American River Ventures, one of a handful of new Sacramento, Calif.-based venture firms intent on financing a new generation of regional entrepreneurs, last week received a $10 million jump-start from the California Public Employees Retirement System (CalPERS). CalPERS’ investment is the first institutional commitment toward the first-time fund’s $25 million fund-raising target.
Once the firm reaches its $25 million target, it will leverage a federal Small Business Administration SBIC license to create a $75 million pool of investment capital for early-stage investments in the technology arena. American River Ventures Fund will move into telecommunications hardware and software, enterprise software and fabless semiconductor deals in Northern California – Contra Costa, Marin and Sonoma Counties.
The region – home to major engineering and manufacturing facilities for Hewlett-Packard Co. and Intel Corp. and a biotechnology research hub at the University of California – slowly has been garnering the attention of venture investors. Last year, 10 area companies raised $169.34 million in venture dollars. This year, three area companies have raised $64 million.
“There’s been a steady outward migration from the Bay Area, so the management talent is there, but the funding infrastructure hasn’t been there. Part of the reason CalPERS invested in us is to help build companies in areas that haven’t been reached by Silicon Valley investors,” said Corley Phillips, a principal with the firm. “It’s an advantage for us: Less competition for deals means better prices for LPs.”
Phillips, who is also a member of Incline Village, Nev.-based Sierra Angels, will manage the fund alongside John Kunhart. Harry Laswell, a managing director at Intel Capital responsible for investments in wireless communications and mobile computing, will join the team June 25.
The firm expects to hold a formal first close before Memorial Day and to begin investing soon after that.