Meritus Ventures, L.P. Announces Successful Completion of Fundraising
Monday June 12, 2006
Meritus Ventures, L.P. announced today that it has completed fundraising after receiving investment commitments that exceed the fund's original fundraising target by approximately 22%.
London, KY and Oak Ridge, TN – Meritus Ventures, L.P. announced today that it has completed fundraising after receiving investment commitments that exceed the fund’s original fundraising target by approximately 22%. Meritus received conditional approval from the United States Department of Agriculture (USDA) and the United States Small Business Administration (SBA) as a Rural Business Investment Company (RBIC) under USDA’s Rural Business Investment Program (RBIP) on June 1, 2005.
Meritus Ventures is a private, for-profit, venture capital fund established to make equity investments in private companies in rural southern and central Appalachia. The general partner of the fund is Eclipse Management, LLC. Meritus Ventures is managed by Ray Moncrief (President of Eclipse Management, LLC) and Grady Vanderhoofven (Executive Vice President of Eclipse Management, LLC). The fund has offices in London, KY and Oak Ridge, TN.
Upon receipt of conditional approval in June 2005, the Fund Managers accelerated their efforts to raise $10 million of private capital, with the understanding that successfully raising the $10 million and obtaining final approval from USDA and SBA as a RBIC would qualify the fund to access an additional $20 million of private capital via the sale of debentures guaranteed by USDA. However, after raising $12.2 million in capital commitments, Meritus has formally asked SBA to make available to the fund $4.4 million of debenture leverage in addition to the originally contemplated $20 million. If SBA approves the fund’s request, and subject to final approval of the fund as a RBIC, Meritus Ventures would commence operations as a $36.6 million fund.
As part of the announcement, Ray Moncrief stated, “We expect Meritus to be a $33 million to $37 million fund by the time we become fully operational. That would make Meritus two-and-a-half to three times the size of our current fund, the Southern Appalachian Fund, and should really allow us to build on the momentum that has been established with the Southern Appalachian Fund.” He added, “The rural focus of Meritus Ventures is a natural for us because we have been successfully investing in rural Appalachia for over 30 years.”
The fund has secured investment commitments from twenty-two (22) investors, approximately 80% of which are institutional investors and approximately 20% of which are individuals. Most of the fund’s diverse investor group is located outside of the fund’s targeted geography. Investors from as far away as Puerto Rico and Colorado joined investors from Chicago, New York City, and Washington, D.C. In total, the fund received investment commitments from investors in fourteen (14) different states, and approximately two-thirds of the private capital was raised outside of southern and central Appalachia. The fund is not releasing additional details regarding the identity of its investors until final approval as a RBIC has been received.
Grady Vanderhoofven said, “We could not be more pleased with the enthusiasm we found in the investment community. We were excited to see this level of interest in making equity investments in rural areas in central and southern Appalachia.” He added, “We believe the interest is motivated by at least two factors. The first is that inefficiencies in the capital markets in this region of the country create opportunities for professional investors that may not exist or may be harder to find in more traditional venture capital markets, and the second is that some investors are simply committed to investing in rural central and southern Appalachia because of the great need for equity capital that is evident here.” He concluded, “Once we receive final approval as a RBIC and gain access to the debenture leverage, approximately 85% of the total capital in our fund will be from outside of this region and will flow into this region as a direct result of our investment activity.”
Once the fund becomes operational, it will seek to make investments in private, expansion-stage companies located in rural areas in central and southern Appalachia. The fund managers expect the fund to begin investing by the end of calendar year 2006.
About the Rural Business Investment Program – The U.S. Congress authorized the Rural Business Investment Program (RBIP) in the 2002 Farm Bill. The purpose of the RBIP is to promote economic development and to create wealth and job opportunities in rural areas by encouraging developmental venture capital investments primarily in smaller enterprises and by meeting the unmet equity capital needs of such businesses. The program is similar to existing SBA venture capital programs – specifically, the Small Business Investment Company (SBIC) and New Markets Venture Capital (NMVC) programs – and is intended to license Rural Business Investment Companies (RBICs) through a competitive process. (www.sba.gov/INV/RBIP)
About Meritus Ventures, L.P. – Meritus Ventures is one of three conditionally approved Rural Business Investment Companies (RBICs) in the United States. The $30M+ venture capital fund was formed to generate attractive returns for the fund’s investors while creating wealth and jobs in rural areas of central and southern Appalachia. In addition to providing equity capital, the fund may provide operational assistance to its potential and actual portfolio companies. For more details about the fund, visit www.meritusventures.com.
About the Southern Appalachian Fund, L.P. – The Southern Appalachian Fund is one of six New Markets Venture Capital Companies in the United States. The $12.5M venture capital fund was formed to provide equity capital and operational assistance to qualifying businesses in southern Appalachia. The Fund focuses specifically on companies in Kentucky, Tennessee, and the Appalachian counties of Georgia, Alabama, and Mississippi. (www.southappfund.com)
Meritus Ventures Contacts:
Ray Moncrief, President, Eclipse Management, LLC. – (606) 864-5175
Grady Vanderhoofven, Executive Vice President, Eclipse Management, LLC. – (865) 220-2020