Charles Sirois doesn't think the venture capital system in Canada is broken. It just needs a little help.
On Monday, some of that help is arriving in the form of Tandem Expansion Fund, a new private-sector growth-capital fund that will invest in Canadian technology companies. The general partner for the fund is Tandem Expansion, which is co-founded by Mr. Sirois and Brent Belzberg, founder and senior managing partner of TorQuest.
The Business Development Bank of Canada will invest $75-million in the fund, courtesy of the Government of Canada. The fund is expected to close its first round of financing at $300-million later this summer.
Tandem has received “preliminary commitments” from other private investors totalling $250-million. The long-term goal of the fund will be to raise as much as $500-million for growth-stage financing, said Mr. Sirois, who is also the chairman of Canadian Imperial Bank of Commerce.
Tandem comes at a crucial time for the Canadian VC industry, which has seen fundraising decline every year but one since 2001.
“This is not the perfect time,” Mr. Sirois said in an interview. “But we think that we have a very good product Canada needs, and that we believe that we will be able to demonstrate to the investors – and we've already done that for some – that this is a unique opportunity in this country to finance very strong Canadian technology companies who will produce tremendous value and return.”
Rather than invest in companies looking for seed or startup financing, the new fund will focus primarily on “growth phase” companies with established business models that are looking to build scale and go international, Mr. Sirois said.
Financing for companies in need of infusions of cash of between $10-million and $40-million is something that is missing in Canada's venture capital market, said Jean-René Halde, BDC's president and chief executive officer.
“There are a lot of very good technology companies in this industry that right now need scale,” he said. “And hopefully what this growth fund will do is provide those companies with scale and make those companies a success.”
The day-to-day operations of the fund will be managed by David Bookbinder, André Gauthier, Christopher Legg and Alex Moorhead.