Why Rittenhouse Ventures isn’t chasing unicorns

Allow Saul Richter a baseball analogy.
“Batters who swing for every pitch aiming to hit a home run strike out more often,” he wrote in a statement to Technical.ly Philly.
Richter, 44, of Center City, is talking about investing in startups. It’s how the managing partner of the newly-rebranded Rittenhouse Ventures (note the .vc domain) explains why he isn’t interested in searching for so-called “unicorns,” or what the startup world is calling billion-dollar exits. He’s more interested in exits of $35 to $75 million, which he cites as the median range for venture exits. (This Pitchbook report from Q3 of 2013 puts the median venture exit size at $82 million.)
“We feel that a smaller total capital raise is entrepreneur-aligned and leaves the founding team and investors with a broader range of exit options that will provide them a positive outcome,” he wrote.

Rittenhouse Ventures is the new identity of venture firm Emerald Stage2 Ventures, the Navy Yard-based firm that Richter has run with Bruce Luehrs since 2006. The firm has, so far, raised $1.1 million, according to an SEC filing, though it’s unclear how big the eventual fund will be. Richter declined to comment on the filing, citing SEC rules. All he could say on that front was that Rittenhouse Ventures is “actively investing in new companies.”
From Emerald Stage2’s first fund of $14 million, the firm invested in 11 startups, including in vcopious, AlignAlytics and the now-exited ClickEquations.
(Though it’s not clear how big this fund will eventually be, that early number suggests another reason Rittenhouse Ventures isn’t chasing unicorns: with a smaller fund, you have to be strategic. For a quick and dirty comparison, First Round Capital’s fifth fund was $175 million.)
Rittenhouse Ventures is run by the same people, still headquartered at the Navy Yard next to Benjamin Franklin Technology Partners (from which the firm seeds many of its deals) and still focused on local, B2B companies in the healthcare, financial and human resources sectors. The main difference is the name, which aims to strengthen the firm’s tie to Philadelphia, Richter said in a phone interview last week. The name comes from David Rittenhouse, the Germantown-born treasurer of Pennsylvania and director of the U.S. Mint in the late 1700s.
Richter and Luehrs make investments between $500,000 to $750,000 in rounds that range from $1 million to $3 million, though a “very small percentage of the fund” will be dedicated to doing earlier stage investing of about $50,000 to $250,000 in order to “get a seat at the table,” Richter said. That’s because, during startup pitches to Benjamin Franklin Technology Partners, they’d find very early-stage startups that they wanted to invest in but didn’t have a way to do so.