Cincinnati startup capital company CincyTech has finished raising its fifth fund, giving it nearly $20 million in new money to invest.

Avondale-based CincyTech, based in the University of Cincinnati’s 1819 Innovation Hub in Avondale, raised $19.7 million for its fifth investment fund. It wrapped up fundraising at the end of April.

CincyTech will use the money to invest in seed-stage startups, as it has done for the past 15 years.

“It’s another locally based seed-stage investment fund that will focus on Ohio and principally Greater Cincinnati,” CincyTech CEO Mike Venerable told me.

The fund is significantly smaller than the $31 million fourth fund CincyTech raised in 2016. It’s also well shy of the $50 million target CincyTech had set in November 2019 when it began raising the fifth fund.

There’s a clear reason for that, Venerable said.

“This is our Covid fund,” he told me. “A lot of it has to do with the timing. Last year we focused on our portfolio and paused fundraising for about six months. We think this is the right size for us now. And we needed to wrap it up and deploy that capital.”

CincyTech will continue to invest mainly in health care and digital companies, Venerable said. It started investing from the fund more than a year ago. Investments from its fifth fund have included business networking site developer Peerro, biotech firm Eikonoklastes Therapeutics and drug development company Kurome Therapeutics.

CincyTech completed what’s known in the investment fundraising world as a first close last year. That enabled it to call in commitments from investors and begin investing money raised for the fund. Now it can invest all of that money.

CincyTech has active investments in more than 25 companies.

The fifth fund will likely last three to four years, Venerable said. CincyTech will likely invest in four to five companies a year, with those investments averaging $4 million to $6 million a year.

Venerable expects CincyTech to find plenty of companies in which to invest.

“We’re excited coming out of the pandemic,” he said. “There’s a lot of opportunity with the change in the environment. It’s a good and interesting time to be investing.”

Investors in the fund are mostly local companies and foundations as well as high-net-worth individuals, Venerable said. He declined to name specific investors but said the vast majority are repeat investors. Institutions that invested in the fourth fund included Cincinnati Children’s Hospital, Castellini Management Co., Interact for Health, the Greater Cincinnati Foundation and UC Health.

CincyTech has invested $68 million directly in companies since CincyTech began operating in its current format in 2006. Its companies have received $1 billion in co-investment alongside CincyTech.

Source: Cincy Inno – CincyTech wraps up raising $20 million seed capital fund