AVX Partners, the firm started by Austin Ventures veteran Chris Pacitti, has made its third investment and is looking for more deals.
AVX will announce Thursday that it has invested $5 million in Austin-based Vyopta Inc., which helps customers monitor and improve the performance of their video and Web collaboration systems. The investment is the first venture capital raised by Vyopta, which was founded in 2007 has 70 customers including Vista Print and the U.S. Department of Veteran Affairs.
Founded a year ago, AVX backs software and cloud companies that have launched products and signed customers, but need outside investment to accelerate their growth.
"We call it the marginalized middle - they're too small to attract capital from large funds on either coast, but they've outgrown the capacity of the smaller regional investors, " Pacitti said. "They have annual revenue of $2 million to $5 million, and are growing at a healthy clip, but it's hard to attract investment."
In addition to Vyopta, AVX has invested $5 million in Austin data management firm Predictive Science, and has invested an undisclosed amount in Vapor IO, a data center solutions startup also based in Austin.
Pacitti spent nearly two decades at Austin Ventures, the long time venture capital firm that announced last February that it wouldn't raise a new fund for early stage investing. The firm said it would instead create an affiliate fund that would invest on a deal-by-deal basis, using dollars from its network of tech executives and others.
AVX plans to make three to five investments a year. In each deal, Pacitti invests at least 5 percent of the capital, and Austin Ventures general partners Joe Aragona, Ken DeAngelis and John Thornton invest an additional 10 percent.
The remainder of the money comes from the AVX Partners' syndicate of more than 50 investors including tech executives and entrepreneurs that Austin Ventures has backed in the past. Its investor base also includes local real estate developers and large family offices, which invest on behalf of wealthy families.
In addition to capital, AVX introduces company founders to experienced industry executives who can provide operating advice.
"They've gone through those high growth phases and have made mistakes and figured out how to do it, " Pacitti said.
Vyopta is an example of how it works.
In addition to the $5 million infusion, AVX matched Vyopta's management team with former executives of Austin software maker SolarWinds, including former Chief Executive Officer Mike Bennett.
"We want to go from 25 people to more than 60 in the next six months, and we also want to accelerate our sales cycle, " said Alfredo Ramirez, chief executive of Vyopta. "Mike took SolarWinds public, and we can learn a lot from him when it comes to recruiting a team and getting through the challenges that you face when you're growing fast."