PHX Ventures to Invest in Arizona’s High-Growth B2B Software Companies

PHX Ventures has announced an over-subscription of its second fund at $25.4 million to invest in Arizona’s high-growth B2B software companies.

Founded by software entrepreneur Gregg Scoresby, the seed-stage venture capital (VC) firm was created to fill a gap in the state’s local software industry, providing institutional-quality, early-stage capital for ambitious startups, PHX Ventures said in a Thursday (Aug. 3) press release. The fund will lead or co-lead seed rounds of $1 to $5 million for these businesses.

“We want to use our capital and operating experience to identify, fund, and partner with ambitious entrepreneurs to build high-growth software companies that start, scale, and stay in Arizona,” Scoresby said in the release.

Investors in PHX Ventures Fund II include successful software entrepreneurs, executives and advisers in Arizona as well as principals from top-tier growth equity firms across the United States, according to the press release.

The firm expects to hold its final close later this year and cap the fund at $30 million, the release said. The new fund has already made its first investment, with an announcement expected soon, and PHX Ventures has invested in 20 companies to date.

Many of the contributors to the new fund have a deep understanding of the startup process, per the release. Scoresby himself has experienced the challenges of raising capital first-hand.

“Raising capital is one of the most difficult but necessary tasks required to build a category-defining software company,” said Scoresby. “When I started CampusLogic, I talked to hundreds of investors over a two-year period to raise $3 million. I vowed then, that after I sold CampusLogic, I would create Arizona’s first institutional-quality, seed-stage venture capital fund supported by Arizona’s most successful software entrepreneurs. This is it.”

This announcement comes when venture capital (VC) spending has dropped by almost half in the U.S.

American investors backed one-third fewer startup deals in the second quarter of 2023, compared to the same period the previous year, and spent about half of what they spent last year, Bloomberg News reported July 6, citing PitchBook data.

The largest drop happened in angel or seed deals, for startups still in the concept phase, according to the report.