Having spent one year managing a venture fund entirely comprised of individual investors, Ridgewood Capital Management of Ridgewood, N.J., launched its second fund two weeks ago with a target of $75 million.
Ridgewood Capital Venture Partners II LLC will retain the same investment focus as its $52 million predecessor, which is fully invested, said Robert Gold, president of Ridgewood Capital.
“We have a clear high-tech focus, our portfolio looks like a Silicon Valley fund with a New York flavor,” Gold said. “We have business-to-business companies … and also semiconductor design, as well as a New York-type new media company.”
In the first fund, the firm committed as much as $6 million to each portfolio commitment. Primarily, Ridgewood participated in Series B rounds that assign pre-money valuations of $5 million to $15 million to the portfolio company. Proceeds from Ridgewood rounds generally serve as working capital to complete product development and enhance infrastructure prior to the first major institutional round.
“We have led and partnered on deals, but we have never just been one of the people,” Gold said. “Our bias is to lead.”
Typically the firm prefers to serve as the lead investor and take at least one board seat, if not two. Gold said that bias stems from the firm’s history as an operating entity under the Ridgewood Companies. Founded in 1982, the firm began direct investing right away, taking majority positions in portfolio companies. That operating experience has skewed the venture arm toward early-stage deals, where Ridgewood can actively participate, Gold said.
Fund II has already received hard circle commitments of $25 million, 20% of which is available for investment already. Ridgewood’s high-net-worth individual investor base has acted swiftly, as Gold said the company has seen nearly three-quarters of existing LPs re-invest thus far. Terms on the offering include a 2% management fee, 75%/25% management fee and a minimum investment of $250,000.
Gold hopes to complete fund raising in the next two to three months and said the firm plans to begin investing the new fund once it breaks escrow.