Bruce Croxon passes Round 13 Capital reins to younger leaders, raises $200-million fund

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Celebrity entrepreneur-turned-financier Bruce Croxon and business partner John Eckert are passing leadership of their Toronto venture capital firm, Round 13 Capital, to its next generation of partners after raising $200-million for their new fund.

The co-founders are stepping back as managing partners, as general partners Brahm Klar and Wilson Lee assume those titles for Round 13′s third fund, which has raised $200-million of its $300-million goal.

Mr. Croxon, 61, said in an interview he and 66-year-old Mr. Eckert made a “very deliberate, conscious decision that we want Round 13 to be around 100 years from now,” and the best way to do that was make an orderly transition to new leadership. For now they will continue to lead Round 13 and remain on its investment committee. “The passion is still there,” he said. “I’m still so fired up about growing Canadian technology companies.”

The handover and new fund aren’t the only changes at 11-year old Round 13. Its growth fund, led by ex-technology investment banker Sanjiv Samant, is rebranding as PropelR Growth Fund and relocating from its offices in Toronto’s Riverdale neighbourhood to Bay Street. PropelR, which invests in private technology companies that are near to going public or selling, is making the name change to avoid market confusion with other Round 13 funds, which make longer-term bets on earlier-stage businesses. PropelR is also in the final stages of raising its second, $150-million fund, Mr. Samant said.

The two funds add to a growing list of Canadian venture capital firms that have recently hit fundraising goals despite mounting challenges in the technology space. Last month, Vancouver’s Yaletown Partners reached the $200-million fundraising target for its innovation growth fund, while veteran tech executive and deal maker Janet Bannister raised $22-million of a $30-million target for the first fund of her new firm, Staircase Ventures. Radical Ventures has raised most of its planned US$550-million second fund. Meanwhile, Kensington Capital Partners last week became the first of four Canadian “fund of funds” managers partially financed by Ottawa to announce the first close on its third fund to back Canadian venture capital firms under a federal program.

Mr. Croxon, and Mr. Eckert launched Round 13 in 2012 aiming to raise $100-million. They named their firm after the gruelling 13th round of the 1975 Thrilla in Manila heavyweight title match between Muhammad Ali and Joe Frazier, and each brought their own star appeal: Mr. Croxon was founder of online dating website Lavalife Inc., and later a star of Dragons’ Den and co-host of The Disruptors. Mr. Eckert was a veteran venture capitalist and banker.

But the pair took hits along the way. Anchor investor Alberta Investment Management Corp. backed out of a pledge to invest up to $50-million after a leadership change. All four fund of funds tapped by Ottawa to invest in Canadian venture capital firms passed because Round 13 was new and raising in a crowded market. Some early backers dropped out. But by 2017 they’d almost made it, raising $95-million for their first fund, drawing largely from entrepreneurs and wealthy individuals. Round 13′s second fund, launched in 2019, raised $158-million and its performance ranked in the top quartile of funds that year, Mr. Klar said. Past investments include stakes in online furniture seller Article, e-commerce app developer Bold Commerce and restaurant point-of-sale software provider TouchBistro. Round 13 also oversees two other funds.

The new Round 13 fund will aim to invest $5-million to $15-million apiece in growing Canadian technology companies with established market demand for their products and that have figured out their unit economics. Investing “at reasonable valuations” is “non-negotiable,” said Mr. Klar, 35, who joined Round 13 in 2018 after working as an associate for RBC Capital Markets and Onex Corp.

He noted the firm has shifted its investing focus several times as prices soared in various tech subsectors, even buying a stake last fall in publicly traded Thinkific Labs Inc. – an unusual move for a venture capital firm – after valuations for public tech companies fell below their private peers. “We try to develop investment themes that factor in our growth mindset, reasonable valuation, great management teams, and we are prepared to move around quite a bit.”