Sources: two of the largest tech-focused private equity firms, Vista Equity Partners and Thoma Bravo, are each looking to raise $10B+ funds
Two of the largest technology-focused private-equity firms are competing to raise money for what would be their biggest funds Tweets: @trevornoren and @lisaabramowicz1 Tweets: Trevor Noren / @trevornoren : “Technology has been the most popular sector for private-equity investors in recent years, accounting for 20.5%, or $79.5 billion, of all acquisitions globally in 2017” http://www.wsj.com/... http://twitter.com/... Lisa Abramowicz / @lisaabramowicz1 : Two private equity firms are trying to raise $22 billion for their biggest yet tech funds. Lots of interested investors, but a dwindling pool of obvious investments at a time of such high asset prices. http://www.wsj.com/...
Context & Ripple Effects
In May 2018, Vista Equity Partners and Thoma Bravo were simultaneously shopping their largest-ever funds, each targeting $10B+, just as tech had become the most popular sector for PE investors — accounting for $79.5B, or 20.5%, of global acquisitions in 2017. That followed tech firms' record 46% share of US private-equity buyouts reported two years earlier.
The 2018 asks now read as the opening bid in a scaling race: Thoma Bravo went on to pursue a $35B tech-buyout fund and ultimately closed $32.4B across three funds, while even venture firms like Bessemer added a buyout vehicle in a $4.6B dual raise. The constraint flagged at the time — interested investors but a dwindling pool of them — is what makes the two-firm head-to-head notable.
First-order effects
- Institutional LPs face two competing $10B+ asks from the same sector specialists at once, forcing allocation choices between rival software-buyout franchises while the pool of willing investors shrinks.
- Both firms secure capacity for far larger take-privates than prior funds allowed — the trajectory that later produced Thoma Bravo's $10.2B RealPage and $12.3B Proofpoint acquisitions.
Second-order effects
- Rival tech PE firms are pushed to scale their own flagships to stay competitive for large software targets, a dynamic visible when Thoma Bravo's main buyout fund grew 36% over its predecessor to $24.3B by late 2022.
- Mega-fund PE begins crowding the territory venture capital traditionally owned, as startups staying private longer push VC firms themselves toward $1B+ vehicles — blurring the line between growth investing and buyouts.
Third-order effects
- Software ownership concentrates in a handful of giant specialist funds, and the model's leverage risk surfaces with it: Thoma Bravo's handover of Medallia to creditors, erasing roughly $5.1B for investors, shows what the downside of the scale race looks like.
- If the pattern holds, tech buyouts consolidate around a few multi-decade platform managers whose fund sizes, not deal-by-deal judgment alone, determine which companies can be taken private at all.
The trend: Technology-focused private equity is scaling into ever-larger flagship funds, concentrating software-company ownership among a few specialist managers while testing how much leveraged buyout capital the market will absorb.