By SEAN SILCOFF
Wednesday, April 11, 2018
The former chief financial officers of Google Inc. and BlackBerry Ltd. are joining Montreal-based venture capital firm iNovia Capital.
It's a coup for the 10-year-old tech investment firm, one of Canada's most successful backers of tech startups, and will help it kick off an ambitious drive to raise a US$500-million fund to invest in Canadian firms that typically have to look abroad once they need significant amounts of capital.
Patrick Pichette, who left Google in 2015, and Dennis Kavelman, who worked at BlackBerry until 2010, have joined the firm as general partners.
"Their experience is quite unique in the industry - they're part of a handful of operators and entrepreneurs that helped build multibilliondollar companies," said iNovia managing partner Chris Arsenault, whose firm's investment performance ranks among the top quarter of all North American firms and which has backed some of Canada's most prominent startups, including Lightspeed POS Inc. and Clearpath Robotics Inc.
"It's a game changer."
Mr. Arsenault declined to comment on iNovia's fundraising plan, which was shared confidentially with The Globe and Mail by investment industry sources along with word that investors have made soft commitments of US$300-million.
But Mr. Arsenault confirmed iNovia, which raised a C$110-million fund in 2007, another for C$134-million in 2011, and a third for C$180-million in 2015, was shifting its focus into an area of venture capital known as "growth capital" investing.
While iNovia and most other Canadian venture companies finance tech firms at earlier stages, only a handful, including Georgian Partners and OMERS Ventures, have the size and scale to write cheques big enough to lead growth rounds, typically for $20-million-plus, for fast-expanding firms generating millions in sales.
"The minute you hit the large [funding] rounds, it turns into a desert pretty fast" in Canada, Mr. Pichette said. "At Google ... we took out so many companies from Canada because, the minute they finished raising their [early-stage financings], they looked really good, and ... the minute you have a win, an American company comes and takes them out.
"INovia did not have the capacity to [lead larger financings]. Now it will with us. That's going to make a fundamental difference to the ecosystem of Canada."
Mr. Arsenault, a veteran entrepreneur who cut his venture-capital teeth working for billionaire Montreal entrepreneur Charles Sirois' Telesystem Ltd. during the dot-com bubble, co-founded iNovia's predecessor firm, MSBi Capital, in 2004, backed by Quebec Inc. investors Desjardins and the FTQ Solidarity Fund, and has since financed dozens of Canadian and U.S. startups. It has had several successful "exits," with portfolio companies Chango and Basis Science selling for more than US$100-million each, while Airbnb last year bought Luxury Retreats, a Montreal online apartment rental service that iNovia had backed, for $400-million.
But Mr. Arsenault said that as iNoviabacked companies, of which two-thirds are Canadian, got increasingly bigger, the vast majority of capital they raised came from outside Canada. Meanwhile, he said, iNovia got comfortable leading or co-leading some larger rounds for its portfolio firms, which "drove us to have conversations with Dennis and Patrick [and] bring this to the next level." Mr. Pichette, Google's CFO for seven years before he took a career break in 2015 to travel the world with his wife, said he had his pick of CEO jobs, board appointments and invitations from Silicon Valley venture capital firms, but chose iNovia because "I really wanted to find a way to contribute back to Canada."
The 55-year-old Montrealer, a past president of operations with Bell Canada, said that, with iNovia, "I could hit my three objectives: be my own boss, join a partnership in a [small] firm where I have a great fit, and focus on [creating] the next 25,000 jobs in Canada." He will open an office for iNovia in London and also work with its Canadian firms.
Toronto-based Mr. Kavelman, now an angel investor and board member with iNovia portfolio companies Thalmic Labs and Buildscale Inc. (better known as Vidyard), said he too wanted to bring his rare operating experience to bear helping aspiring Canadian companies.
"I got very spoiled at RIM: I had two co-CEOs [Jim Balsillie and Mike Lazaridis] I got to learn from ... who were both brilliant.," he said. "They had a changethe-world philosophy and created a category. So the bar for me has been set at: 'Whatever I do, it had better matter.' " Rick Nathan, managing partner of Toronto investment firm Kensington Capital Partners and an iNovia backer, said the arrival of the two CFOs "sends a strong message. ... The Canadian venture market is on the map."
Former CFOs Dennis Kavelman, left, of BlackBerry and Patrick Pichette, right, of Google, are seen with Chris Arsenault, managing partner at iNovia.
DARIO AYALA/THE GLOBE AND MAIL