Startup hedge funds, private equity funds and venture capital funds in Canada are struggling to raise money.MARK BLINCH
Canadian venture capital investor Celtic House Venture Partners is launching a brand new $105-million fund to invest in start up companies, marking the firm's first new fund in seven years.
Supported by the Ontario Venture Capital Fund, Teralys Capital, Export Development Canada and BDC Venture Capital, Celtic House will invest in companies that specialize in media communications technology and are in their very early stages. The last time Celtic raised money, it was back in 2005 and the firm brought in $225-million.
Given yet another venture capital announcement, it appears as though the sector is turning a important corner. In March, BlackBerry Partners Fund announced a brand new $150-million war chest, and in the federal budget the Conservatives promised to set aside $400-million to create venture capital funds led by the private sector, as well as give the Business Development Bank of Canada another $100-million to support the organization's venture capital activities.
But while this progress is promising, the sector still isn't steaming hot. Though there is reason for people to be happy that the government seems to understand that it needs to support Canadian startups in some capacity, "it's still early days," said Celtic House partner David Adderley.
"I think you have to be careful of looking at one quarter's numbers or two quarters, and saying venture is back," he said of the recent fund closings. Some firms have been fundraising for up to two years, he added, so it's not as though the money is coming to them quickly.
There is also a fear that government venture capital support could be pulled because budgetary constraints are so tight. The Ontario Liberals announced the possibility of a venture capital tax credit last fall, but no one has heard a thing about it since, likely because the government is in such fiscal trouble.
For that reason, Mr. Adderley isn't overly ecstatic. "Yes, people are listening… but I don't think the problem has been solved yet."
Tim Kiladze