Oaktree-backed Runway Growth Credit Fund closes equity raise on $275m

The fundraise comes amid the potential for a record year in venture capital deal volume.

Runway Growth Credit Fund, a business development company, has locked down $275 million for early-stage lending, which included an increased capital commitment from Oaktree Capital Management.

The Chicago-based BDC makes loans of $5 million-$30 million to fast-growing Canada- and US-based businesses that are looking for a funding source outside of venture capital or growth equity, Runway said in a statement. It invests in companies supported by venture capital sponsors or those without such backing, including those funded by entrepreneurs.

By deal value, the firm’s portfolio was tilted toward sponsor-backed companies, firm spokesman Tom Raterman said, while deal count was about half sponsored, half non-sponsored.

Los Angeles-based Oaktree increased its capital commitment to Runway from the initial $125 million to $139 million, making up slightly more than half of the fundraise. The two firms entered a strategic relationship in December, under which Oaktree invested $125 million.

The credit investment behemoth also received a seat on Runway’s board of directors and investment committee. Oaktree named one of its managing directors, Brian Laibow, to both of those positions.

The firm held an initial close in December 2015, Raterman said. Much of the fund came from “several” family offices and wealth management platforms representing high-net-worth individuals. Approximately 70 percent of the commitments were from institutional investors, he added.

Runway chief executive officer David Spreng said in a statement: “We have seen strong demand from growth companies seeking an alternative to raising dilutive equity capital, and the anchor investment by Oaktree will enable us to expand our origination efforts.”

Runway’s fundraise comes as the venture capital world will likely end the year with a record deal volume, according to third-quarter statistics from the National Venture Capital Association and financial research firm Pitchbook. Through 30 September, some $61.4 billion worth of venture capital investments had been made. 2015 holds the current record, when total deal volume stood at $79.2 billion.

The median deal size for angel investments and early and late stage venture capital at the end of the third quarter was larger than the 2016 average. Angel investments stood at an average size of $1 million, while early and late stage deals had a mean value of $6.1 million and $11.1 million, respectively.