Rho Ventures closes $425m fifth fund

The New York-based venture firm will make investments in communications, healthcare and information technology companies.

New York-based Rho Ventures has announced the final close of its fifth fund on $425 million (€316 million).

Rho Ventures V will finance companies seeking early- through expansion-stage funding in a broad range of sectors including communications, healthcare, and information technology.

According to Rho Ventures managing partner Habib Kairouz, investors in this fund were a typical mix of institutional and high net-worth individuals, and that the fund has become more and more based on domestic capital, with almost an even split between the two sources whereas before it had been exclusively foreign-funded.

Kairouz also points out that the market for later-stage investing is getting better as buyers and financiers are becoming more receptive. In IT, for example, he says more money can be devoted to funding late-stage companies that aren’t undergoing triage following the tech collapse. He adds that Rho Ventures tends to “modulate” its investment strategy in order to emphasize either more early-stage or more late-stage companies when appropriate.

Rho Ventures is part of Rho Capital Partners, which also includes its direct investment arm Rho Private Equity and its fund-of-funds Rho Fund Investors. Rho has been investing in the US venture capital sector since its inception in 1981, when it was set up as an investment platform for wealthy European families. In 1993, the firm separated its fund investment activities from its venture capital activities.

Rho Ventures currently manages more than $1 billion in capital. Its prior fund closed back in 2001 with $435 million in capital commitments. Thus far, Rho Ventures has invested in more than 150 companies, including Compaq Computer Corp., Ciena Corp., and Human Genome Sciences.