Financial terms of the deal were not disclosed. The arrangement will give Riverstone entry to Blackhorn’s startup networks and help the private equity firm increase its investments in companies focused on reducing carbon emissions in the industrial sector, the companies said in a statement.
“As a later-stage investor, they need to have access to earlier-stage deal flow and a deeper pool of pipeline opportunities,” said Blackhorn managing partner Melissa Cheong. “And then for an early-stage investor, we need to have access to creative pools of capital that can be flexible and nimble, drawing from both the public and private markets.”
The investment is one of only three reported instances in the last two years in which a PE firm has taken a minority stake in a VC firm, according to PitchBook data.
Within the PE industry however, GP-stakes deals have been gaining momentum in recent years, as demand for minority investments in private capital firms heats up. Capital raised for strategies targeting minority investments in private asset managers reached around $7.2 billion last year, with a number of other big players including Bonaccord Capital and Hunter Point Capital pitching new funds to investors lately, PitchBook previously reported.
Riverstone, founded in 2000 by former Goldman Sachs’ executives David Leuschen and Pierre Lapeyre, primarily conducts buyout and growth capital investments in the energy and power sectors.
In recent years, Riverstone has formed blank-check companies to pursue its decarbonization strategy. The most recent one, named Decarbonization Plus Acquisition Corporation V, is seeking up to $275 million, according to a filing with the Securities and Exchange Commission. Some of the SPACs have landed acquisition targets, including hydrogen fuel-cell truck company Hyzon Motors and Solid Power, a developer of solid-state battery technology backed by Ford and BMW.
Other GP-stakes deals targeting VC firms since the start of the pandemic include Goldman Sachs’ investment in technology-focused Thrive Capital founded by Joshua Kushner. In November of 2020, Bloomberg reported that venture capital giant NEA was in talks to sell a stake to Dyal Capital Partners, now part of Blue Owl Capital, and Kuwait-backed Wafra.
Blackhorn Ventures, based in Denver, invests in startups that use technology to improve resource efficiency in the industrial sector. It focuses on three sectors: transportation, energy and the built environment. The firm currently manages approximately $200 million in assets across three vehicles, including a seed fund and a Series A fund.
Blackhorn invests $500,000 to $1 million at a time through its seed-stage strategy, $4 million to $7 million for Series A deals, and $7 million to $20 million for later-stage deals, Cheong said.
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