Meritus Ventures RBIC Conditional Approval
Monday June 06, 2005
Announces
Receipt of Conditional Approval as a
Rural
Business Investment Company
Meritus Ventures is a private, for-profit,
venture capital fund established to make equity investments in private
companies in rural southern and central
In 2001, KHIC and Tech 2020 worked together to
establish Southern Appalachian Management Company, LLC., to be the general
partner for the Southern Appalachian Fund, L.P.
The Southern Appalachian Fund is a $12.5 million private, for-profit, venture
capital fund that became operational in 2003 and is currently investing in
early-stage and expansion-stage, private companies in southern
Meritus Ventures will be managed by Ray Moncrief
(President of Eclipse Management, LLC) and Grady Vanderhoofven (Executive Vice
President of Eclipse Management, LLC).
The fund will have offices in
The conditional approval of Meritus Ventures
means the fund has successfully passed the USDA and SBA review process, and the
fund management team has been approved to manage the fund as a RBIC, subject to
raising $10 million of private capital and obtaining final approval from USDA
and SBA. Upon successfully raising $10
million of private capital and obtaining final approval as a RBIC, the fund
will be able to access an additional $20 million of private capital via the
sale of debentures guaranteed by USDA.
In total, the fund will have $30 million of capital targeted for equity
investments in companies located in rural areas of southern and central
As part of the announcement, Ray Moncrief
stated, “I applaud the United States Department of Agriculture for creating the
Rural Business Investment Program that provided for Rural Business Investment
Companies in the 2002 Farm Bill. The
RBIC application process was rigorous and both the SBA and USDA conducted the
process very professionally.” Moncrief
further noted, “There is a significant demand for equity capital by early and
expanding businesses in rural
Of the $10 million of private capital to be
raised as a pre-requisite for final approval as a RBIC, Meritus raised $2.2
million of investment commitments before receiving notice of conditional
approval. Investors that have already
committed to invest in Meritus include the F.B. Heron Foundation and the
Central Fund of the Community Development Venture Capital Alliance, both in
“The F.B. Heron Foundation has particular
interest in Meritus Ventures because of the track record that the Meritus
management team has of successfully investing in underserved rural communities
where virtually no venture capital is invested,” said Luther Ragin, Jr., Vice
President of Investments of the F. B. Heron Foundation.
"Meritus Ventures joins a vital and rapidly-growing
industry of funds that seek market rates of return for their investors and
create important economic impacts in underinvested regions of the
country," said Kerwin Tesdell, President of the Community Development
Venture Capital Alliance. "It will
be operated by one of the industry's premier management teams, with a proven
track record of making money where other venture capitalists tend not to
invest."
Once the fund becomes operational, it will focus
specifically on companies located in rural areas in
“Conditional approval of Meritus Ventures is a
landmark event for our region. Once this
fund is formally licensed as a RBIC by USDA and SBA, it will be a source of
equity capital for businesses that historically have not had access to equity
capital,” said Grady Vanderhoofven, Executive Vice President of Eclipse
Management, LLC, and one of the two fund managers. “This fund targets promising companies in our
region, and our experience with the Southern Appalachian Fund has demonstrated
that we have access to very attractive deals that most venture funds don’t see
because they generally don’t look for deals in this part of the country. We are very appreciative of the vote of
confidence we have received from USDA and SBA and from those investors that
have already made investment commitments to Meritus Ventures.”