Silversmith on its $460M First-time Fund

Silversmith Capital, a newly formed private equity firm, exceeded its fundraising goal by 30%. Managing partner Jim Quagliaroli discusses how he and his partners tapped into their network for their first successful fundraise.

Boston-based Silversmith Capital recently closed its first-time fund at $460M. This exceeds Silversmith’s initial goal by 30 percent, and it took a mere three months of fundraising to reach the hard cap—no small feat for a firm that was formed this year.

But don’t underestimate the power of three veterans of the growth equity business in top positions at Silversmith: founders and managing partners include Jeff Crisan and Todd MacLean, previously of Bain Capital Ventures, and Jim Quagliaroli, whose previous position was managing director at Spectrum Equity.

“The relationship among the three of us goes back a long time, both personally and professionally,” says Quagliaroli, managing partner at Silversmith. “Each of us has grown up in the growth equity market, and has done so in the same city, focused on the same industry segments.” He adds that the firm’s mandate, which is to support what Silversmith believes to be the best entrepreneurs to grow profitable healthcare and technology companies, also aided the strong fundraise.

Silversmith’s partners worked with Monument Group, a placement agent, and met with a wide variety of institutional investors, insurance companies and financial institutions over the summer months for the fundraise. One commitment of up to $25M came from the University of Michigan.

Due to the three partners’ long-time experience in the growth equity market, close to 10 percent of the fund was from founders, entrepreneurs, and friends of the firm with whom they have previously worked. “It’s certainly gratifying to raise significant capital from the founders and entrepreneurs that we’ve previously supported,” says Quagliaroli.

Silversmith is focused on investing in two core industry verticals: technology and healthcare. “Within technology, you’ll see us investing in SaaS (software-as-a-service) platforms and information/data service companies,” explains Quagliaroli. “Within healthcare, we will look at both healthcare IT and healthcare services.  We have experience in software, IT and data platforms that sell into a wide range of healthcare providers and payers.  These areas are where our domain expertise is, and where we think we can be helpful to growing companies.”

But Silversmith isn’t “chasing unicorns,” as those at the firm like to say. It is looking at profitable growth companies—not serving as a startup investor and weighing in on issues of intellectual property or developing a product, says Quagliaroli.

“We want to be a strategic partner to founders and entrepreneurs,” he says. “We value partnership and try to be hands-on, hardworking, knowledgeable investors. Our inclination is to roll up our sleeves—that may be helping to recruit other managers to the team, recruiting other board members, or supporting M&A—really helping in any way we can.”