It appears the taxpayer-backed BC Tech Fund’s first startup investment has gone south – south of the border, that is.
The previous BC Liberal government ushered in the $100 million fund of funds in late 2015 with a mandate of building more local startups in the province.
However, Mojio, the first startup to receive a capital injection from taxpayers, has since seen its entire executive team migrate to Silicon Valley.
The head count for the company, which specializes in connecting cars to the internet, is now split “about 50-50” between its offices in Vancouver and Campbell, California, according to Mojio head of marketing Kyle MacDonald.
The most senior employees in Vancouver are its senior director of engineering and global head of technical services, while the entire C-suite has been based at a new Silicon Valley office since August 2018.
“The idea that Mojio and its board has decided to hire people in the U.S., and the mind and matter moved [to] the U.S. – that probably wasn’t the intent,” said Brent Holliday, CEO of Vancouver-based Garibaldi Capital Advisors.
When the BC Tech Fund was unveiled more than three years ago, then-premier Christy Clark said her government was looking “to find ways to make sure there are more success stories in tech in this city and in places all across the province.”
She said in December 2015, “That tech fund will be there to support these small companies [to] become medium-sized and then big tech companies that are going to lead tech all around British Columbia.”
However, Clark said the government would keep politics out of it and hire a private manager to administer the $100 million fund.
Toronto-based Kensington Capital began managing the BC Tech Fund the following year, opening its first office in Vancouver and hand-picking Mojio as its first direct investment.
While the BC Tech Fund is a fund of funds, the province had earmarked $25 million for Kensington to make direct investments in local startups.
After using the BC Tech Fund to invest in Mojio, Kensington has since been using its own capital to back the startup.
Kensington led a Series B round in Mojio beginning in December 2017 that initially raised $30 million.
The round closed in February 2018, raising US$40 million ($52.7 million).
Kensington declined interview requests from Business in Vancouver.
Kensington managing director Gerri Sinclair said in a statement that her company was “very pleased” with its investments, and that the firm continues “to see exciting opportunities in B.C. across all technology sectors.”
“Today, the company [Mojio] is based in downtown Vancouver, Silicon Valley, and Bulgaria,” she said. “The company also continues to hire and build out its team locally in Vancouver (they currently have 40 employees in Vancouver), which aligns with the BC Tech Fund’s mandate to invest in B.C. companies that will contribute to the growth and innovation of the tech sector, attract more investment to the province, and create new jobs.”
Sinclair did not answer questions about whether Kensington was aware of Mojio’s leadership arrangement or what, if any, obligations startups were required to meet by accepting capital from the BC Tech Fund.
The Ministry of Jobs, Trade and Technology stated that the BC Tech Fund does not have restrictions on relocation of staff or any other specific stipulations attached to the investments, given the dynamic nature of the industry.
“B.C. money invested in Silicon Valley. That’s really smart, isn’t it?” BC Green Party Leader Andrew Weaver told BIV.
“There’s no explanation for it … We have companies in B.C. that are crying out for investment.”
Kensington’s website states that for companies to be eligible for the BC Tech Fund, they must be headquartered in B.C. or possess “a significant number of senior executives residing in B.C.” as well as a “substantial portion of its operations or a significant number of its full-time employees” in the province.
Beyond Mojio, the BC Tech Fund has made direct investments in Vancouver-based Foodee Inc. and Eventbase Technology Inc.
And as a fund of funds, it’s also backed venture capital funds including Toronto’s Lumira Capital, which has opened a Vancouver office, and Vanedge Capital.
B.C. Jobs, Trade and Technology Minister Bruce Ralston said the BC Tech Fund has been successful as a tool to support local companies to stay and grow in the province.
“That said, as with any policy we will continue to monitor outcomes of the BC Tech Fund, and if there are adjustments that could be made to enhance its effectiveness, I will certainly consider them,” he said in a statement.
Venture capitalist Holliday, however, said the local technology ecosystem has changed dramatically since the BC Tech Fund was announced.
“There is more money sloshing around from seed funds to family offices to private equity, growth equity and all the venture capital funds that have been raised in Canada or that look in Canada for investments,” he said.
“Just taking a step back, I think the $100 million BC Tech Fund should have just been for fund of funds. I don’t think it should be direct investing at all. There’s tons of direct investors now.”
