SEATTLE – Crossroad Ventures, the venture firm that spun out of Silicon Valley’s Redleaf Ventures earlier this year, recently changed its name to Guide Ventures and was anticipating a first close in April on more than $10 million for its inaugural fund, said founder Russ Aldrich.
Mr. Aldrich, who had been Redleaf’s Washington-based managing director, split off from the firm to form the Pacific Northwest-focused Crossroad with local angel investor Jim Thorton (VCJ, February, page 5). The two men quickly changed the firm’s name to Guide Ventures, which Mr. Aldrich thought better reflected the group’s hands-on approach to seed- and early-stage investing.
Guide Ventures II L.P. was launched with a $25 million target and a $30 million cap, and Mr. Aldrich expects the fund to reach its ceiling before July.
The success of Redleaf I – which Mr. Aldrich continues to help manage – has paved the way for Guide to approach potential investors, and both firms’ commitment to sharing deal flow, expertise and even some of their carried interest split, is a key selling point for Guide.
Guide has approached high-net-worth individuals and family foundations. Mr. Aldrich would not disclose investors’ names until the fund was closed, but he said, “They’re well recognized names.”
One challenge to fund raising from such investors has been the attractive public markets – with high returns available from the more liquid public stocks, it can be difficult to persuade investors to put their money into private equity, Mr. Aldrich explained.
Redleaf and Guide already have co-invested in a company, AdRelevance, a Seattle-based company that provides intelligence information about online advertising. Guide is funding the deal with capital from its founders, Mr. Aldrich said. The two groups invested about $300,000 apiece, and Northwest Venture Associates and Madrona Investments were co-investors.