SJF Ventures, which invests in cleantech businesses and other companies with the potential to benefit society, attracted $90 million for its third fund in less than half the time it spent raising money for its much smaller second fund.
David Kirkpatrick, managing director and co-founder of the Durham venture capital fund, credits the returns generated to date by the second fund for paving the way for quicker fund-raising . The firm’s second fund, which attracted $28 million from investors, ranks among the top 25 percent of all funds founded the same year, according to Cambridge Associates, an investment advisor to foundations and private investors.
“All of that stuff about ‘impact investing’ or cleantech helps, but you don’t really get into the door until you have a strong track record,” Kirkpatrick said.
To be sure, no one would confuse SJF’s fund-raising efforts with speed dating.
It took the firm 15 months to raise the money from institutional investors and wealthy individuals for its latest fund. That was an upgrade from the nearly three years it devoted to raising money for its second fund.
Moreover, SJF ended up raising more than the $75 million it had targeted.
“I think it’s a tremendous accomplishment in this environment,” said Ben Brooks, a partner with Raleigh venture capital firm Southern Capitol Investors. “I think it is a reflection of the interest in cleantech.”
But, Brooks added, picking the winners and losers among the hordes of cleantech companies that have been bursting on the scene is “a real challenging game ... I think David and his team are superb and have done a great job.”
SJF has focused on investing in cleantech companies and what’s known as “impact investing” – that is, plowing money into companies that can make a positive contribution to society – since 1999. Still, Kirkpatrick stressed that the firm is just as focused on doing well financially as it is in doing good, and is proving that it can juggle both goals successfully.
Venture capital firms invest in emerging companies with a lot of upside in exchange for a stake of the business, which they cash out on when the company is sold or goes public – if all goes according to plan, that is. It’s a long-term investment strategy with plenty of risk, since a venture capital firm can lose its entire investment in a company that fails.
To date SJF, which is headquartered in Durham but also has offices in New York and San Francisco, has invested in 36 companies nationwide. It recently invested in its first Triangle company, Aseptia, a Raleigh food processing company.
“We are certainly hopeful that, with this fund, we’ll invest in more than one Triangle-based company,” Kirkpatrick said.
Aseptia, which has a food processing plant about 75 miles west of Raleigh in the Montgomery County town of Troy that operates under the name Wright Foods, falls under the “impact investing” category.
Its innovative technology enables it to kill the bacteria that causes foods to go bad and make people sick without ruining the flavor.
Not only does that produce tastier, more nutritious food but, by using aseptic packaging that is lighter and more space-efficient than cans, the overall carbon footprint is reduced, Kirkpatrick said. Many cans, he added, also contain a lining that has raised health concerns in some quarters.
At the same time, Kirkpatrick said, Aseptia is “hiring like crazy” and has zoomed past 100 employees since it started operating in August.
“Those are good quality jobs in an area that needs them,” he said.