Inovia raises US$325-million technology venture fund as backers shrug off market jitters

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Chris Arsenault, proper, founding companion of the enterprise capital agency iNovia, together with Patrick Pichette, left, former CFO of Google, and Dennis Kavelman, centre, former CFO of Blackberry, on the iNovia places of work in Montreal in 2018.Dario Ayala/For The Globe and Mail

Inovia Capital, one in every of Canada’s largest enterprise capital corporations, has raised its largest early-stage fund thus far, fuelled by sturdy demand from institutional traders regardless of the sharp latest devaluation of tech firms.

Inovia stated Wednesday it had raised US$325-million for its fifth fund to again younger expertise firms at early levels of their progress. That’s up from the US$200-million it raised for its fourth such fund in 2019. Inovia has steadily elevated the dimensions of its funds since elevating its first, at $110-million, in 2007.

Inovia companion Karamdeep Nijjar stated commitments for the brand new fund arrived briskly from previous backers after the Montreal-based agency went to market in February. These embrace Canadian fund-of-funds HarbourVest Companions, Kensington Capital Companions, Northleaf Capital Companions and Teralys Capital, in addition to Financial institution of Nova Scotia, Calgary’s AVAC Group, Alberta Enterprise Corp., and Quebec traders Fonds de solidarité FTQ, Fondaction, Caisse de dépôt et placement du Québec and Investissement Québec.

Inovia has additionally added three new institutional traders: Trans-Canada Capital, Air Canada’s pension fund supervisor; British Columbia Funding Administration Corp.; and IA Monetary Group IAG-T. “It’s the quickest fund we’ve ever raised” and demand exceeded funds raised, Mr. Nijjar stated.

Inovia is one in every of Canada’s main entrepreneur-led enterprise capital corporations which have helped revive the sector’s tarnished fame for delivering poor returns within the 2000s. It was co-founded by veteran entrepreneurs and enterprise traders Chris Arsenault and Shawn Abbott in 2007. That proved to be superb timing to again younger firms, on the daybreak of a interval of digital disruption owing to the proliferation of smartphones, cloud computing and widespread adoption of information analytics and machine studying.

A few of Inovia’s extra outstanding investments embrace Lightspeed Commerce Inc. LSPD-T, Michele Romanow’s Clear Finance Expertise Corp., Hopper Inc. and Clearpath Robotics Inc. It was an early backer of Luxurious Retreats Worldwide Inc., bought by Airbnb Inc. ABNB-Q in 2017 for $400-million.

Alongside the way in which, Inovia has expanded its crew and funding scope. The agency moved into “progress” investing in 2018, offering large-scale financings to extra established software program firms similar to Sonder Holdings Inc. and Wealthsimple Applied sciences Inc. It employed the previous chief monetary officers of BlackBerry Ltd. BB-T and Google mum or dad Alphabet Inc. GOOGL-Q – Dennis Kavelman and Patrick Pichette, respectively – to co-lead the trouble with Mr. Arsenault. Inovia raised its first, US$400-million progress fund in 2019 and a second, for US$450-million, in 2021. Final 12 months it additionally launched a $334-million “continuity” fund to reinvest in top-performing portfolio firms and purchase out earlier traders that needed to promote their stakes.

Inovia has additionally expanded its expertise, recruiting two high-profile companions final 12 months: chief expertise officer Krista Skalde, who beforehand led expertise administration for sovereign wealth fund Abu Dhabi Funding Authority, and chief expertise officer Steven Woods, a Google engineering govt.

“They’ve constructed their crew with numerous intelligence,” stated Teralys managing companion Jacques Bernier, including that they’re “one of many few” technology-focused personal capital corporations in Canada to evolve the way in which they’ve over the previous twenty years. Mr. Bernier stated it was too early to evaluate the success of Innovia’s progress funds, which made a number of bets throughout a interval of inflated valuations in 2020 and 2021.

Mr. Nijjar stated Inovia’s newest early-stage fund will proceed the identical investing technique as its predecessors, focusing totally on Canadian-based business-to-business cloud software program firms, marketplaces and consumer-oriented expertise, in retail, journey, digital, manufacturing logistics and monetary companies. “We’ve confirmed we are able to execute on that,” he stated.

Requested whether or not this was a precarious time to be investing with the latest crash in tech valuations and worsening financial image, Mr. Nijjar stated Inovia has been constant in the way it paces its investments. “There shall be occasions after we’re deploying capital in scorching markets at excessive valuations and occasions after we’re deploying capital into markets the place there are comparatively decrease valuations. We don’t attempt to time the market. We simply should concentrate on discovering high quality companies with nice unit economics and strong founding groups.”

Mr. Bernier stated this might show to be time to again startups, as was the case throughout the 2008-09 recession. “Costs shall be decrease, with much less rivals. Odds are you’ll do significantly better.”

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