Celtic House Venture Partners, an Ottawa-based technology venture capital firm, will announce today that it has closed a new $280-million fund -- its third and the largest raised in the private equity arena in Canada.
This new venture capital money follows on the heels of a new $250-million fund raised last fall by Ventures West Management Inc. of Vancouver.
The new money signals "an improving sentiment" by institutional investors toward a higher-risk asset class after the technology bubble burst in 2000, Andrew Waitman, managing partner of Celtic House said yesterday. "It was tough to raise the money because people remained very cautious."
But Mr. Waitman expects 2005 to be a "banner year in the whole venture business in North America," in both the raising of money and investing of capital.
"You are going to see more initial public offerings and more buyout activity, and when you see IPOs and buyouts, that directly leads to people getting more aggressive in venture funding."
Half of the money raised in Celtic House's latest fund also comes from U.S. and European investors -- a rarity in the Canadian venture world, he added.
Celtic House, which invests in early-stage technology companies, sold foreign investors on the opportunities in Canada compared with the "mature markets" in Boston and in California's Silicon Valley, he said. "Ottawa, Toronto and Waterloo are 10 to 15 years behind the United States."
Its latest fund will focus on the several industry sectors, including semiconductors, micro-electrical mechanical systems (MEMS), optics and software, primarily in Canada as well as in Britain.
Celtic House was founded in 1994 as the private investment vehicle of high-tech pioneer Terry Matthews, chairman of Mitel Corp. and founder of Newbridge Networks Corp., which was acquired by Alcatel SA.
But six partners bought out Mr. Matthews in 2002. The Celtic House II fund, the company's second fund that began with $180-million (U.S.) from Mr. Matthews, received an additional $90-million two years later from institutional investors, including Ontario Teachers Pension Plan. Investments in the second fund include names like Tropic Networks Inc. of Ottawa and ViXs Systems Inc. of Toronto.
All the institutional investors in the second fund returned in the newest fund.
Some of Celtic House's successful investments have included OtigaBay Systems, a Vancouver-based developer of high performance computing systems that was acquired recently by Cray Inc. of Seattle for $115-million.