Seattle-based Madrona Venture Group has closed its oversubscribed fourth fund on $250 million (€161 million), exceeding its $225 million target.
The fund was raised in “a couple of months” without the help of a placement agent, Madrona managing director Greg Gottesman told PEO.
“Our strategy has really started to bear fruit”, Gottesman said of the rapid fundraising. He credits the successful fundraise in part with a string of recent exits, including the sale of Farecast to Microsoft for $115 million in April, generating greater than five times cash on cash returns. Farecast was incubated in Madrona's offices by the firm's venture partners.
All of Madrona's existing institutional investors in the previous fund both reinvested and significantly increased their commitment in Fund IV, Gottesman said.
Fund IV's limited partners are primarily foundations and endowments. Returning investors include University of Virginia Management Company, The Irvine Foundation and BlackRock Alternative Advisors. The University of North Carolina, The Annie E. Casey Foundation and YMCA Retirement Fund are among Madrona's few new investors.
Madrona is an early-stage investor in technology companies based in the Pacific Northwest. The vast majority of the firm's investments are seed and Series A. “We're going to get in early and roll up our sleeves,” Gottesman said of the firm's strategy.
Targeted sectors include consumer internet, commercial software and services, digital media and advertising, networking and infrastructure and wireless.
A core strategy of the firm is university commercialisation having spun out more than 10 companies from the University of Washington?s computer science and engineering department.
Fund IV will make approximately 25 investments averaging $8 million to $10 million in size over the life of a portfolio company.
The most recent fund was raised far more rapidly that Madrona's previous fund which closed on $167 million in 2006. Fund III was raised more than seven years after the close of Fund II on $250 million.
Founded in 1995 by a group of high net worth individuals, Madrona now has more that $650 million in commitments.