Fund II First Exit

As usual, just like in every other aspect of life, the Pareto principle applies: in 2024, the top 15 startups (SpaceX, OpenAI, Stripe, Epic Games, etc.) accounted for around 60% of the US VC secondary market volume. These highly traded companies are typically multi-decacorns. We tend to avoid them, as we believe their upside potential isn’t that compelling. Besides, as fund managers, it’s our job to dig in the mud.

Over a coffee chat, Egnyte — a content collaboration platform based in Mountain View — came up in conversation. Its primary competitor is Box (NYSE, $4.5B market cap), which we currently use via Carta, as it’s the default option for the funds they administer. That said, we are not fans of Box’s interface, and Egnyte felt like a refreshing alternative.

As we dug deeper into Egnyte, a few things stood out:

* Their last funding round was over six years ago (in Oct 2018), led solely by Goldman Sachs, valuing the company at $462M

* Despite raising only $138M —a modest sum by Silicon Valley standards — Egnyte has scaled revenue from $80M in 2018 to over $250M, all while maintaining profitability

* They have attracted 22,000+ customers globally, with strong traction in AEC (Architecture, Engineering, Construction) and Life Sciences

* The three founders (part of the so-called “India mafia”) still hold key leadership roles as CEO, CTO, and Head of Growth. On the board, five seats are occupied by the VCs: Kleiner Perkins, GV, Goldman Sachs, Polaris, and Floodgate

Given this context, our Investment Committee enthusiastically approved the investment in Egnyte. Acquiring the shares took some time due to the stock’s limited liquidity — based on broker data, we became the largest buyer since Q2 2021.

While we initially anticipated an IPO, we were surprised when Egnyte was instead acquired by GI Partners and TA Associates for $1.4B.

Conclusion

We are thrilled to share the first exit of Fabrica Ventures Fund II, achieved in less than a year since the fund’s final closing. This Egnyte exit delivered a 160% IRR and returned nearly 10% of the fund’s total committed capital to our LPs.