PHX Ventures has raised more than $25 million for a second fund to back seed-stage business-to-business software companies in Arizona.
PHX Ventures Fund II will lead or co-lead seed rounds of $1 million to $5 million and aims to support around 15 companies, said Gregg Scoresby, founder and managing partner of PHX Ventures.
Scoresby launched PHX Ventures in 2019 to fill a funding need for high-growth, early-stage companies in Arizona. The firm has invested in 20 companies to date and is the most active software investor in Arizona.
“Raising capital is one of the most difficult but necessary tasks required to build a category-defining software company,” Scoresby told AZ Inno. “When I started CampusLogic, I talked to hundreds of angel investors over a two-year period to raise $3 million. I vowed then, that after I sold CampusLogic, I would create Arizona’s first institutional-quality, seed-stage venture capital fund supported by Arizona’s most successful software entrepreneurs. This is it.”
Investors in PHX Ventures Fund II consist of notable Arizona-based software entrepreneurs, including Heidi Jannenga of WebPT, Matt Pittinsky of Parchment, Gabe Cooper of Virtuous, Chris Ronzio of Trainual, and Hamid Shojaee of Savvy Trader, among many others.
“The number of founders that have invested in this fund because they care about backing other Arizona software founders is really incredible,” Scoresby said. “This list is a little bit of the who's who of software entrepreneurs in Arizona.”
Other investors are software executives and advisers, and principals from more than 10 top-tier growth equity firms nationwide.
PHX Ventures began marketing the fund with a $25 million target in February and it generated so much investment interest that it's expected to close later this year at an oversubscribed amount of $30 million, Scoresby said.
The firm's first fund totaled $15 million from a handful of investors, including large family offices and Scoresby, who contributed a significant amount of capital.
AI strategies will play into investment choices
PHX Ventures Fund II will likely invest in software startups with substantial artificial intelligence strategies to drive productivity in companies, Scoresby said.
“We are for entrepreneurs who are using and building software that drives productivity because we believe that productivity is attractive in any economy,” he said. “If your software delivers real productivity for your customers, you will always be able to sell it, if that's the case. So we're very focused on productivity enhancing software, whether it's in a specific industry vertical or across.”
The fund has already made its first investment, which will be announced at a later date, Scoresby added.
PHX Ventures’ second fund comes at a challenging time for the venture capital industry as economic headwinds put pressure on deals nationwide and in Arizona during the second quarter.
Despite recent economic uncertainty in the venture capital landscape, PHX Ventures was able to exceed its $25 million target for its second fund in five months due in part to the firm's team, which has extensive experience with operating and investing in software companies.
“I think that really resonates. I also think people understand that we have probably the most extensive network of growth equity investors behind us,” Scoresby said. “We have partners at other venture and private equity firms invest in our funds and these are some of the leading software investment firms across the country that are investing in series A, B and C behind us. So that combination of our operating experience and the extensive nature of our capital network is appealing to our investors.”
