The sheer number of deals in the Southeast venture capital over the last year has kept service providers (lawyers, accountants, bankers, etc.) busy. The team behind Service Provider Capital is looking to tap into this momentum as they close Fund II.
The fund brings together service providers from across the region to join in on larger VC-backed investment rounds. The fund is “nomenclature agnostic” and will join rounds that are at least $1 million.
Fund I backed 65 startups across the Southeast, including Voxie, Vennfi (Charityvest), Stord, Greenlight, Kobiton, PadSplit, Relay Payments, and Car360 (acquired by Carvana).
The fund also attracted an impressive list of LPs, most of whom have rejoined and upped commitments for Fund II.
Having a strong bench of service providers as LPs means the fund can provide additional value to startups in the region.
“One thing we figured out in Fund I — that’s even more true now — is that we have this pool of money and that’s great. But that alone is not enough to get us into deals. We have to add value…because the good deals are oversubscribed. And those are the deals we want to get into,” added Spear. “In order for us to do that, we have to add value, whether it’s because one of our LPs has a particular connection or one of us as the GPs does.”
The Fund is also able to tap into its sister funds located in regions across the US in order to increase relationships with strong VCs looking to invest in Southeast startups.
Brian Gordon has joined Spear and Hill as a third partner in Fund II. As Partner McDermott Will & Emery, Gordon is building out the venture and emerging growth practice at the firm. Adding a third partner is strategic as Service Provider Capital Southeast looks to join upcoming deals.
“I think if we look five to eight years ago, virtually all of us would see every deal in the ecosystem,” said Gordon. “Just the number of deals has increased so broadly that you really need a lot more tentacles into the ecosystem to see the good deals.”
Fund II is roughly double the size of Fund I, and the team plans on deploying larger checks into regional startups over the life of the fund. It has already closed on five deals with companies across Atlanta, Florida, and North Carolina.
The team sees bringing more service providers into the investing side of the ecosystem as a positive for up-and-coming regional entrepreneurs as well.
“We’re tapping into a source of capital that otherwise wouldn’t really be able to participate in any meaningful way,” Hill told Hypepotamus. “Both for investors and also for entrepreneurs, bringing that additional capital to market ends up being a strong positive.”