What happened: Vancouver venture capitalists close $150 million fund
Why it matters: Vistara Capital is looking to fill in a market gap for tech companies in need of growth funding
Like a party balloon taking on more helium, the dollar figure behind one Vancouver-based growth fund keeps going up and up.
Vistara Capital Partners announced Wednesday (December 11) the final close of its latest fund, reaching US$115 million (C$150 million).
The firm originally aimed to create a US$100 million fund aimed at helping more mature business-to-business software firms with growth when it announced the close of its first round in October 2018.
Since that initial US$40 million raise, however, Vistara has continued to draw investor interest, leading to the oversubscribed close of the Vistara Technology Growth Fund III LP.
It closed a second round in July 2019, bringing the fund to US$75 million at that time.
“We’re very pleased to have the extra horsepower in the fund,” Vistara managing partner Randy Garg told Business in Vancouver.
“At the end of the day we are looking to back probably 12-15 solid growth-stage tech companies in this fund.”
Vistara has so far committed about 30% of the fund to five companies.
The fund’s investments, which typically range from US$5 million to US$15 million, will take the form of debt financing rather than equity financing.
Investors in the fund are made up of family offices, private foundations, wealth management firms and two dozen tech industry executives.
Export Development Canada was the fund’s initial institutional investor.
Vistara’s Canadian portfolio includes Vancouver-based ecommerce platform Mobify and Toronto fintech Zafin.
“When you look at the gap in the market, there’s a lot of companies that get to $10 million or $20 million in revenue and end up selling too early because access to growth capital isn’t there or it comes along with significant dilution [or] control of the business that the founders may or may not want to give up,” Garg said.
“So our real mandate is to help these companies go from $10 million or $20 million in revenue to $50 million-plus before they look to exit or explore other options.”
With the close of the fund, the Garg and company plan to open a new office in Toronto at the beginning of 2020.
“A lot of our Canadian deal flow is coming from out East. So for us we’re looking for tech companies doing north of $10 million in revenue. We do have several here in the West but you can probably multiply that by 10 or 20 in terms of number of companies that would fit our criteria in the Ontario market,” Garg said.
He added that a new office in Central Canada would allow Vistara to better serve potential investments in Montreal, Ottawa and Waterloo as well as American investments on the Eastern Seaboard.
“We’d love to see more local tech companies that we can invest in that meet our criteria. I’m happy to engage with any and all,” Garg said, adding that he’s been putting the word out through the B.C. Tech Association.