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Toba Capital on the Hunt After Slower 2022

OC's Largest VC Boosts Holdings via Australia

Newport Beach’s Toba Capital, founded by OC multibillionaire Vinny Smith, has recently increased its portfolio holdings and is hunting for more investments in the tech area, after slowing things down last year.

Tech exec Smith was the CEO of Quest Software in Aliso Viejo who engineered the $2.4 billion sale of the company to Dell in 2012.

He then started Toba Capital that same year, pushing it to become the largest venture capital firm based in Orange County.

Toba has $1.4 billion in assets under management, according to Business Journal figures. Smith ranked No. 19 on the Business Journal’s 2022 OC Wealthiest list with a fortune estimated at $2.9 billon.

One of Toba’s earliest investments was Alteryx Inc. (NYSE: AYX) when the Irvine-based data analytics firm was valued at $100 million, well below its approximately $4.1 billion valuation today.

In the latest investment, Toba announced on Jan. 26 it had cleared the way for the acquisition of Australian company ProvenDB, which protects signatures and other key information online, by Chicago-based OneSpan Inc. (Nasdaq: OSPN), a digital agreements security company that uses blockchain technology.

Matt Gless, a Toba partner, explained to the Business Journal that Toba had financial interests in both OpenSpan and ProvenDB.

“We’re investors in both businesses. We brought the two parties together,” Gless told the Business Journal on Feb. 1. Financial details were not released.

Toba founder Smith said the acquisition “brings together two industry leaders in their respective fields, resulting in a powerful combination that will revolutionize how businesses create trustworthy digital agreements.”

Looking ahead, Smith shared the following brief comment with the Business Journal: “This summer we will have something really interesting to show you.”

Technology Companies

Toba Capital calls itself “an early-stage investment firm committed to helping create incredible technology companies.”

Gless said it’s a “fair comment” to say that Toba was a “little bit quiet” in 2022.

“We slowed down to allow the market to provide better pricing for where these businesses should be priced,” he said.

“We sharpened our pencil, if you will, found better value,” Gless added­­.

He said Toba is “really excited” about its investments including compliance specialists Hyperproof of Seattle and cloud and application security specialists Wallarm of San Francisco and is looking to adding to the stakes.

“There were five of six investments made in ’22, whereas we made more investments in prior years,” he said. “We were just being prudent, given the market volatility. We are excited about ’23.”

He added: “Right now we’re looking at adding on to investments in a couple of our existing portfolio companies like Hyperproof, like Wallarm. In and around compliance and security is important to us.”

Hunt Continues

Gless said Toba is “excited” about investing in key tech areas such as security, software as a service, compliance, artificial intelligence as well as the increasingly prevalent ESG—environmental, social and governance. That includes carbon removal, battery tech and solar.

“We will continue to hunt for interesting opportunities in and around those areas,” according to Gless, who is based at Toba headquarters in Newport Beach. “We have a big pipeline. There’s many active conversations taking place.”

Last summer, Toba took part in a $72 million founding round for Newport Beach-based healthcare software company Tebra Technologies Inc. The round gave Tebra a more than billion-dollar valuation.

Toba Capital’s website lists venture investments in almost 80 companies, while it has exited investments in 33 companies. The exited companies include Irvine-based firms SecureAuth and Synoptek, in addition to Alteryx.

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Kevin Costelloe
Kevin Costelloe
Tech reporter at Orange County Business Journal
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