Sorenson Capital—like Mormonism, the electric guitar, and frisbee—has origins in Utah, and expanded beyond. Rob Rueckert, who spent 15 years at Intel Capital, joined the VC firm in 2015 right as it was looking beyond Utah.
“A number of people tried to recruit me before, and I was happy where I was at,” said Rueckert. “Sorenson made a lot of sense for me because it scratched an itch. At the time, it was a regional fund. They said: ‘We want to grow the practice to be a national fund. We want to grow our asset classes. We want you to do that for us.’”
Sorenson has since done just that: The firm—now with offices in both Salt Lake City and Palo Alto—has invested in CloudKnox (acquired by Microsoft in 2021), Fastly (went public in 2019), Harness (valued at $3.7 billion), and Talon Security (acquired by Palo Alto Networks for a reported $600 million). Now, Sorenson has raised its third fund at $150 million, Fortune can exclusively report. The new fund is close in size to the firm’s second fund.
“We’re experts in B2B software and security,” said Ken Elefant, Sorenson partner. “We are definitely not a generalist fund. We’re definitely not a ‘spray and pray’ fund. We work very closely with our founders to open up doors with customers and partners. The only way that you can do that is to have a really good idea on how that industry works and who’d be the initial buyers for that product.”
Sorenson’s strategy is notable for its stark clarity. The firm, full stop, focuses on early-stage companies and emphasizes scaling over product development. The firm focuses solely on enterprise software and cybersecurity (the portfolio is about 40% security right now). The portfolio is deliberately small and structured to stay that way, as Sorenson makes between six and seven investments each year. The firm’s emphasis specializes in helping startups with go-to-market, building sales and marketing teams.
“That’s where we help out, because that’s where [founders] need it most,” said Rueckert. “That’s where an investor that’s seen the movie over and over again can pick up tips and tricks.”
Parker Ence, CEO and cofounder at Jump, told Fortune via email that Sorenson has helped recruit employees, navigate fundraising, and found the startup “way before we had product market fit, and consistently checked in with us, encouraged us, sent us a steady stream of introductions to potential customers and industry experts.”
Enterprise software and cybersecurity are both in the AI set to change in the AI era. Traditional customer relationship management (CRM) software is particularly in the crosshairs, said Rueckert, who believes AI will automate data collection and generate insights automatically, says CRMs will change completely over the next five years.
“The whole purpose of the CRM was to have the person input the data and then have the manager look at it,” said Rueckert. “Then they attempt to make some decisions. If all of that can be done with AI, why do you need a CRM?”
Cybersecurity is also set to be affected by AI: “When we moved from on-prem to the cloud, we knew there would be security issues associated with that,” Elefant said. “And when we move from deterministic software to AI software, there are going to be huge changes, as well.”
In the end, it’s a strategy notable for its discipline—Sorenson is as much defined by what it is as what it’s not. And it’s gotten results: A source familiar with the firm’s performance said that Sorenson has zero write-offs to date, and only three companies have ever exited below cost, but capital was still recovered.
Why does this matter? It means that Sorenson, which declined to comment on those metrics, has been creative about finding the best possible outcome for companies, even those that aren’t soaring.
“We’re not trying to be all things to all people,” said Rueckert. ”We’re not going to make the product better. We’re investing in the company because we believe in the CEO, and we believe in the product.”
See you tomorrow,
Allie GarfinkleX: @agarfinksEmail: alexandra.garfinkle@fortune.comSubmit a deal for the Term Sheet newsletter here.
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