Cypress Raises $60M Royalty Fund V

Cypress Growth Capital is pleased to announce the closing of our fifth royalty-based growth capital fund, CGC Royalty Investments V, LP. This $60 million investment vehicle was oversubscribed and raised in 43 days.

You can read more about the new fund in this feature story in Dallas Innovates.

Fund V will continue to provide Cypress' pioneering, equity-preserving financing to emerging software and technology-enabled services companies based primarily in the Southwest and Southeast US. Our diversified group of investors includes prominent Texas-based family offices, other US-based family offices and high-net-worth individuals, including former Cypress portfolio company CEOs who sold their companies.

"We were pleased to be able to raise our latest fund in less than two months and to be once again over-subscribed. We appreciate the vote of confidence in Cypress and our investment model," said Ed Mello, co-founder and Managing Director of Cypress Growth Capital. “With a fifteen-year track record of consistently successful outcomes for our investors and portfolio companies, our royalty financing model has proven itself as a compelling alternative to venture capital and traditional debt options."

Founders who partner with Cypress achieve exceptional outcomes for themselves and their shareholders. Historically, our portfolio companies have produced an average of 10x growth in equity value following our investment and have generated more than $2.4B in enterprise value. More than 90% of Cypress’ portfolio companies go on to achieve their exit objective, usually through a larger growth equity round, majority recapitalization, or outright sale.

Just as importantly, Cypress’ royalty-based growth capital model is also attractive to investors. "As an investor in their prior funds, we have been impressed with the Cypress team and the performance of the funds, and we were pleased to increase our commitment to Fund V,” said Shivam Khanna, Managing Partner of Eternal Lotus Capital Partners. "We particularly appreciate the highly relevant operational and entrepreneurial experience the Cypress team brings to evaluating, selecting and supporting companies. We believe it’s a differentiator and helps produce consistently high returns with less risk than other alternative investments.”

Fund V also includes a record number of previous Cypress portfolio company CEOs as limited partners. “Cypress’ non-dilutive capital was the right choice for us when we were an emerging company,” said Scott Harper, Co-Founder and CEO of Dialexa, a Dallas-based technology company acquired by IBM in 2022. “More importantly, the Cypress team provided advice and support that helped us achieve exceptional growth. I’m proud to be an investor in the current fund and to be contributing to the success of a future generation of entrepreneurs.”

“Post-pandemic, capital and debt markets have changed significantly and valuations for software and technology-enabled service companies have reset,” said Cypress Managing Director Vik Thapar. “As a result, Cypress’s non-dilutive growth capital is an even more attractive alternative to equity and traditional debt for founders who wish to preserve their equity. This will help fuel the success of Fund V.”

With the closing of Fund V, the Cypress team will continue to offer its deep operating, entrepreneurial, and investment experience to its portfolio companies, an important differentiator from other firms that provide only capital.