VC Firm Announces It Will Now Only Invest in Companies It Has Already Invested In
"Follow-on only" strategy will let the firm double down on its winners, as well as its losers, as well as everything.
MENLO PARK, Calif. — Cascade Ridge Partners, a venture capital firm with $4 billion under management, announced Monday that it will no longer evaluate new companies and will instead invest exclusively in the 61 companies already in its portfolio, a strategy the firm calls "conviction" and analysts call "the same thing with a name."
"We've spent fifteen years finding great founders," said managing partner Alison Whitford. "We found them. They're right here. Why would we keep looking?"
Under the new model, the firm's partners will spend their time attending board meetings, leading follow-on rounds, and marking up the valuations of companies whose previous rounds they also led. Whitford said this eliminates "the inefficiency of due diligence," since the firm already knows everything about its companies "that it is willing to know."
The firm noted that the approach also protects its returns from an unwelcome trend in which new companies raise from other firms. "Every time a hot company takes money from someone else, our ownership in the future goes down," said a partner. "We've solved this by not having a future. We have a present. It's a very good present."
Founders in the portfolio welcomed the news. "I got an email that said my Series D was closed," said the CEO of an AI infrastructure company. "I hadn't started raising. They just did it. The valuation is up 40 percent. I'm not sure what changed. I think one of the other portfolio companies got acquired and the number needed to go somewhere."
Limited partners have expressed some concern that the strategy will make it difficult to assess performance. Cascade Ridge said performance is "excellent," according to the valuations, which it sets.