The fund, Yaletown’s first new capital pool in five years, will target “emerging growth” companies in information technology and clean-technology sectors that specialize in improving corporate productivity and efficiency and in the “Internet-of-things” space.Hemera Technologies
Another Canadian venture-capital firm is joining the fundraising frenzy. Vancouver-based Yaletown Partners is setting out to raise a $135-million fund, its third and largest venture-capital fund since it opened its doors 13 years ago.
The fund, Yaletown's first new capital pool in five years, will target "emerging growth" companies in information technology and clean-technology sectors that specialize in improving corporate productivity and efficiency and in the "Internet-of-things" space. Its ideal investee company would generate $3-million to $5-million in revenue, have "shown some initial success," but would not require massive amounts of outside capital to fuel expansion, said Yaletown partner Mike Satterfield. Fundraising is set to start this quarter, with a target first close later this year.
Yaletown follows a string of VC firms that have tapped the market lately, fuelled in part by the federal government's venture-capital action plan, which saw Ottawa, Ontario and Quebec inject $450-million into four fund-of-funds investors alongside private investors who committed another $900-million. About half of those funds have been committed to 19 venture-capital firms.
Mr. Satterfield said Yaletown has been focusing primarily on emerging growth companies out of its $100-million second fund in the past few years and "we really liked the market dynamics of that."
Some high-profile venture-backed companies chew up a lot of private investor capital and aim to become "unicorns," meaning they are valued at $1-billion or more while still privately held.
Yaletown isn't aiming so high. Mr. Satterfield said Yaletown would be happy to invest in companies that don't need a lot of financing and where "exits" – either sales or initial public offerings – would happen in the $50-million to $250-million enterprise value range. "We're not really unicorn chasers," he said. The company's portfolio includes Internet-of-things company Bit Stew Systems and data-security firm Phemi Health Systems.
The past few months have been shaky in the tech sector: The number of IPOs has fallen steeply and the stocks of several venture-backed tech companies that went public in the past 18 months also swooned. Fidelity has also written down the values of many investments made into private tech companies.
Mr. Satterfield acknowledged that he's worried about the market softness, but noted that Yaletown raised its previous two funds in relatively soft periods, in the mid-2000s and coming out of the credit crisis in 2010-11. "We've raised funds a couple of times heading into cloudy weather," he said. "But we've managed to make it work."
Sean Silcoff