The newest addition to the Silicon Valley VC scene is Ridgelift Ventures, a startup firm that aims to raise $200 million for its inaugural fund.
The firm – headed by co-founders Stu Phillips, a former U.S. Venture Partners general partner, and Robert Goldberg, a former managing director at Idealab – hasn’t “formally” launched its fund-raising drive. But Phillips and Goldberg say that early indications are positive.
“Obviously, I know a lot of people in the LP community,” Phillips says. “The feedback that we’ve had on the fundamental premise of Ridgelift has been extremely encouraging.”
The two met nearly seven years ago. Phillips had invested in a browser add-on called FlySwat that raised a little more than $3 million from USVP and Comdisco Ventures, according to Thomson Financial (publisher of PE Week). At the time, Goldberg was senior VP of sales, marketing and operations for NBCi, which acquired FlySwat in 2000 for an undisclosed amount.
“There was a little hair in the deal that required cool heads and smart business minds,” says Goldberg of the acquisition, which some sources at the time said hovered around $70 million. “Stuart and I, who each led the deal on both sides, realized then that we shared core values and subsequently forged a nice friendship.”
Phillips and Goldberg have since served on two boards together – online ad optimization startup ClickShift and search company X1 Technologies.
They named their firm Ridgelift in a reference to rising air. “Ridge lift” is a term used when a prevailing wind rushes against a long hill or ridge of hills and the air is forced upward. (Ridgelift, meanwhile, is located on a very flat stretch of Marsh Road in Menlo Park, Calif.)
The two are close to signing two more GPs to help raise the fund. Phillips, who worked at Cisco Systems and Tandem Computers before joining USVP, isn’t naming candidates yet. However, he says, “We’ve been deliberate about the kinds of folks with whom we’ve been talking. We have 20 years of operating experience apiece, in addition to our VC experience, and we’ve looked for similar backgrounds to fill out our team, which we’re in the home stretch of completing.”
The firm plans to invest in 25 to 30 companies, each of which will receive between $6 million and $8 million from the firm. Ridgelift is actively meeting with startups, but it has yet to make any investments.
Neither Goldberg nor Phillips would discuss terms of the fund, though Phillips, who led fund-raising for USVP’s current fund, a $600 million vehicle assembled in 2004, hints that they will be standard for an emerging fund.
The firm isn’t putting many sector constraints on itself. Phillips says that he will look at “computers, communications, software, and Internet-related companies,” while Goldberg says he’ll do everything from enterprise investing to consumer-focused technology deals.
Ridgelift will add other areas of coverage when its newest team members are announced, Goldberg says.
Its big differentiator, say both men, boils down to its stage focus. In 1995, early stage investments made up 28% of rounds, but that fell last year to 19%, according to figures cited by Phillips. “That leaves an opportunity for a smaller fund to fill that void,” he says.
If they succeed at wrapping up their fund, they’ll join a number of first-timers who have launched firms recently, such as Maven Venture Partners, Bridgescale Partners, Shasta Ventures and Spark Capital. In the past four years, roughly 30% of U.S. funds that have come to market have been inaugural funds, according to Thomson Financial.
Phillips says that his biggest hits are CacheFlow and @Road. CacheFlow, now called Blue Coat Systems, is an enterprise appliance company that raised more than $52 million in five rounds before it went public in 1999 with a $120 million IPO. Benchmark Capital and Technology Crossover Ventures were also investors.
@Road, a mobile resources management company, raised $88 million over six rounds and went public in a $63 million IPO in 2000. Its market cap today is about $290 million. Institutional Venture Partners and ABS Capital Partners were among @Road’s other investors.
Goldberg, who has been an executive at Looksmart and Thinking Machines, in addition to NBCi and Idealab, says that his “most recent highlights” include X1 (privately held), the search-engine Snap (privately held) and Insider Pages, a search engine that provides users with information about local businesses, and is also still privately held.