The Riverside Co. has closed the $650 million Riverside Micro-Cap Fund IV. Riverside’s micro-cap funds back small businesses that have up to $7 million of Ebitda. Previous investments from the micro-cap funds have included The Dermatology Group, Kasasa by BancVue, and SafeBuilt
The RMCF IV exceeded its original target of $500 million and continues the investment thesis of Riverside’s previous micro-cap funds, the last of which was raised in 2014 and was considerably smaller at $350 million. The larger size of the new fund reflects Riverside’s increased commitment to small businesses. The new fund also represents a departure from the small business investment company (SBIC) model of the previous micro-cap funds. The Small Business Administration currently limits SBICs to $350 million.
“We’ve grown our team, and the size of our portfolio has increased,” says RMCF fund manager Loren Schlachet. The RMCF model has helped the firm refine its strategy of giving “significant operating attention” to smaller companies.
The RMCF IV received investments from institutions including: Makena Capital, State of Michigan Retirement System, clients of Willis Towers Watson and clients of Partners Capital Investment Group.
Headquartered in Cleveland and New York, Riverside backs lower middle-market companies. Riverside won Mergers & Acquisitions’ 2015 M&A Mid-Market Award for Seller of the Year in 2014 and 2015. Led by co-CEOs Béla Szigethy and Stewart Kohl, Riverside has invested in more than 400 transactions since the firm’s founding in 1988.