SEATTLE – Madrona Investment Group’s first fund, Madrona Venture Partners, in December reached a second and final close on its $250 million cap.
The vehicle, which will back early-stage information technology and communications companies, had targeted $150 million to $200 million (VCJ, December 1999, page 19). A first close in October brought in more than $120 million.
Chief Financial Officer Troy Cichos said the fund could not accommodate all potential limited partners despite its larger $250 million total, chalking investor’s enthusiasm to the tremendous growth of the industry and the success of Madrona’s investment professionals in previous investments.
Madrona Investment Group came together in 1995 to invest the capital of its principals, backing companies such as Amazon.com Inc. and HomeGrocer.com Inc.
The firm opted to raise outside capital, in part, as a way to participate in later-stage financings, General Partner Tom Alberg said. Madrona’s other GPs are Paul Goodrich and Greg Gottesman, and Bill Ruckelshaus and Jerry Grinstein are strategic partners. Cichos said the firm was in the market for two partners.
By press time, the firm had invested some 10% of Madrona Investment Partners, the CFO said.
Madrona raised most of its inaugural fund from strategically helpful individuals, primarily from the Northwest. Cichos declined to name investors.
The fund features a 2.5% management fee and a 20% carry, unless the fund reaches a 50% net IRR for LPs in which case the carry would increase to 30%.