River Cities Capital Funds has closed its third fund with $158 million. The firm, based in Cincinnati, also has an office in Raleigh, N.C., principally invests in the Midwest and Southeast.
“We started raising this fund in early 2001 and wound up closing in June 2002,” says Ted Robinson, a managing director at River Cities. “We had set the target at $150 million, but we would have taken as much as $250 million. In the end, we are happy to have achieved our goal.”
River Cities typically invests in first or second institutional rounds of financing. Its target markets include information technology, health care, communications and manufacturing. Fund III will probably pump an average of $2 million into five or six deals per year. When all is said and done, River Cities expects to put about $5 million into each portfolio company, with a maximum of $10 million.
“Five or six deals a year is manageable, and, in terms of stage, we will be diversified but have a bias toward first and second rounds,” Robinson says.
Robinson would not say name the firm’s limited partners, however, he says that River Cities secured money from the Small Business Investment Company program and the remainder came from high-net worth and institutional investors.
Fund III will follow the path of its predecessors. Fund I was raised $45 million in 1994. Fund II was raised in 1998 and closed with $94 million. Both funds are fully committed.
Thus far, Fund III has made six investments. Most recently it led a deal with $1.6 million in Construction Software Technologies, a Web site for the construction industry. Prior to that, River Cities invested $1.5 million into Rubicon Technology. In September 2001 River Cities made its first investment. It put $2 million in Smart Signal, a company that monitors the condition of products that have maintenance requirements, like a jet engine. In October 2001 the firm invested $1.5 million in Evault, an online data back-up service and $2 million in CrossMedia, a Web-based marketing service. Then in November 2001, the firm invested $1.5 million into Afterbot Inc., a developer of point of sale solutions that allows retailers to generate digital receipts.
Contact Danielle Fugazy