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Insight targets $3bn for second ‘follow-on’ fund

The fund will invest in assets acquired by 2019-vintage Insight Venture Partners XI, following the launch in 2021 of a vehicle targeting Fund X investments.

Insight Partners is going big on its second fund dedicated to investing in its own portfolio companies.

The New York-based tech investor is targeting $3 billion for Fund XI Follow-On, which will invest in businesses acquired by the 2019-vintage Insight Venture Partners XI, according to documents prepared by Massachusetts Pension Reserves Investment Management Board.

MassPRIM approved a commitment of up to $20 million to the fund at its board meeting on Thursday.

Insight Venture Partners XI raised $9.54 billion by final close in April 2020. MassPRIM was among the LPs in the fund, having committed $150 million, according to PEI data. Insight does not disclose which assets are in its funds.

In March last year, Secondaries Investor reported that Insight was targeting $1.25 billion to make primary and secondaries investments in portfolio companies held by 2017-vintage Insight Venture Partners X. It is not clear if the fund has closed.

Follow-on funds, or double-down funds, allow GPs to provide extra capital for assets that the manager believes could become top performers in the flagship fund with more time and money. They can also be used to maintain exposure to assets sold by the flagship fund during the exit period. Unlike continuation funds, no replacement capital is injected by a secondary buyer and LPs do not have the option to cash out of the asset.

Follow-on funds are typically associated with tech investors such as Insight and TA Associates, which in June closed TA Select Opportunities Fund II on its $1.5 billion hard-cap, but are becoming more common in the buyout sphere.

In March, European mid-market firm Equistone Partners announced it had made the inaugural investments from its Reinvestment Fund, which takes minority positions in companies sold by its flagship funds. The size of the fund was not disclosed.

Insight has $90 billion in assets under management, more than 20 percent of which came  with the final close of Fund XII, on $20 billion, back in February. It has backed the likes of social media giant Twitter, Canadian e-commerce site Shopify, website builder Wix, enterprise event management platform Cvent and data and analytics platform Qualtrics.