An additional five VCs from Vancouver, Toronto, and Montréal will receive portions of the $25 million commitment.
By Bianca Bharti and Douglas Soltys (BetaKit)
The federal government Tuesday doled out the second tranche of its inclusive growth stream commitment to five Canadian venture capital (VC) fund managers as part of the Venture Capital Catalyst Initiative (VCCI).
At MaRS Discovery District, Small Business Minister Rechie Valdez announced $25 million in funding, the final tranche of the $50 million it earmarked in Budget 2021 meant to help underrepresented entrepreneurs, including women and people from Indigenous, Black, and 2SLGBTQI+ communities.
The money will go to Vancouver-based Raven Indigenous Capital Partners and Pender Ventures, Toronto-based Amplify Capital and StandUp Ventures, and Montréal-based TandemLaunch Inc.
“There is simply a lack of equity-deserving communities in the venture capital space.”
Minister Rechie Valdez
“In order to build a stable private capital industry, it is imperative that Canada continue to demonstrate that investment can generate world-class financial returns,” Valdez said at the press conference. “So, through VCCI, our government is improving the sustainability of the Canadian ecosystem through a market-driven approach that will deepen the pool of experienced fund managers and attract further private capital into the market.”
The minister went on to cite statistics, noting that only 19 percent of venture capital partners are women and 23 percent visible minorities. “There is simply a lack of equity-deserving communities in the venture capital space,” Valdez said, adding that founders of diverse backgrounds “unfairly” encounter barriers because of their identities.
The Liberal government relaunched the government-matching fund-of-funds program as VCCI in 2017, with a renewed $450 million committed over five years in 2021. It was originally launched in 2013 under the previous Conservative government, which branded it as the Venture Capital Action Plan (VCAP). Ottawa claims that along with other public and private investments, VCCI will inject $1.6 billion into the innovation capital market. In this year’s budget, the federal government also committed an additional $200 million for minority entrepreneurs and to invest in underserved startup ecosystems outside major cities.
Today’s announcement brought few new details on the additional capital allocation beyond what was previously known about that commitment from Budget 2024. Valdez reiterated that the new funding, to be dispersed over two years starting in 2026, is a commitment to “increase access to venture capital for equity-deserving entrepreneurs and to invest in startup ecosystems in underserved communities and outside key metropolitan centres.”
Speaking with BetaKit after the event, Valdez noted that despite the new focus on non-urban startups, the structure of the new commitment would be run very similarly to the inclusive growth stream.
“We’re really trying to expand our reach in terms of how we can continue to invest in the venture capital ecosystem,” she said.
The continuation of the VCCI program had been an open question for some time prior to the Budget 2024 announcement, due to comments made by CVCA CEO Kim Furlong in 2022 to The Globe and Mail. She stated the $450-million renewal was the “last time we’ll see a major fund-to-fund initiative from the federal government.” Furlong eventually walked those comments back somewhat on The BetaKit Podcast, but a complete renewal of VCCI has yet to be seen.
When asked if a full VCCI refresh could be expected from the federal government, or if the program was transitioning solely to focus on equity-deserving groups, Minister Valdez demurred.
“Right now [equity-deserving groups] is our focus,” Minister Valdez said. “Making sure we’re levelling the playing field.”
“Right now [equity-deserving groups] is our focus,” she said. “Making sure we’re levelling the playing field.”
A committee of industry experts, including from the Business Development Bank of Canada (BDC) and the federal department of Innovation, Science and Economic Development (ISED), selected this year’s recipients. Venture firms selected will have to report their progress in enhancing diversity and gender equality across the ecosystem.
“We are excited to receive this funding from VCCI and to be able to put these resources towards closing diversity gaps in the industry,” Maria Pacella, managing partner at Pender Ventures, told BetaKit. “We have been incorporating DEI practices within our investment process with strong early success and this allocation from VCCI will enable us to scale up initiatives that advance diversity and inclusion across our investment portfolio and the wider community.”
TandemLaunch also received VCCI funding in 2018, a year after the federal government launched the first iteration of the program. A spokesperson confirmed that this year’s VCCI funding will be included in the second close of the VC firm’s Fund IV, which has so far secured $27 million of a $40-million target.
“Diversity has always been a fundamental value at TandemLaunch and a key aspiration of our entire team,” the firm’s CEO Helge Seetzen and managing partner Emilie Boutros said in an emailed statement to BetaKit. “We believe this is a testament to our commitment of fostering an inclusive environment and leveraging diverse perspectives to drive innovation and value creation.”
One of the originators of VCCI’s predecessor while at BDC, new MaRS CEO Alison Nankivell said she “knows very well” it’s contribution to growing emerging managers. (BetaKit)
StandUp Ventures’ Michelle McBane noted at the event that the VCCI funding would go toward the firm’s yet-to-be-launched Fund III. Alongside the funding came the new addition of Meredith Powell as a venture partner. She will operate out of Vancouver and support deal flows, due diligence, and the VC’s portfolio companies. Powell previously spent six years as a venture partner at Voyager Capital. StandUp Ventures also promoted four-year firm veteran Katheleen Eva to senior associate.
Amplify Capital will use the VCCI support as part of a newly launched Fund III. At the announcement event, Amplify Capital managing partner Kathryn Wortsman noted the firm had announced its first fund at MaRS eight years ago, with a focus on “driving for outstanding financial returns alongside outstanding measurable impact.”
“Working in venture capital and private equity for the last 30 years has given me a lens of the opportunity in the social and climate sector to apply best practices in business and technology to scale opportunities to deliver outstanding impact returns,” she said.
Ahead of the VCCI update, Raven Indigenous Capital Partners announced it had opened its first US office in Albuquerque, N.M. “This expansion marks a significant milestone in the firm’s mission to support and invest in Native-led businesses across the United States and Canada,” it said Monday on LinkedIn.
Raven launched in 2018 to help Indigenous entrepreneurs grow and scale their businesses while strengthening the Indigenous economy. The firm is part of the Raven Fund Group, which recently saw its Raven Indigenous Outcomes Funds secure a $20.4-million first close.
Founded in 2016 as the MaRS Catalyst Fund with a $5.8 million Fund I, Amplify rebranded and spun out of the MaRS Discovery District in 2019. In 2022, Amplify Capital secured the final close for its second impact investment fund, raising a total $36 million CAD.