Valhalla Partners closed its inaugural fund after navigating the tumultuous waters of venture capital fund-raising. The firm announced the closing through an article posted on its Web site that it raised $172 million.
While the total falls below the firm’s initial goal of $200 million, the final closing is a triumph for any first-time fund, says Gene Riechers, one of Valhalla’s three general partners.
“This was an accomplishment in what was a somewhat difficult climate in raising venture funds,” Riechers says.
Riechers – who served as a managing director with FBR Technology Ventures before joining Valhalla – says that many limited partners were still suffering from allocation issues resulting from low public equity values. Thus, the fund fell a little shy of its goal, but he remains optimistic for future fund-raising.
“2004 will be a better fund-raising year than 2003 was,” he says.
Limited partners in the fund include DuPont, HarbourVest Partners, Investco, J.P. Morgan, Lockheed Martin, Quellos Group and U.S. Trust. While general partners of a fund normally don’t invest more than 1% of the fund, the GPs of Valhalla’s first fund invested nearly 12%, or 20 million.
Valhalla held a first close for $106 million last July. The firm expected to hold its final close on the fund by late autumn. Instead, it closed in December. Riechers says that the firm could have continued fund-raising but chose not to do so.
The company has made two investments. It invested in networking software provider Rivermine Software, which raised a $5 million Series A round last October. In December, Valhalla also invested in the $5 million Series A round of Secure Software, a provider of software security. The firm is close to finalizing its third deal and expects to make up to seven investments in 2004 in the areas of communications and networking, IT services, and software.
The firm will primarily make venture investments, but will also do technology buyout deals, as well.
Former New Enterprise Associates General Partner Arthur Marks in 2002 founded Valhalla, and former FBR Technology partners Hooks Johnson and Riechers joined him soon after.
The firm, which is based in McLean, Va., focuses on early-stage technology companies in the Mid-Atlantic region, with a concentration in Maryland, Virginia, and Washington D.C.