BERLIN (Reuters) - Deutsche Telekom’s venture capital arm said on Tuesday it was closing its second fund to new money after raising $350 million to invest in software service companies that are powering digital transformation.
Corporate sponsors SK Telecom of Korea and German optics company Zeiss have joined Deutsche Telekom, HarbourVest, Neuberger Bermann and others in backing the fund, Deutsche Telekom Capital Partners (DTCP) said.
SK Telecom’s $30 million investment is part of a wider agreement with Deutsche Telekom to set up a joint venture to develop technologies and services for next-generation 5G mobile networks, the Korean company said separately.
DTCP’s Venture/Growth Fund II, founded last year, has already made five investments. These include leading a funding round at Fastly, which helps accelerate internet page loads and floated recently in New York.
The fund is focusing on so-called Software-as-a-Service (SaaS) companies that offer cloud-based software with subscription pricing - a “land and expand” model that makes it easy to ramp up use without major IT headaches, said DTCP head of Venture/Growth and Managing Partner Jack Young.
“From an investor’s perspective, an enterprise SaaS business is easily measurable and predictable,” Young told Reuters, adding that digital transformation will accelerate as artificial intelligence is increasingly deployed in software.
DTCP’s first fund, set up in 2015, raised $140 million from Deutsche Telekom. It has made four exits, returning half of the capital already to investors and remains invested in nine firms.
In total, DTCP is managing or advising on $1.7 billion in assets.
Reporting by Douglas Busvine; editing by David Evans and Michelle Martin