Some of the money set aside by the Conservative government for tech startups in the 2013 budget is making its way into the eco-system, fueled by private investors that are kicking in their own cash.
Kensington Capital Partners Ltd. announced Jan. 19 it was making for specific investments through its Kensington Venture Fund, which closed an initial round of $160 million after launching in November. That same fund is a part of the government’s Venture Capital Action Plan, which promises to spend $400 million over the next five to eight years. Specifically, $50 million of that money was set aside for three to five existing high-performing venture capital funds in Canada. Having invested more than $600 million since its founding in 1996, Kensington fits the bill.
One third of the fund comes from government, and the rest comes from private investors, says Rick Nathan, managing director of Kensington Capital partners.
“It’s very much connected to the government program,” he says. The government in this instance has found a fairly effective way to support the industry with capital, while putting all the investment decisions in private-sector hands… so you know all the decisions are market driven.”
According to its press release Kensington plans to invest in:
1) Georgian Partners II: Invests in expansion stage Enterprise Software, Internet and Information companies that are exploiting Applied Analytics: the convergence of Cloudbased business solutions, Big Data, and broad information Rights. The fund’s notable portfolio companies include Shopify (Ottawa) and Vision Critical (Vancouver). (Toronto, ON.)
2) NOVACAP TMT IV: Focuses on later stage growth and established technology, media and telecom companies. (Montreal, QC.)
3) Blue Ant Media Inc.: Owns and operates 11 media brands across traditional and digital media platforms, including eight specialty cable channels, a YouTube multichannel network and live events. (Toronto, ON.)
4) Walden Venture Capital VIII: Targets Sprout Stage™ investments focused on digital media and cloud services. (San Francisco, CA.)
While the fund is primarily focused on the Canadian market, Nathan says there is room for foreign investments. “We’ll probablyb have a couple from outside Canadain in a fund of 10-12 investments.”
In this case, the investments going to Silicon Valley are designed to help attract the investors needed to contribute the other two-thirds of the fund needed in addition to the government coin, Nathan says.
“Strategically, if you’re going to be an investor in Canadian technology firms, you want to be connected to the Valley,” he says. “It’s the main centre in the world where the technology firms get invested in and grow.”
The portfolio remains a work in progress, with the eventual goal of raising $300 million in total. While enterprise-focused tech played a role in this batch of investments, that won’t be one of the main themes of this fund, Nathan says. Expect to see half of the fund focused on technology that is targeting either the enterprise or consumer space, and about one-third of the fund invested in clean tech and energy.
Private members of the fund include Richardson GMP, OpenText Corp., Royal Bank of Canada, BMO Financial Group, CIBC, TD Bank Group, and Scotiabank in addition to individual investors.