Vertical software refers to software products that are designed to serve a specific industry or...
Investing for a better future
Our portfolio
Our Criteria
We invest in category leaders that have a history of operating profitability:
Financial Profile
-
- At least $2M in recurring revenue
- History of profitability (at least 10% operating margins)
- Preference for high gross margins (70%+)
- Revenue growth rate at least flat
- Serving a specific market (government, healthcare, technology, utilities, farms, etc.)
- Mostly US-based customers
Business Profile
- Generally founder run
- Preference for 5+ years operating history
- Operate in large, growing markets
- Have a cost advantage vs. peers
- Founders have a special approach to the market and are able to recruit others
- Disciplined unit economics
Our Mandate
We invest in a variety of assets:
- Majority acquisitions of vertical software companies
- We are flexible on founders staying on after the acquisition
- We require some seller equity rollover
- Minority investments in venture backed, growth stage companies
- Primary with a strong lead (target valuation of $200M-$2BN)
- Secondary in pre-IPO companies
- Real estate
- Dental clinics
Investment Case Studies
Blend Labs
$5M, 2019, Series D
We invested in a private round with the thesis that Blend would expand in its mortgage processing division, move into other lines of credit. The business was showing very strong retention and revenue growth, and had built a strong culture. Blend went public later.
Figure
We invested in the seed round on the premise that blockchain would be commercialized, and saving on middle man fees in securtization was a good use case. This proved true, combined with HELOC loan packages.
Meraki
We invested in one of the first true hardware-as-a-service businesses focused on wireless networking. We believed in the management team and executed a structured equity transaction. Several months later, Merake was acquired by Cisco for more than $3 billion.
"Loka was a hands-on and supportive investor from the very first days. They believe in your mission and you want them by your side."
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Vertical software refers to software products that are designed to serve a specific industry or...
Vertical software refers to software products that are designed to serve a specific industry or...