understand what is good and great look like sooner than we believe others can in the market. And then ultimately we really focus then on, you know, how are we going to get to be able to create value in these companies.
We are sourcing every single software company on the planet. If it has north of 1 million of revenue to billions of revenue, we're going to see it somewhere in our ecosystem. And the thing that we've identified as a team is there are certain of these businesses that we'd like to own, and we have to do multiple steps own them.
I think the biggest thing that Mike hit on there is, you know, look, private equity has a mixed reputation. If you look across the landscape, founders are worried that you're going to come in and slash and burn. And that's been kind of the historical perception of our market. And we're really focused on growth and helping these businesses flourish and inflect growth rates higher as they get larger. And so we focus a ton on how are we hiring talent, how are we doing recruiting and testing and helping these folks get larger in a very competitive market landscape.
Important disclosures
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