Exclusive: Sorenson Capital raises $150 million third fund to chase security and enterprise software deals

“A number of people tried to recruit me before, and I was happy where I was at,” said Rueckert. “Sorenson made a lot of sense for me because it scratched an itch. At the time, it was a regional fund. They said: ‘We want to grow the practice to be a national fund. We want to grow our asset classes. We want you to do that for us.’”

Sorenson has since done just that: The firm—now with offices in both Salt Lake City and Palo Alto—has invested in CloudKnox (acquired by Microsoft in 2021), Fastly (went public in 2019), Harness (valued at $3.7 billion), and Talon Security (acquired by Palo Alto Networks for a reported $600 million). Now, Sorenson has raised its third fund at $150 million, Fortune can exclusively report. The new fund is close in size to the firm’s second fund. 

“We’re experts in B2B software and security,” said Ken Elefant, Sorenson partner. “We are definitely not a generalist fund. We’re definitely not a ‘spray and pray’ fund. We work very closely with our founders to open up doors with customers and partners. The only way that you can do that is to have a really good idea on how that industry works and who’d be the initial buyers for that product.”

Sorenson’s strategy is notable for its stark clarity. The firm, full stop, focuses on early-stage companies and emphasizes scaling over product development. The firm focuses solely on enterprise software and cybersecurity (the portfolio is about 40% security right now). The portfolio is deliberately small and structured to stay that way, as Sorenson makes between six and seven investments each year. The firm’s emphasis specializes in helping startups with go-to-market, building sales and marketing teams. 

“That’s where we help out, because that’s where [founders] need it most,” said Rueckert. “That’s where an investor that’s seen the movie over and over again can pick up tips and tricks.”

Parker Ence, CEO and cofounder at Jump, told Fortune via email that Sorenson has helped recruit employees, navigate fundraising, and found the startup “way before we had product market fit, and consistently checked in with us, encouraged us, sent us a steady stream of introductions to potential customers and industry experts.”

Enterprise software and cybersecurity are both set to change in the AI era. Traditional customer relationship management (CRM) software is particularly in the crosshairs, said Rueckert, who believes AI will automate data collection and generate insights automatically, says CRMs will change completely over the next five years.

“The whole purpose of the CRM was to have the person input the data and then have the manager look at it,” said Rueckert. “Then they attempt to make some decisions. If all of that can be done with AI, why do you need a CRM?”

Cybersecurity is also set to be affected by AI: “When we moved from on-prem to the cloud, we knew there would be security issues associated with that,” Elefant said. “And when we move from deterministic software to AI software, there are going to be huge changes, as well.”

In the end, it’s a strategy notable for its discipline—Sorenson is as much defined by what it is as what it’s not. And it’s gotten results: A source familiar with the firm’s performance said that Sorenson has zero write-offs to date, and only three companies have ever exited below cost, but capital was still recovered.

Why does this matter? It means that Sorenson, which declined to comment on those metrics, has been creative about finding the best possible outcome for companies, even those that aren’t soaring. 

“We’re not trying to be all things to all people,” said Rueckert. ”We’re not going to make the product better. We’re investing in the company because we believe in the CEO, and we believe in the product.”

See you tomorrow,

Allie Garfinkle
X: @agarfinks
Email: alexandra.garfinkle@fortune.com
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Venture Deals

- Kalshi, a New York City-based prediction market, raised $185 million in Series C funding at a $2 billion valuation. Paradigm led the round and was joined by Multicoin Capital, Sequoia, Neo, and Peng Zhao.

- Halter, an Auckland, New Zealand-based cattle ranch technology company, raised $100 million in Series D funding, at a $1 billion valuation. BOND led the round and was joined by NewView and existing investors Bessemer Venture Partners, DCVC, Blackbird, and others.

- Neuron23, a South San Francisco, Calif.-based neurological and immunological diseases therapies developer, raised $96.5 million in Series D funding from existing investors Westlake Village BioPartners, SoftBank Vision Fund 2, Redmile Group, and others.

- Zama, a Paris-based fully homomorphic encryption blockchain solutions developer, raised $57 million in Series B funding. Blockchange Ventures and Pantera Capital led the round and were joined by others.

- Certify, a New York City-based provider data intelligence company, raised $40 million in Series B funding. Transformation Capital led the round and was joined by SemperVirens and existing investors General Catalyst and Upfront Ventures.

- Metaview, a San Francisco-based AI-powered hiring platform, raised $35 million in Series B. GV led the round and was joined by existing investors Plural, Vertex Ventures, Seedcamp, and others.

- Niural, a San Francisco-based AI professional employment organization, raised $31 million in funding. Marathon Management Partners led the round and was joined by existing investors M13, Inspired Capital, Newform Capital, and others.

- Arine, a San Francisco-based AI-powered medication intelligence platform, raised $30 million in Series C funding. Town Hall Ventures led the round and was joined by Kaiser Permanente Ventures and other existing investors.

- Kognitos, a San Jose-based business operations AI automation company, raised $25 million in Series B funding. Prosperity7 led the round and was joined by Khosla Ventures, Wipro Ventures, Engineering Capital, and others.

- Paraform, a San Francisco-based recruiting marketplace, raised $20 million in Series A funding. Felicis led the round and was joined by A*, BOND, DST Global, Liquid 2, and angel investors.

- Synthflow AI, a Berlin-based agentic AI platform for phone call automation, raised $20 million in Series A funding. Accel led the round and was joined by existing investors Atlantic Labs and Singular.

- Sibill, a Milan-based financial and administrative management solutions for small and medium-sized enterprises, raised €12 million ($14 million) in Series A funding. Creandum led the round and was joined by Keen Venture Partners and angel investors.

- Elfie, a New York City-based health monitoring and rewards app, raised $12 million. White Star Capital led the round and was joined by LifeX Ventures and existing investors Integra Partners, FEBE Ventures, and Hustle Fund.

- Echandia, a Bromma, Sweden-based maritime battery systems company, raised 105 million krona ($11.1 million) in funding from S2G.

- Jarsy, a Palo Alto-based digital investment platform, raised $5 million in pre-seed funding. Breyer Capital led the round and was joined by Karman Ventures and angel investors.

- Movemint, a San Francisco-based athletic events platform, raised $5 million in seed funding. Underscore VC led the round and was joined by Michael Horvath and Green D Ventures. 

- Sitch, a New York City-based AI-powered matchmaking app, raised $5 million in seed funding. M13 led the round and was joined by existing investor a16z SpeedRun.

- Insight Health, an Austin-based AI agents developer for clinics, raised $4.6 million in funding. Kindred Ventures led the round and was joined by 43, RTP, Karman Ventures, and others.

- Antler Bio, a Dublin-based gene expression technology developer for dairy farming, raised $4.3 million in funding. The First Thirty Ventures led the round and was joined by Endgame Capital and Generation-RE.

- Lux Aeterna, a Denver-based reusable satellite platform developer, raised $4 million in pre-seed funding. Space Capital led the round and was joined by Dynamo Ventures, Mission One Capital, Alumni Ventures, Service Provider Capital, and angel investors.

- Jobright, a Santa Clara, Calif.-based AI job search platform, raised $3.2 million in funding. Translink Capital led the round and was joined by HR Tech Investments.

- Waypoint AI, a Berkeley-based AI-powered software maintenance solution, raised $3.1 million in pre-seed funding. 42Cap and Dreamcraft Ventures led the round and were joined by Berkeley SkyDeck Fund, Lumiere AI Ventures, and others.

- Blank Metal, a Minneapolis-based AI-native engineering company, raised $3 million in seed funding from Rally Ventures, Traction Capital, and Pure Play Partners.

- Mahalo, a Chicago-based post-purchase experience platform, raised $2.6 million in pre-seed funding. Motivate Venture Capital led the round and was joined by Diagram and Bridge Venture Fund.

- OutSee, a Cambridge, England-based AI-powered predictive genomics technology developer for drug discovery, raised £1.8 million ($2.5 million) in seed funding. Ahren Innovation Capital led the round and was joined by Kadmos Capital, Empirical Ventures, and Panacea Ventures.

- YieldClub, a Washington D.C.-based crypto savings app, raised $2.5 million in pre-seed funding from Pharsalus, Flex Capital, The House Fund, Superlayer, and angel investors.

Private Equity

- Court Square Capital Partners acquired a majority stake in DCCM, a Houston-based design, consulting, and construction management services provider for infrastructure projects. Financial terms were not disclosed.

- Decks & Docks, backed by CCMP Growth Advisors, acquired The Deck Supply, a Kansas City-based decking supplies company. Financial terms were not disclosed.

- FTV Capital acquired a 50% stake in ProfitSolv, a Knoxville-based billing, payments, and software solutions provider for legal, accounting, and professional services firms. Financial terms were not disclosed.

- GetixHealth, a portfolio company of H.I.G. Capital, acquired Americollect, a Manitowoc, Wis.-based patient engagement solutions company for healthcare providers. Financial terms were not disclosed.

- Harvest Partners agreed to acquire a majority stake in Med-Metrix, a Parsippany, N.J.-based revenue cycle management solutions provider. Financial terms were not disclosed.

- Latticework Capital Management acquired a majority stake in First Medical Associates, a Germantown, Md.-based primary care provider. Financial terms were not disclosed.

- Mechanix Wear, a portfolio company of Gryphon Investors, acquired Kinco, a Portland, Ore.-based work gloves company. Financial terms were not disclosed.

- Revenue Analytics, backed by Lead Edge Capital and others, acquired Climber, a Viseu, Portugal-based revenue management software provider for small hotel chains. Financial terms were not disclosed.

- The Riverside Company acquired a majority stake in Maid Brigade, an Atlanta-based residential cleaning services franchisor. Financial terms were not disclosed.

- Vision Innovation Partners, a portfolio company of Gryphon Investors, acquired Eye Care of Delaware, a Newark, Del.-based eye surgery provider. Financial terms were not disclosed.

Exits

- Greenbelt Capital Management agreed to acquire the power distribution business of BRUSH Group, a Loughborough, England-based engineering solutions provider for electrical infrastructure projects, from One Equity Partners. Financial terms were not disclosed.

- STG agreed to acquire Yodlee, a Berwyn, Pa.-based finance and data analytics platform, from Envestnet, backed by Bain Capital. Financial terms were not disclosed.

Other

- Mark Walter agreed to acquire a majority stake in the Los Angeles Lakers, a Los Angeles-based NBA team, from the Buss Family Trust for $10 billion, according to ESPN.

- New Home acquired Landsea Homes, a Dallas-based house building company, for $11.30 per share in an all-cash transaction at an enterprise value of approximately $1.2 billion.

- Illumina acquired SomaLogic, a Boulder-based proteomics technology company, from Standard BioTools for $350 million in cash upfront and up to $75 million in earnout payments.

- Gorilla Technology agreed to acquire CNS, a Bangkok-based technology solution provider, and its subsidiary CANS, a Bangkok-based communication and mobility solution provider. Financial terms were not disclosed.

- Liftout Capital acquired a majority stake in AG&E, a Dallas-based structural engineering company. Financial terms were not disclosed.

FUNDS + FUNDS OF FUNDS

- Marlin Equity Partners, a Los Angeles-based investment firm, raised €1 billion ($1.2 billion) for its third European fund focused on software, technology and services businesses.

- Project A, a London and Berlin-based venture capital firm, raised €325 million ($378.9 million) for its fifth fund focused on early-stage tech companies.

- Sentinel Global, a San Francisco-based venture capital firm, raised $213.5 million for its first fund focused on enterprise technology companies.

People

- Astorg, a Luxembourg-based private equity firm, added Jérôme Triebel as partner, head of France and Benelux for its mid-cap fund. Previously, he was at Sagard.