Inovia raises US$325m tech venture fund as backers ignore market jitters
Inovia Capital, one of Canada’s largest venture capital firms, has raised its largest seed fund to date, fueled by strong demand from institutional investors despite the recent sharp devaluation of tech companies.
Inovia announced on Wednesday that it has raised $325 million for its fifth fund to support young tech companies in the early stages of their growth. This is an increase from the $200 million it raised for its fourth such fund in 2019. Inovia has steadily increased the size of its funds since raising its first, to $110 million, in 2007.
Inovia partner Karamdeep Nijjar said commitments for the new fund came in quickly from former backers after the Montreal-based company went public in February. These include Canadian funds of funds HarbourVest Partners, Kensington Capital Partners, Northleaf Capital Partners and Teralys Capital, as well as Bank of Nova Scotia, Calgary’s AVAC Group, Alberta Enterprise Corp. and Quebec investors Fonds de solidarité FTQ, Fondaction, Caisse de dépôt et placement du Québec and Investissement Québec.
Inovia has also added three new institutional investors: Trans-Canada Capital, the manager of Air Canada’s pension fund; British Columbia Investment Management Corp.; and IA Financial Group IAG-T. “It’s the fastest fund we’ve ever raised” and the demand has exceeded the funds raised, Mr Nijjar said.
Inovia is one of Canada’s leading entrepreneur-led venture capital firms that helped revive the sector’s tarnished reputation for poor returns in the 2000s. It was co-founded by veteran entrepreneurs and investors Chris Arsenault and Shawn Abbott in 2007. It proved to be the perfect time to support start-ups, at the dawn of a period of digital disruption due to the proliferation of smartphones, cloud computing and the widespread adoption of analytics data and machine learning.
Some of Inovia’s largest investments include Lightspeed Commerce Inc. LSPD-T, Michele Romanow’s Clear Finance Technology Corp., Hopper Inc., and Clearpath Robotics Inc. It was an early backer of Luxury Retreats International Inc. ., bought by Airbnb Inc. ABNB-Q in 2017 for $400 million.
Along the way, Inovia has expanded its team and investment reach. The company shifted to “growth” investing in 2018, providing large-scale funding to more established software companies such as Sonder Holdings Inc. and Wealthsimple Technologies Inc. It hired the former chief financial officers of BlackBerry Ltd. BB-T and Google parent company Alphabet Inc. GOOGL-Q — Dennis Kavelman and Patrick Pichette, respectively — to co-lead the effort with Mr. Arsenault. Inovia raised its first US$400m growth fund in 2019 and a second, US$450m, in 2021. Last year it also launched a US$334m “continuity” fund to reinvest in the best performing portfolio companies and buy out previous investors who wanted to sell their shares.
Inovia has also broadened its talent base by bringing on two high-profile partners last year: Chief Talent Officer Krista Skalde, who previously led talent management for sovereign wealth fund Abu Dhabi Investment Authority, and Chief Technology Officer Steven Woods, an engineering manager at Google.
“They built their team with a lot of intelligence,” said Teralys managing partner Jacques Bernier, adding that they are “one of the few” tech-focused private equity firms in Canada to have evolved. as they have done for the past two years. decades. Bernier said it was too early to assess the success of Innovia’s growth funds, which made several bets during a period of inflated valuations in 2020 and 2021.
Nijjar said Inovia’s latest seed fund will continue the same investment strategy as its predecessors, focusing primarily on Canadian business-to-business cloud software companies, marketplaces and consumer-focused technology, in the retail, travel, digital, manufacturing. logistics and financial services. “We have proven that we can execute this,” he said.
Asked if it was a precarious time to invest with the recent crash in tech valuations and deteriorating economic conditions, Mr Nijjar said Inovia had been consistent in how it paced its investments. “There will be times when we deploy capital into hot markets at high valuations and times when we deploy capital into markets where valuations are relatively lower. We are not trying to time the market. We just need to focus on finding quality companies with great unit economics and strong founding teams.
Mr Bernier said this could prove to be a good time to support startups, as was the case during the 2008-09 recession. “Prices will be lower, with fewer competitors. Chances are you’ll do much better.
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