Wingman Growth Partners Bags $215 Million to Invest in Software Deals
Wingman Growth Partners has closed its inaugural fund at its $215 million hard cap, hoping to make bets in software despite the market tumult that has followed an onrush of artificial-intelligence technology.
The fund
Set up last year in Greenwich, Conn., the firm focuses on investing in software, data and financial technology businesses. Contrary to prevailing market sentiment, though, Wingman sees AI as a help—not a harm—to its target companies, according to founder Jeff Machlin. Before starting Wingman, Machlin was a partner at Brighton Park Capital.
The firm exceeded its $150 million target for the fund by more than 40%, he said, and wrapped up fundraising for the vehicle in less than a year with about 20 limited-partner investors.
The firm aims to invest $20 million to $80 million per deal in mission-critical and specialist software suppliers across the U.S. and Canada, said Machlin, who is also Wingman’s managing partner. Roughly 15% of the fresh capital has already been deployed.
The strategy
The firm is looking to make six to eight main investments in founder-led software companies still in their growth stage. Many of the companies the firm aims to back haven’t received outside capital previously.
Wingman focuses on companies with proprietary intellectual property and domain expertise, making them well-positioned to use AI to drive value for their customers.
“Rather than thinking about AI as a disrupter or a headwind for these companies, it’s really an enabler and tailwind,” Machlin said.
The firm has so far invested in InterProse, whose applications are used to collect past-due bills, and Beam4D Enterprises, doing business as Beam Software, to combine with InterProse.
Wingman tends to source deals directly through relationships built with management teams. The firm developed the InterProse deal by doing a “thematic dive” on software suppliers whose applications are used by lenders and others for managing receivables, Machlin said.
Wingman now numbers six investment professionals and continues to build out its operating team, he said. The firm expects its new fund to be fully committed by the end of next year.
The context
As AI technologies proliferate, anxiety has arisen over their potential to upend software businesses, such as customer-relationship management, for instance, or businesses that rely on recurring revenue. Some of that has been reflected in a widespread move away from private-credit investment vehicles by individual investors since last fall.
In recent months, fund-withdrawal requests have climbed at some business-development companies, which generally lend to sponsor-backed midmarket companies, as well as at interval funds significantly invested in loans to software businesses. The redemptions have created headaches for managers of BDCs and credit funds.
But unease in the market has also opened opportunities for software investors, Machlin said.
“What I would say with confidence is the amount of competition has gone down for the assets,” he added.