Canadian public pension funds are helping drive growth in domestic tech venture capital amid signs of a surge in growth capital, with growing expectations that startups with global aspirations will remain in Canada and exit at high valuations.
Québec's CDPQ announced today that it had backed Inovia Capital’s second growth fund with a US$75 million investment as it seeks to support tech-focused growth-stage companies across a range of sectors. Inovia’s first growth fund, launched in February 2019 with US$400 million in capital, achieved a track-record in investing in innovative, globally-minded companies primarily in Canada.
At the same time, PSP Investments – which caters for the pensions of federal employees – announced it was backing Greensoil PropTech Ventures Fund II (GSPV II), which has reached half its US$100 million target. There is a growing market for proptech in Canada, although the majority of startups are at an earlier fundraising stage. GSPV II aims to take proptech innovators to the next stage as the market disruption caused by the pandemic accelerates the digitalization of the property sector.
This week’s venture capital splurge by two of Canada’s largest public pension funds comes days after Laura Lenz, a partner in OMERS Ventures – a subsidiary of the Ontario PPF – remarked that in Canada “venture backed companies are achieving scale and sizeable exits at a velocity unseen ever before in our market.”
Lenz noted that while Canada had produced companies at Seed and Series A stage, there was a lack of funding infrastructure to support businesses achieving unicorn status and many decanted to the US after a Series B funding or exited too early.
However, from the beginning of 2020 – amid the disruption of the pandemic – “the last 14 months of exits in Canada has been more valuable than the last two decades combined.” She added, “Both the frequency and the size of exits is rapidly increasing which makes it a very exciting time to be investing in Canadian tech. Overall, Canadian exit momentum is at an all-time high and we could be hitting that inflection point of exponential growth in Canadian exits.”