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This is the first fund raised by the firm since changing its name from IDG Ventures USA last year
Venture capital fundraising is riding high right now. According to the Dow Jones VentureSource 2Q’18 U.S. Venture Capital Report, 159 venture funds raised $17.74 billion in the second quarter of this year, for a three year high. That represented growth of 9 percent in the number of funds, and 100 percent growth in the amount raised, from the first three months of 2018.
There are no signs of things slowing down during Q3. Greylock has already raised a $1 billion fund, as did Index Ventures and Lightspeed Venture Partners, while Scale Venture Parners raised $400 million, and that's all just in the first few weeks of July.
The fund was oversubscribed and was backed by "foundations, endowments, insurance companies, funds of funds, family offices, Ridge portfolio entrepreneurs, and prominent tech industry executives from companies like Facebook, Google, Microsoft, Netflix, Oracle, and Salesforce," Alex Rosen, Managing Director at Ridge Ventures, wrote.
While the fund is the fourth raised by the firm, and is therefore called Ridge Ventures IV, this is the first fund since it rebranded itself from IDG Ventures USA back in September 2017.
"We raised twice as much capital from outside investors as we have for any fund in the past. And we’re extremely grateful to our returning institutional LPs, all of whom re-upped with us after participating in our third fund. We believe that serves as the best testament to the returns we’ve provided," said Rosen.
The team at Ridge Ventures also includes Pat Kenealy, the former CEO of IDG, as well as Gil Penchina, Ben Metcalfe and April Yang. Penchina was the founder of Flight Ventures, the largest syndicate on the AngelList platform, before he joined IDG Ventures in late 2016.
Ridge Ventures primarily invests in enterprise companies, at what Rosen calls the "traditional Series A stage," meaning a few customers and low annual recurring revenue. The firm's thesis, he said, is "enterprise data and code that radically change the end-user experience will create the most value."
"Going deeper, we see three major trends changing the enterprise landscape: (1) a second wave of migration to the modern cloud, (2) the emergence of data-driven and data-as-a-service (DaaS) companies, and (3) the evolving world of human/machine interaction."
In addition, the firm will also invest in consumer application that intersect with its enterprise thesis.
"Enterprise solutions often lag behind consumer applications due to more complex requirements and a challenging — but ultimately more sustainable — path to massive scale. Areas we remain excited about involve AI, analytics/data, SaaS, and infrastructure, in industries where we continue to see large, addressable, unsolved problems, including martech, supply chain, and HR tech," said Rosen.
Some of Ridge's investments include growth marketing automation platforrm Braze; voice and text chat app Discord; edge cloud platform Fastly; social commerce company Minted; digital workplace platform Sapho; location data company SafeGraph; women's underwear company ThirdLove; data wrangling company Trifacta; and employee engagement platform YouEarnedIt.
The company has also seen exits for its investments in data management platform Krux, which was acquired by Salesforce for around $700 million in 2016, and conversational AI startup MindMeld, which was acquired by Cisco for $125 million in 2017.
The firm says it plans to invest between $3 million and $7 million in initial capital, higher than the $2 million to $5 million the firm was investing when Rosen spoke to Vator in 2016.
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