River Cities Capital Funds, a growth equity firm investing in high-potential healthcare and IT companies, announced today the final closing of its fifth fund. Fund V surpassed its $150 million target to reach the $200 million hard cap, with the continued support from many long-time limited partners as well as new participation from several large national and international institutions. The firm, based in Cincinnati, Ohio and Raleigh, North Carolina, has raised more than $500 million to date.
“The River Cities’ team is extremely bullish about the Fund V opportunity. We are building off the momentum from the success of our prior funds and the learnings from the firm’s 20 years in the market. With a $200M fund, River Cities is a significant player pursuing investments in small, relatively underserved growth equity rounds. The larger fund allows us to continue to expand the investment team as well as our opportunity set,” says Dan Fleming, Managing Director of River Cities.
Dan Fleming, Carter McNabb, Ed McCarthy, Rob Heimann and Rik Vandevenne are joined by Davis Griffin as the principal investors for Fund V. While a challenge for many growth equity firms, River Cities’ founders, Glen Mayfield and Ted Robinson, completed a smooth succession process to the next generation of managers during the Fund IV cycle, ensuring that River Cities will continue growing for the future. Both founders remain active in Fund V.
Top quartile performance of River Cities 2001 and 2007 vintage funds has validated the firm’s healthcare and IT growth stage strategy, which will be deployed in Fund V. River Cities will continue to build market-segment leaders that combine disruptive technologies, innovative business practices and disciplined sales and marketing expansion to become leaders in their target markets. With more than 100 investments made, the firm’s investment formula has led to consistent, premium returns, with 40% of exits returning more than five times invested capital, while maintaining an extremely low loss ratio.
Among River Cities accomplishments are software-as-a-service successes such as the IPOs of SPS Commerce and SciQuest, along with the sale of EVault to Seagate and MX Logic to McAfee/Intel. Medical device winners include Suros Surgical, which sold to Hologic; Orthoscan, sold to ATON; and OrthoHelix , sold to Tornier. The firm has also generated premium returns in the world of healthcare services with companies like Inspiris, which was bought by United Healthcare and River Cities’ most recent exit of Accelecare Wound Centers, which Revelstoke Capital Partners acquired in December, 2013.
With the Firm now managing its largest fund to date, River Cities continues to expand its professional team. New hires include Walker Fuller, senior associate, a former associate of Pamlico Capital and graduate of University of North Carolina; and Patrick Dunnigan, currently pursuing an MBA at the Duke University Fuqua School of Business, will be joining the team as an investment intern. Dunnigan was previously the Director, Corporate Development and Business Analytics for venture-backed company Vazata, prior to which he served as a senior associate with Florida-based Ballast Point Ventures.
The Fund V portfolio includes three companies to date: Trax Technologies, a Saas provider of logistics-spend management solutions; TissueTech, a pioneer in regenerative tissue-based products; and StepLeader, a B2B provider of mobile technology platform and data-driven mobile ad networks for local media outlets. With robust deal flow and fundraising completed, new investment activity is expected to accelerate over the coming year.