Professional Documents
Culture Documents
Locals Question Why Toronto VC Managing B.C
Locals Question Why Toronto VC Managing B.C
TechFundmoney
biv.com /article/2017/4/localsquestionwhytorontovcmanagingbctechfu/
WhenLumiraCapitalsteamtoucheddowninVancouverinearlyAprilforitsannualgeneralmeeting,theTorontobasedventurecapitalfirmwasalsomarkingthefirst
timeitwouldhaveanofficeinB.C.
Thenewofficewasnonnegotiableforthefirmreceivinganinvestmentfromtheprovinces$100millionBCTechFundmanagedbyKensingtonCapital(also
headquarteredinToronto).
LumirahadpreviouslyinvestedintwoB.C.companiesVictoriasAuriniaPharmaceuticalsInc.(TSX:AUP)andVancouversZymeworksbuthadnopermanent
presenceintheprovincebeforesecuringtheinvestment.
Sixmonthsafterthelaunchoftheprovinces$100millionfundoffunds,TorontosheavyinfluenceonB.C.taxpayersmoneyisntsittingwellwiththelocalventurecapital
companies.
IdontthinktheBCTechFundhasachievedthegoalsthatwereoriginallyintendedfortheprogram,saidTimiaCapital(TSXV:TCA)CEOMikeWalkinshaw,adecade
plusindustryveteranwhocuthisteethasVancouverbasedChrysalixEnergyschieffinancialofficer.
ClearlytheB.C.governmentwastryingtoputinplaceaprogramthatwouldhelpfundtechnologycompaniesinBritishColumbiaandintheireyescreatejobgrowth.So
far,Idontbelievethathashappened.IcanprobablycountthenumberofdealsthathavereceivedmoneythroughtheBCTechFundononehand.
The$100millionfundoffundshas$25millionearmarkedfordirectinvestmentinearlystagecompanies.Theremaining$75millionistobeallocatedtoventurecapital
fundsthatarerequiredtoinvestinB.C.basedstartups.
Lastfall,VancouversVanedgeCapitalbecamethefirstfundtoreceivemoneyfromthe$75millionpool.AndtechstartupMojioreceivedadirectinvestmentintherange
of$1millionto$3millionfromthe$25milliondirectinvestmentpool,KensingtonCapitalmanagingdirectorRickNathantoldBusinessinVancouverinNovember2016.
TorontosLumiraisthethirdentitytoreceivefundingfromtheBCTechFundsinceitslaunchinOctober.LumiraCEOPetervanderVeldensaidcompanypolicy
preventedhimfromrevealinghowmuchmoneyitreceivedfromthefund.ButNathansaidheexpectedinvestmentsinotherfundswouldbelessthanthe$15million
Vanedgereceived.
AsBIVreportedinApril2016,twoB.C.entitieswithlocalknowledgeandventurecapitalinvestmentexpertisewereshortlistedalongwithKensingtontorunthetechfund.
WalkinshawsaidhisventurecapitalfirmalsoputinabidtomanagetheBCTechFundbutheacknowledgedthattheothertwolocalentitieshadstrongerbids.
Iwasperfectlyfinewithanyofthose[local]playersgettingthatmoney.MygoalinthatwastomakesurethatmoneyendedupinBritishColumbiasothatwecouldstart
afundoffundsindustryhere.
KensingtonCapitalmanagingdirectorGerriSinclairtoldBIVthatnomatterwhereafundmanagerisheadquartered,themoneywillstillgotoB.C.companies.
Oneofourmandatesistoattractoutsideoftheprovinceafundto[moveto]B.C.inordertoqualifyforthetechfund,saidSinclair,whowasrecruitedbyKensingtonlast
yeartolaunchanofficeinVancouver(likeLumira,ithadnopermanentpresenceintheprovincepriortothetechfund).
ShepreviouslyservedaspresidentofPremierChristyClarkstechnologycouncil.
SinclairsaidthereisashortageoflifescienceventurecapitalfundsinB.C.,soattractingLumiraisahugeaccomplishmentfortheBCTechFund.
LumirahasinturnhiredAuriniaPharmaceuticalschairmanRichardGlickman,whosecompanypreviouslyreceivedinvestmentfromLumira,toleaditssinglepartner
officeinB.C.
TimiaCapitalhasmadefourdealswithB.C.techfirms,withafifthtobeannouncedsoon,Walkinshawsaid.
WeveprobablydonemoredealsinthisprovincethananyVC[venturecapitalfirm]hasdoneinthisprovincethisyear.Andyetwedontqualifyforthefundingbecause
werenota$100millionfund.
Thisprogramhadtheintentofreallyprovidingthefundingtolocalventurecapitalcompanies.Now,somewherealongtheline,thestructuringofthefundmovedtoa
placewhereonlytheabsolutelargestfundsweregoingtogetmoney.Asaresultitexcludedalmostallofthelocalcompaniesthataremakinginvestmentsinthis
province.
SurreyTyneheadMLAAmrikVirk,whoservedasB.C.stechnologyministerwhenthetechfundwasannouncedinDecember2015,saidheexpectstohearcriticism
fromthelocalcommunitywhenaTorontofirmreceivesthefunds.
ButhesaidthecalibreoftheTorontofundswouldultimatelybenefitB.C.
WhenwegetaTorontocompanylikeLumirathatsgoingtoengageatadeeperlevelinB.C.,thatsgoingtoraiseallships,Virksaid.
Theyregoingtoinvestmoreinourlocalspace.And,ifwerebringingthecentreofthatventurecapitalworld[Toronto]furtherandfurtherwesttowardus,thisisa
positiveforallofthesecompanies.
VirksaidheexpectsLumirashighprofiletohaveamultipliereffectanddrawmoreventurecapitalfirmstotheprovince.
ButtherolloutoftheBCTechFundhasirkedGeorgeHeyman,MLAforVancouverFairviewandBCNDPtechnologycritic.
WehavefirmsinBritishColumbiathatwouldhavelovedtohavehadtheopportunitythatTorontosKensingtonCapitalwasgiven,theMLAsaid.
HeymansaidthatwhileheunderstandsKensingtonandLumirahavebothestablishedB.C.offices,itshouldbeuptothegovernmenttobuildupgreatercapacityin
BritishColumbiaandnotsendouropportunitiesandmuchofourmoneyoutsideoftheprovince.
WhileallthemoneyfromtheBCTechFundisrequiredtobeinvestedinlocalearlystagecompanies,thefundmanagersareentitledtoannualmanagementfeesbased
onapercentageofthe$100milliontheymanageasopposedtohowmuchmoneyisdistributedeachyear.A1%managementfee,whichisbelowindustrystandards,
wouldnetKensington$1millionannually.
KensingtonisalsoentitledtomanagementfeesfortakingovertheremnantsofthetaxpayerfundedBCRenaissanceCapitalFund.
JayRhind,aprincipalattheVancouverFounderFund,saidheunderstandsthefrustrationsinthelocalVCfundcommunitybutarguedthatafundoffundsmanagerlike
Kensingtonshouldbebasingitsdecisionssolelyonmeritandnotgeography.
IfyoulookattheVCfunduniverseinVancouvertheoptionsofwhereKensingtoncandeploythatcashiftheywereonlytochooselocalmanagersisprettyslim,he
said.
Rhindsventurecapitalfund,whichlaunchedinOctober2015,isoneofB.C.snewestfunds.HesaidtheBCTechFundisareallyniceinitiative,butinnowayisthis
goingtobethesilverbulletthatsolvesallofourproblemsoftheavailabilityofcapital.
WithafilefromKirkLaPointe
torton@biv.com
@reporton