SARATGOGA, Calif./PITTSBURGH – Expanding its deal flow to the Mid-Atlantic United States, in June Silicon Valley-focused Redleaf Venture Management held a first close on its second fund and made plans to open a Pittsburgh office.
Redleaf Venture II is one of three investors from the VC hubs of the Valley and Boston, including Draper Fisher Jurvetson and Lycos Inc., that have been lured to Pittsburgh to tap deal flow from Carnegie Mellon University, the University of Pittsburgh and other educational institutions (story page 5).
Redleaf chose Pittsburgh as the center of its East Coast operations to dip into technology companies in Western Pennsylvania, Philadelphia, Northern Virginia and Research Triangle Park, N.C., areas that have spawned such successes as America Online Inc., said Redleaf Managing Partner Lloyd Mahaffey.
The $30 million June close included commitments from Pennsylvania-based investors PNC Bancorp and Safeguard Scientifics.
“I think Safeguard’s had a legacy of being pretty conscious of working with the state … to create jobs,” said Safeguard President Harry Wallaesa. “We were impressed with [Redleaf’s] track record and management team, and we wanted to help Governor Ridge get [some more venture capitalists] in Pennsylvania.” Pennsylvania Governor Tom Ridge’s Technology 21 initiative has aggressively sought to attract VC activity to the region.
Mr. Mahaffey expects a second close on an additional $20 million in mid-September.
Redleaf II will invest an average of $4.5 million to $6 million in each portfolio company, with an average first round investment of between $1.5 million and $2 million. The company closed three deals that it warehoused in Redleaf Venture I while it completed the first close of the latest fund, including a $1 million investment in a $3.5 million Series C round for Mediaflex.com, a Santa Clara-based digital printing company.