Riverwood Capital has closed on $1.8 billion in new capital, the growth investment firm announced today.
The firm last raised in 2020, with total capital commitments of $1.4 billion at that time.
Riverwood’s strategy is to invest in and support “high-growth” mid-size technology companies that are either profitable or with positive unit economics. The new capital will go mostly toward new investments, said Jeff Parks, co-founder & managing partner of Riverwood Capital. The firm does not reserve capital upfront in a fund for follow-ons.
However, Riverwood does plan to “selectively” invest more capital over time in its existing portfolio companies “in case there is an opportunity for M&A, to accelerate organic growth, or provide liquidity to some shareholders that might need to sell,” Parks said.
“We consider those options on a case-by-case basis,” he added.
The firm’s check sizes primarily range from $25 million to $100 million per company. Riverwood targets 20 to 30 companies per fund cycle. So far, it has backed a few companies out of its new fund, including SpyCloud, Hyperproof, One Model and Logcomex.
Over the years, Riverwood has made more than 75 investments, and says it has seen over 40 exits (including fully/partially realized and liquid investments) ranging from acquisitions, sponsor buyouts and IPOs, since its 2008 inception. Billtrust, Globant, GoPro, Nextdoor and Vacasa are among the companies that went public.
Recently, portfolio company ForgeRock sold to Thoma Bravo in a deal that valued that company at about $2.3 billion.
Focused on the growth stage
Riverwood describes itself exclusively as a growth-stage investor.
“The average revenue at entry of our investments is usually in the tens of millions, and our 75+ portfolio companies have grown their revenues at about 40% per year on average during the past decade,” said Francisco Alvarez-Demalde, co-founder & managing partner of Riverwood Capital.
While Riverwood invests globally, it is focused on backing companies located in North America and Latin America with the majority of its investments being in companies headquartered in the U.S. It has offices in Menlo Park, California; Miami, Florida; New York, New York; and São Paulo, Brazil.
“The technology opportunity in Latin America has been consistently expanding during the past 15 years, and our portfolio companies have been able to expand their revenues at +50% per year on average during that period,” Alvarez-Demalde said. “Tech investing in Latin America has been experiencing a correction, after the ‘peak’ in capital flows experienced in 2021. Despite the volatility in capital flows and global investor interest in the region, the opportunity to build and expand technology businesses in Latin America has never been greater.”
Looking ahead, part of Riverwood’s playbook is to support the international expansion of its portfolio companies, including to Europe, Asia and other regions,” he added.
The firm’s assets under management currently stand at $5.8 billion, not inclusive of the capital from its final close. Because it discloses AUM on a quarterly basis, the firm won’t have an updated number with the final fund close figure until after the fourth quarter. It claims to have reached $7.3 billion of value across all investments.
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