Lead Edge Capital Raises $3.5 Billion for New Fund

Lead Edge Capital, a growth equity firm that has backed ByteDance Ltd., Spotify Technology SA and startup Grafana Labs, has raised $3.5 billion for its seventh fund to focus on software investments even as other investors dump stocks in the sector.

The new fund will primarily invest in private companies, Lead Edge said in a statement on Monday.

The New York-headquartered firm was formed in 2011 and has invested in some of the world’s biggest software and tech companies, including China’s Alibaba Group Holding Ltd., dating app Bumble and Uber Technologies Inc.

Some of those early investments now risk disruption from artificial intelligence. After Anthropic PBC released plug-ins for its AI service Claude through January and February, fears that the technology might replace sectors such as legal services or financial software roiled markets.

Lead Edge founder Mitchell Green is among the growing chorus of investors who say the fear-driven selloff is overblown.

“People tend to overestimate how fast things will change,” said Green. “Everybody said in 2017 we’d have self-driving cars. Ten years later, we’re just starting.”

Software companies are seeing a bifurcation, according to Green, with those specializing in repetitive tasks such as customer service calls or workflow automation more vulnerable to AI disruption. Others that manage critical business data are more shielded, he said.

“These businesses have strong foundations,” said Green, adding that enterprise software companies such as Confluent Inc, Databricks and Grafana have grown into giant businesses by providing support, services, security patches and developer resources.

Lead Edge Capital has raised $9 billion since inception, investing in companies with at least $10 million in revenue and strong annual growth. It plans to deploy between $50 million and $400 million per investment. The investor points to its network of limited partners, many experiened executives who supply funding and advice, as a differentiating factor.

Last year, the company opened its first international office in London to back more European companies. Its investments on the continent include French car-sharing service BlaBlaCar, UK credit-scoring firm ClearScore, Spotify and money-transfer company Wise.