Riverside Acceleration Capital raising second venture debt vehicle

The strategy focuses on lending to growing tech companies with more than $3m in ARR.

Riverside Acceleration Capital is raising its second venture debt fund, which is targeting $150 million.

The Riverside Company held a first close on more than $60 million for its Riverside Acceleration Capital Fund II on Thursday, according to documents filed with the Securities and Exchange Commission.

Riverside launched the strategy in 2016, which focuses on lending to business-to-business software-as-a-service companies with at least $3 million in annual recurring revenue. The firm deploys loans worth between $1 million and $5 million for five-year terms, according to its website.

The strategy looks to generate capped returns of 1.5x-2x the investment amount and has the flexibility to potentially provide additional funding to companies in which it invests.

The lender has a growing portfolio of companies across the technology sector such as Revegy, which makes sales platform software, and Enhatch, which creates logistics platforms for medical device and equipment manufacturers.

Fund I, which closed in 2016, hit its $50 million target.

The firm, which did not provide comment by press time, is also in the market with its latest flagship buyout fund, Riverside Capital Appreciation Fund VII, closing on $1.02 billion of the up to $1.5 billion it hopes to raise.

Venture debt is an increasingly growing focus across credit shops. Fundraising for the strategy in 2018 totaled more than $1.3 billion in capital commitments, the highest amount since 2011 ($1.67 billion), according to PDI data.

The Riverside Company is a New York-based asset management firm that operates both debt and equity strategies. The firm’s credit arm has raised $110 million toward a $350 million goal for Riverside Credit Solutions I, according to the most recent SEC filing. The firm has more than $8 billion in assets under management.