A take of US$200 million over one week is a fairly standard haul for the latest releases in, say, the Avengers or Star Wars franchises.
But it’s not every week that Vancouver-based technology funds take in that kind of money. Yet the city got a taste of some blockbuster action between October 10 and October 17 when two funds announced raises totalling US$85 million, while a third announced it was “well on its way” to raising US$120 million.
So is Vancouver heating up as a funding ecosystem or is it merely a coincidence?
“Overall it is a very good time to be raising capital,” said Brent Holliday, CEO and founder of Vancouver-based Garibaldi Capital Advisors.
But Holliday added such access to capital goes in cycles and that he wouldn’t read too much into the exact timing of the most recent big announcements.
“These little bursts happen because maybe we’re a small sample size in Canada,” he said, adding a similar burst occured in Toronto in 2016 when Information Venture Partners, NEI Generational Leaders Fund and others all unveiled significant raises in quick succession.
The recent B.C. burst included Vistara Capital Partners’ US$40 million raise, followed a day later by Version One Ventures LLC revealing it had landed US$45 million in commitments to its latest fund.
Vistara managing partner Randy Garg told Business in Vancouver in October that his firm aimed to raise another US$60 million by year’s end.
A third fund, Chrysalix Venture Capital, announced a week earlier that it had secured the first close of its new RoboValley Fund.
The firm did not reveal the size of its first close but said it was “well on its way” to raising US$120 million for the new fund.
Each fund is global in its perspective and each one differs on strategy.
Version One focuses on pre-seed and seed-round investments of US$500,000 to US$750,000 for companies based in Vancouver, San Francisco, Seattle and Toronto-Waterloo.
Vistara targets more mature, business-to-business software companies with investments around US$10 million. It participated in a financing round announced October 30 that totalled US$20 million for Chicago-based Backstop Solutions Group LLC.
“We’d love to put more money to work across Canada,” Garg said. “We’d certainly love to put more money to work here in B.C.”
He added that his team plans to expand to Toronto in early 2019.
While these Vancouver-based firms have been adept at raising capital, none are mandated to target domestic companies with investments.
And Canadian firms’ efforts to attract deals have met with mixed success.
An October report from PwC Canada and CB Insights examining third-quarter venture capital raises across the country revealed the close of 87 deals across the country – down from 127 in the second quarter.
Total funding, meanwhile, dropped 42% from quarter to quarter to US$541 million.
But Holliday said Canadian tech companies on the whole are benefiting from an abundance of capital in the U.S.
“The Americans are now scouring the [Canadian] market constantly,” he said, adding he’s been getting emails almost every day from U.S. investors inquiring about local companies that might be otherwise overlooked.
“The U.S. guys are trying to find the rising tide, and this is all a symptom of the fact that there’s so much money out there in the U.S., now in Canada.”
