Sorenson Capital Raises $150 Million Fund for Security Software

Sorenson Capital, a venture capital firm with roots in Utah, has successfully raised its third fund, totaling $150 million. This fund is nearly the same size as the firm’s second fund and will be used to pursue investments in security and enterprise software deals. The firm, which now has offices in both Salt Lake City and Palo Alto, has a history of investing in notable companies such as CloudKnox, Fastly, Harness, and Talon Security.

Rob Rueckert, who joined Sorenson Capital in 2015 after spending 15 years at Intel Capital, played a pivotal role in the firm's expansion beyond its regional roots. Rueckert was attracted to Sorenson Capital because of its ambition to grow into a national fund and diversify its asset classes. This strategic shift has allowed Sorenson to focus on early-stage companies, emphasizing scaling over product development. The firm's portfolio is deliberately small, with a focus on enterprise software and cybersecurity, making between six and seven investments each year.

Sorenson Capital's strategy is characterized by its clarity and discipline. The firm specializes in helping startups with go-to-market strategies, building sales and marketing teams, and providing valuable insights based on their extensive experience. Ken Elefant, a partner at Sorenson, emphasized that the firm is not a generalist fund but rather an expert in B2B software and security. This specialization allows Sorenson to work closely with founders, opening doors to customers and partners and ensuring that the product reaches the right initial buyers.

Parker Ence, CEO and cofounder at Jump, highlighted Sorenson's support in recruiting employees, navigating fundraising, and providing a steady stream of introductions to potential customers and industry experts. This hands-on approach has been crucial for startups like Jump, which received support from Sorenson even before achieving product-market fit.

The firm's focus on enterprise software and cybersecurity is particularly relevant in the AI era. Traditional customer relationship management (CRM) software is expected to undergo significant changes as AI automates data collection and generates insights automatically. Rueckert believes that CRMs will evolve completely over the next five years, potentially rendering traditional CRMs obsolete. Similarly, the shift from on-premises to cloud-based software and from deterministic to AI-driven software will bring about substantial changes in cybersecurity.

Sorenson Capital's disciplined approach has yielded impressive results. The firm has zero write-offs to date, and only three companies have exited below cost, although capital was still recovered. This indicates that Sorenson has been creative in finding the best possible outcomes for companies, even those that are not soaring. The firm's strategy is defined by what it is and what it is not, focusing on investing in companies because of their leadership and product, rather than trying to improve the product itself.