Today, Riverwood Capital announced the closure of $1.8 billion in new capital for its growth investment activities. The firm had previously raised funds in 2020, amassing total commitments of $1.4 billion at that time.
Riverwood Capital’s approach involves investing in and supporting mid-size technology companies that exhibit substantial growth potential, focusing on those that are already profitable or demonstrate positive unit economics. The majority of the newly secured capital will be directed towards new investments, according to Jeff Parks, co-founder & managing partner of Riverwood Capital. Unlike some investment firms, Riverwood does not allocate capital upfront in a fund for follow-on investments.
While the firm does not reserve capital for follow-ons, it does have plans to “selectively” invest additional capital in its existing portfolio companies over time. This strategic move aims to capitalize on opportunities for mergers and acquisitions, expedite organic growth, or provide liquidity to shareholders in need of selling, as explained by Parks. Each potential investment is evaluated on a case-by-case basis.
Riverwood Capital typically deploys checks ranging from $25 million to $100 million per company and targets 20 to 30 companies per fund cycle. Notable investments from its most recent fund include SpyCloud, Hyperproof, One Model, and Logcomex.
Since its establishment in 2008, Riverwood has made over 75 investments and has witnessed over 40 exits, encompassing acquisitions, sponsor buyouts, and initial public offerings (IPOs). Some of its portfolio companies, including Billtrust, Globant, GoPro, Nextdoor, and Vacasa, have gone public. Recently, ForgeRock, a portfolio company, was acquired by Thoma Bravo in a deal valuing the company at approximately $2.3 billion.
Riverwood Capital distinguishes itself as a growth-stage investor, typically entering investments with companies boasting revenues in the tens of millions. The firm’s portfolio companies have demonstrated an average annual revenue growth of around 40% over the past decade.
While Riverwood operates globally, it primarily focuses on supporting companies in North America and Latin America. The firm has offices in Menlo Park, California; Miami, Florida; New York, New York; and São Paulo, Brazil. Emphasizing the expanding technology opportunities in Latin America, Francisco Alvarez-Demalde, co-founder & managing partner of Riverwood Capital, highlighted the region’s potential despite recent corrections in tech investing.
Looking ahead, Riverwood’s strategy involves aiding the international expansion of its portfolio companies into regions such as Europe and Asia. The firm’s current assets under management total $5.8 billion, excluding the newly closed fund. Riverwood claims to have achieved a cumulative value of $7.3 billion across all its investments, with updated figures expected after the fourth quarter disclosure.
