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(September 14, 2004) In a sign that the fortunes of venture fund investing in Canada are turning, Ventures West today announced the closing of the largest private venture fund in the country.
The fund, which has attracted $250 million in commitments from some of the largest institutional investors in Canada, including the Caisse, Ontario Teachers, the CPP Investment Board and OMERS, is targeting 20 to 30 early stage companies, spread across four sectors: communications, information technology, biotechnology and energy technology.
While much of the growth in private equity over the past year has been in leveraged buyouts, following on the success of Ontario Teachers Yellow Pages efforts, well-run private venture funds are having no difficulty attracting new money, says Ventures West president Robin Louis, who is also president of the Canadian Venture Capital Association.
Ventures West 8, as the new limited partnership is called, was oversubscribed. “We had more interest than would fit into that amount,” says West. “Obviously, we’re delighted with the support from the investors. It’s a huge vote of confidence in us and in the Canadian industry.”
“These are people who have major long-term private equity programs, who look at funds from all across the world, they have the ability to invest in all kinds of funds in all kinds of places.”
The fund expects to invest $5 million to $15 million over multiple financing rounds, with roughly $2 million committed to the first investment round. “There’s a lot of money that goes into creating new companies and commercializing technology that’s coming out of the universities and the research labs.”
Louis says the investments will be made with members of a syndicate, adding that Ventures West gets to see roughly three-quarters of the deals on offer in Canada. That said, however, Ventures West only invests in about one out of 100 opportunities.
“We’re pretty bullish about the venture capital environment in Canada,” Louis adds. “It’s a great place to be investing at this particular time. . .There’s lower costs here than in the United States, there’s good access to the U.S. market, so it’s a great place to form a company at a relatively low costs but still be focused on the U.S. market.”
While there was too much money chasing technology investments in the late 1990s, the markets and entrepreneurs seem more disciplined now, with more reasonable prices for initial investments, he notes.
Filed by Scot Blythe, Advisor.ca, scot.blythe@advisor.rogers.com.
(09/14/04)