Emergence Capital Partners, a venture capital firm focused on technology-enabled services startups, is preparing to raise a second fund targeting $175 million, $50 million more than its first fund. While the four-year old firm is best known for software as a service investments, its portfolio companies generally allow customers to outsource critical processes, are characterized by recurring revenue and are scalable through technology rather than labor.

Examples include

1) HireRight - HR SaaS
2) SuccessFactors - HR SaaA
3) Goodmail Systems - E-mail authentication
4) InQ - Online corporate chat services

The firm has achieved no exits aside from a small stake it held in Salesforce.com early in its existence. However, many of its portfolio companies have gone on to raise later rounds of funding at higher valuations. The firm expects strong support from existing investors and will seek out new ones.

Emergence Capital will likely succeed in its fundraising further proving that limited partners are open to specialized venture capital funds as long as they believe that management can interpret that sector broadly enough to profit from it. As Emergence general partner Gordon Ritter told The Deal's Paul Bonanos:

"We have had people wonder if we were too focused, but we're not like an optical networking fund, where if the industry catches a cold, you're through. Our model diversifies well, and it allows us to cover multiple industry segments."

For more on Emergence Capital Partners, see:
The Deal

Tags: emergence, vc, venture+capital