Another new venture capital (VC) fund has closed its initial funding with a contribution from the federal government, as part of Ottawa’s efforts to help revive the VC industry in Canada.
The Kensington Venture Fund, a private sector-led fund of funds, is the third fund that has been seeded under the federal government’s Venture Capital Action Plan (VCAP).
The fund had its initial closing with $160 million in commitments, comprised of $107 million from a variety of institutional, corporate and individual investors, and $53 million from the federal government.
The government has pledged to contribute $1 of capital to the fund for every $2 committed by private sector investors, up to a maximum of $100 million. The first round of investors includes BMO Financial Group, CIBC, Richardson GMP, Royal Bank of Canada, Scotiabank, TD Bank, Open Text Corp. and various individual investors. The fund plans to seek additional investors and expects to hold a second closing in 2015.
The fund will focus on investment opportunities in clean technology, energy technology, information and communications technologies, and digital media. It will invest in both early-stage and mid-stage venture capital funds, and directly in companies. Kensington Capital Partners will act as the general partner for the fund, and it will seek to maximize returns. It says that, while the fund’s investment mandate covers the entire country, Kensington sees particular opportunities in the markets of Western Canada.
“By giving Canadian technology companies the ability to grow and thrive at home, this fund will help stem the gravitational pull that is driving so many of Canada’s leading entrepreneurs, engineers, scientists, and our most promising emerging technology companies to Silicon Valley,” said Rick Nathan, managing director of Kensington. “This new fund is an opportunity for Kensington to become a larger part of Canada’s growth story.”
Among other approaches, the VCAP includes a commitment to establish up to four private sector-led funds of funds, alongside private investors and provincial governments. “Canada needs a robust venture capital ecosystem that helps increase private sector investments in start-ups across Canada. We all want the next global leaders – and the jobs that will come with them – to be founded here in Canada. That is why the establishment of the Kensington Venture Fund is so important,” said federal Finance Minister Joe Oliver.