Digital Alpha Advisors (Digital Alpha), a digital infrastructure investment firm, has held the closing of Digital Alpha Fund II over its initial hard cap with over USD1 billion in commitments.
The Fund was oversubscribed and continues the same successful strategy of investing in digital infrastructure assets, companies and revenue share arrangements as Digital Alpha Fund I, formed in 2017. Digital Alpha will also continue the successful strategic partnership it has had with Cisco since the firm’s founding, which includes preferred access to Cisco’s deal flow, engineering and sales resources, as well as access to Cisco’s broader ecosystem of channel partners and resellers. In addition, Digital Alpha is proud to cultivate strategic partnerships with other Silicon Valley technology leaders, with whom it has already executed deals in Fund I and Fund II.
As a pioneer of the digital infrastructure category since launching in 2017, the Fund will maintain its core focus of investing in operating companies and revenue share deals across three key verticals: next-gen networks (5G infrastructure investment and Wi-Fi 6 solutions globally), cloud computing and IoT-enabled smart city solutions. The mission critical infrastructure layer where Digital Alpha invests sits above the commodity layer of radio masts, fibre cables and data centres and supports the consumption layer, which is focused on digital content, apps and devices. The Fund will seek to build out a diverse portfolio of approximately a dozen “anti-fragile” investments with resilient business models in leading operating companies and related yield-oriented revenue share structures.
“We’re thrilled to announce the close of our second digital infrastructure fund to support the growth of the digital economy. We’re proud of the role our investments play in providing secure connectivity for private and public sector stakeholders during the pandemic. In addition, the strong interest we’ve had from existing and new institutional investors globally is testament to our team’s expertise, the quality of our strategic relationships and our proven track record of value creation. We’ve already deployed a significant amount of capital into differentiated and high-quality deals, and we look forward to actioning the rich opportunity set our team of experts has identified in the high-growth verticals driving digital transformation,” says Rick Shrotri, Founder & Managing Partner.
To date, the Fund has committed approximately USD300 million across three deals. The first deal of the Fund created a novel network edge solution with Cisco, Qwilt, and British Telecom; this innovative outcome based financing is scaling with telecom and cable operators in markets worldwide. The Fund also recently made a USD185 million investment commitment to network access provider WeLink Communications to help expand their fixed-wireless broadband footprint across the US. Finally, in March the Fund committed USD100 million in outcome-based financing to fund digital infrastructure for communities across the US with Sharecare—a leading digital health platform.
Digital Alpha’s seasoned investment team is led by Rick Shrotri, Founder & Managing Partner, and Vasa Babic, Partner. Shrotri is a 10-year Cisco veteran who devised the funding model employed by the Fund during his time as Head of Business Acceleration at Cisco. As of the Fund II launch, he has collaborated with Vasa Babic on a series of market shaping deals over nearly a decade. Digital Alpha’s diverse team has deep investing and industry experience and is supported by an internal Cisco unit called the Global Infrastructure Funds (GIF) team that was created by Shrotri while he was at Cisco.
Investors in the Fund include sovereign wealth funds, pension funds, endowments & foundations, consultants, and health systems primarily from North America, Europe and the Middle East. Digital Alpha enjoyed a re-up rate on a dollar basis of over 100 per cent from Fund I.