Chohere Capital has raised money to invest in tech-enabled service businesses in the lower mid-market cap.

Partners at the Boston-based new shop Cohere Capital state that there will still be opportunities for lower mid-market business owners to work within the current market, according to Buyouts.

The firm has just closed a $200 million fund. Its Partners I focus on the tech-enabled service businesses in the lower mid-market.

The firm’s co-founder and managing partner, Nik Shah, points out that those lower mid-market business owners are driven to obtain partial liquidity and ways to grow their businesses when they have a better understanding of their businesses’ status. Their goals will be to “derisk and focus on the upside of the business with some cash in the bank account set aside for the rainy day,” Shah said.

Although the coronavirus led to a more challenging environment for private equity fundraising, Cohere was still able to attract LP capital and raise a first-time fund. In January, the firm also made one investment in cloud services provider Clear Scale.

The reason why Cohere was able to raise funds in the challenging market is that the co-founders, Nik Shah and Daniel Gedney, had already built up LP relationships over several years. Shah said that “doing this without a placement agent had its challenges … folks understood the market opportunity and the type of firm we were trying to build.”

Several high-net-worth individuals also supported the firm’s early fundraising and “helped get us launch capital,” Shah said. Other LPs included foundations, insurance companies, and family offices.

Because the coronavirus locked down the country, employees were forced to work from home, and communication with bankers and CEOs moved remotely. Shah said employees will be back in the Boston office once they are able to get back to work.

“This is like nothing anyone has ever seen,” Shah said.

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Economics, Finance and Investing