Canadian public-private venture capital fund raises C$217 million

Tue Jan 21, 2014 5:59pm EST
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By Alastair Sharp

TORONTO (Reuters) - A Canadian government-backed investment fund set up to help revive the country's ailing venture capital industry raised C$217.5 million ($198 million) at its initial closing, its backers said on Tuesday.

The Northleaf Venture Catalyst Fund raised C$145 million from institutional and corporate investors, including Canada's biggest banks, with the rest contributed equally by the federal and Ontario governments.

It will be managed by Northleaf Capital Partners and invest mostly in domestically focused early- and mid-stage venture capital funds, as well as directly in Canadian startups.

"Canada has all the building blocks you would want to see for a vibrant venture ecosystem, in terms of the university network, the entrepreneurial communities," said Jeff Pentland, managing director for Northleaf Capital. "There has been a lack of later-stage capital in that ecosystem."

The fund is part of a C$400 million plan to support Canada's venture capital industry announced in the federal budget last year. The fund has a target of raising C$300 million, and plans to hold a second closing later in 2014.

Pentland said the fund will look to back projects in information technology, health sciences and environmental technology.

It was backed by Bank of Montreal (BMO.TO: Quote), Canadian Imperial Bank of Commerce (CM.TO: Quote), National Bank of Canada (NA.TO: Quote), Royal Bank of Canada (RY.TO: Quote), Bank of Nova Scotia (BNS.TO: Quote), and Toronto-Dominion Bank (TD.TO: Quote).

Northleaf was spun out of TD in 2009, according to its website, and has offices in Toronto, London, and Silicon Valley's Menlo Park in California.   Continued...