As VC market cools, SoftTech gets new partners

SoftTech adds Stephanie Palmeri and Andy McLough, also look to raise $130 million across two funds

It's a tough time for venture capital right now, as things kind of fell off a cliff at the end of last year, with the lowest amount invested since the third quarter of 2014, as the market saw a serious slowdown. 

SoftTech, however, isn't going to let any of that get in the way of its continued investing. The early stage fund is not only promoting two of its own to Partner, but it's planning on raising new new funds as well.

First, SoftTech revealed that Stephanie Palmeri and Andy McLoughlin have both been promoted.

Palmeri joined SoftTech VC in 2011 as a Senior Associate before becoming a Principal. Before that she was an Associate with NYC Seed and launched the NYC SeedStart incubator. She also worked with wine e-commerce startup Lot18 on business development and marketing initiatives.

Her other experiences include Accenture’s market data practice working with investment banking clients like JP Morgan and Morgan Stanley, as well as several years with Estee Lauder’s Clinique brand focused on marketing and sales initiatives for alternative distribution channels.

"Not only has Stephanie developed the fundamental skills that make a great investor (sourcing, board leadership, fundraising, legal), she has supported companies in good times and challenging ones, and become an invaluable contributor to both our SoftTech family and the broader ecosystem," Jeff Clavier, Founder and Managing Partner of SoftTech VC, wrote in a blog post.

I interviewed Palmeri about her investment philosophy in September, and she talked about what interested in her, specifically mentioning the senior care space. 

"With baby boomers entering their senior years, they are not going go to want to age in the same way that their parents aged, so its an interesting to see how tech will transform the way that adult children have relationships with their parents and way seniors will age, which will be in their homes longer and with better data and services. We can bring needs to where they are. I think about those macro trends, and innovating for populations like that," she told me.

"I'm excited when I see companies that can make a difference for a population. I also tend to be customer centric in my thinking. I obviously need to know if there is a business model there, but, all things aside, if you're going after some sort of unmet market need, and you have smart founder who can figure it out, that makes it an interesting business."

McLoughlin, meanwhile, joined the firm much more recently, coming to SoftTech in April of 2015. He is the founder of Huddle, an enterprise content collaboration company that has raised nearly $90 million in venture funding. Andy previously worked as a consultant for a boutique London-based content management consultancy focused on the global insurance and finance markets. He also managed online applications and knowledge tools for Fibernet Group plc, a FTSE 250-listed telecommunications company.

As it gains two new partners, SoftTech is also losing one, as Charles Hudson launched his own firm, called Precursor Ventures. He will remain on a part-time basis at SoftTech until it wrap up the investment period of Fund IV later this year.

As I said earlier, 2016 is not looking like a great time for the markets, or for VCs. Clavier said as much in his blog post, noting that there are already "signs that  2016 is going to be a tough year."

Optimism has taken a hit in the last six months, he said, along with deflating round sizes and valuations. 

"We expect that it will be harder for startups to raise follow-on rounds, and the right mix of top line revenue growth and sustainable unit economics will be rewarded – as opposed to top line growth at all cost," he wrote. "Companies will stumble and will need the financial and operational support of their investors – who will have to show their experience and conviction. I look forward to working with my Partners on these challenges."

As least the firm will have some new funding to play with. As noticed by TechCrunch, SoftTech is currently raising $130 million across two funds, according to separate filings with the SEC. 

The firm is looking to raise $100 million for it's fifth fund, an increase from its $85 million fourth fund, raised in 2014. So far it has not raised any of that funding. SoftTech is also looking to raise $30 million for its Breakout Fund, of which it has already has $27 million committed. 

Founded in 2004, SoftTech is a  micro VC fund that specializes in seed investing. It is a broad, generalist fund, with a combination of B2B and B2C. Thematically its biggest spaces are marketplaces and, to a lesser extent, commerce, which includes consumer devices. That includes investing for quite a few years in mobile enabled services, and cloud based SaaS applications.

In invests between $700,000 to $800,000, on average, in 45 to 50 investments a year, which is typically 3 to 5 deals per quarter.

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