In conversation with Novacap’s Digital Infrastructure team, we explore the firm’s thesis behind its latest fund, the hurdles of an unsteady fundraising environment, and how staying grounded in operational excellence helped them earn the trust of investors across the globe.
What Was the Thesis Behind This Fund, and How Does It Build on Your Firm’s Strategy?
The launch of the Novacap Digital Infrastructure Fund marks a significant step forward in the firm’s strategic development—an initiative deeply rooted in experience. For over 40 years, Novacap has built a reputation through its focused investments across Technology, Industries, and more recently Financial Services. As digital infrastructure matured into a distinct and essential asset class, it became increasingly clear that it merited its own dedicated platform within the firm’s ecosystem.
“This fund is the continuation of a strategy that has already delivered results,” explains Gordon Hargraves, Senior Managing Director, Investor Relations and Strategy at Novacap. “We’ve long been active in sectors like telecom and broadband—areas that have naturally evolved into what is now recognized as digital infrastructure.”
By launching a fund exclusively dedicated to digital infrastructure, Novacap sharpened its focus on North American lower mid-market companies that provide essential connectivity and data access services—sectors supported by tangible, physical assets like broadband networks, wireless infrastructure, and data centers.
“Our approach was to focus in the sub-$1 billion fund space—an area that plays to our strengths and where we can add the most value,” adds Ted Mocarski, Senior Partner, Head of Digital Infrastructure.
The response from investors affirmed this thesis: the fund exceeded its target, raising US$920 million from LPs spanning North America, Europe, the Middle East, and Asia. Including significant co-investments, the total capital committed surpassed US$1 billion. With this new fund, Novacap deepens its commitment to supporting essential infrastructure that powers digital connectivity—while staying true to its longstanding principles: sector expertise, operational excellence, and building enduring partnerships with growing companies.
What Were the Key Factors That Resonated Most With LPs During Fundraising?
Several key elements came together to earn the confidence of investors. At the heart of it was the strength of the team. Novacap’s Digital Infrastructure group brought together seasoned professionals with a long-standing history of working together—and a proven record of delivering results. “Our team’s cohesion and sector credibility were crucial,” says Ted Mocarski. “LPs were able to fund not just our strategy, but our people.”
That trust was reinforced by a robust pipeline of actionable opportunities, many of which had been sourced through relationships cultivated over decades. Several potential investments had already moved under exclusivity during the fundraising process, giving LPs early visibility into the type of companies the fund would back.
“In an increasingly competitive market, being able to point to real transactions—not just hypotheticals—was a major differentiator,” Mocarski explains. That early traction gave LPs confidence that capital would be deployed thoughtfully and effectively.
Another factor that stood out was the fund’s focused strategy. While many investment managers were moving upmarket and raising ever-larger vehicles, Novacap remained committed to the North American lower mid-market. This specialized, value-added approach in this space created an opportunity for differentiation.
“Investors recognized that the sub-billion-dollar segment had become under-served,” says Mocarski. “That’s where Novacap thrives—partnering with founder-led businesses and helping them scale with real operational support.”
How Did the Current Market Environment Influence Your Fundraising Approach?
The fundraising climate from 2022 to 2024 was, by all accounts, extremely challenging. Global infrastructure fundraising volumes dropped by nearly 50%, and timelines to close extended significantly. At the same time, digital infrastructure became a crowded category, with many specialists fundraising in parallel, even as overall LP allocations to the sector decreased compared to its 2021 peak.
“This environment demanded that we be exceptionally focused on our positioning,” reflects Ted Mocarski, Senior Partner and Head of Digital Infrastructure. “We had to clearly demonstrate why the North American lower mid-market not only remained attractive but also represented one of the few areas of unexploited potential in a crowded space.”
Novacap’s approach was rooted in fundamentals: a sharply defined investment thesis, pro-actively sourced with early visibility into platforms, and a strong alignment with where future demand is heading. The team emphasized its ability to identify and scale infrastructure-backed, founder-led businesses that larger players often overlook—assets that remain in high demand from both strategic acquirers and upmarket investors.
Just as critical as the strategy itself was the strength of Novacap’s investor base. “We’re fortunate to have a group of long-standing, thoughtful LPs who not only saw the same opportunity in digital infrastructure, but who also knew the team and trusted our ability to execute,” Gordon Hargraves notes. That credibility was instrumental in securing a successful first close and building early momentum.
The firm also benefitted from a strong partnership with Evercore, whose role as placement agent helped catalyze a number of meaningful new relationships with global institutional investors. Their support enabled Novacap to navigate the noise and connect with LPs who were aligned with the fund’s focus, scale, and differentiated sourcing model.
In an environment where many funds struggled to stand out, Novacap’s disciplined execution, trusted LP network, and focused message allowed it to stand out in a crowded market—and exceed its fundraising target.
What Challenges Did You Face During the Fundraising Process, and How Did You Navigate Them?
Launching a first-time fund under a dedicated strategy came with inherent friction. Many LPs have mandates that preclude backing debut funds, and others take a cautious “wait-and-see” stance. To overcome this, Novacap anchored its value proposition in tangible proof points—completed digital infrastructure investments from prior funds, early transactions from the current fund, and a series of planned communications to LPs aligned with key milestones such as first close, deal announcements, and new team hires.
Another complexity stemmed from perception. “As a firm historically focused on private equity, there were questions about how this fund fits into traditional infrastructure buckets,” Gordon Hargraves says. That meant educating potential investors—through detailed materials and conversations—on the Fund’s criteria and sector diversification, while demonstrating how it aligned with infrastructure return expectations and growth potential.
Strategic partnerships with anchor LPs and co-investment opportunities also helped build credibility and momentum at critical stages.
What Trends Do You See Shaping LP Commitments and Fund Structures Today?
Investor expectations are evolving. LPs are becoming more selective and are concentrating their commitments among proven managers. In this environment, being able to point to DPI (distributions to paid-in capital) and successful exits is more important than ever. Funds that deliver genuine operational value—not just leverage or multiple expansion—stand out.
Moreover, transparency, alignment, and demonstrable differentiation are all key. Investors want to see what makes a strategy not just unique, but repeatable—and resilient.
What Advice Would You Give to Other GPs Raising in the Current Fundraising Climate?
Gordon and Ted don’t hesitate when asked. “Start with credibility. If it’s a new strategy, link it back to a track record that proves capability. Full cycle exits help build confidence.”
They also advise GPs to set achievable targets and secure meaningful commitments before formally launching—ideally 50% of the target through known relationships or anchor investors. Building authentic, ongoing relationships with LPs—outside of active fundraising—creates a foundation of trust.
“And time your outreach,” Gordon adds. “Having a strong update—a new investment, a team hire, an exit—can provide momentum when you need it most.”
In a crowded market, Novacap’s journey stands as an example of clarity, preparation, and staying true to an investment thesis backed by experience. It’s a story not only about raising capital—but about raising conviction in a complex world.
