One of the few Canadian venture capital firms led by a woman is aiming to raise $100-million for its second fund after backing two of the country’s most successful women-led software startups.
Vancouver’s Pender Ventures, an arm of PenderFund Capital Management Ltd., has raised half of the target for the fund, or $50-million, backed by past investors Export Development Canada and Vancouver City Savings Credit Union, and newcomers BMO Capital Partners, Kinsted Wealth Inc., Canadian Imperial Bank of Commerce CM-T and affiliate Pender Growth Fund PTF-X.
The second fund has already raised twice as much as Pender’s first, a $25-million investing vehicle.
Pender Ventures, led by managing partner Maria Pacella, has also expanded nationally, hiring former Real Ventures partner Isaac Souweine, and principal Meryeme Lahmami, previously with BDC Capital’s Women in Tech venture fund, both in Montreal.
Guillermo Freire, senior vice-president of mid-market with EDC, said the Crown corporation backed Pender “based on their investment thesis, the diversity in their investment team and their values,” and Pender’s “strong track record of growing Canadian exporters.”
Since Pender’s first fund began investing in 2018, it has generated an average annual internal rate of return above its 25 per cent to 30 per cent target – even after writing down some of holdings in the tech downturn since late 2021.
Those relatively strong returns are largely due to Pender’s investments in local companies Copperleaf Technologies Inc. CPLF-T, whose chief executive Judi Hess stepped down Jan 1. to become vice-chair; and Jane Software Inc., co-led by founders Alison Taylor and Trevor Johnston.
Ms. Pacella led one of the earliest investments into Copperleaf in 2010 when she was with GrowthWorks Capital, and later bought into the decision analytics software firm through Pender in advance of Copperleaf’s 2021 initial public offering.
Pender in 2019 also led the first institutional investment into Jane, a profitable practice management software provider for health professionals that has continued to thrive despite the tech sector’s recent downturn.
Ms. Pacella said she took pride in the fact 40 per cent of the companies Pender has backed have women and/or BIPOC founders, who have typically struggled to raise venture capital compared with companies led by white men.
“Hopefully I’ll have some great financial success and dedicate what I do to helping other women, to help more enter the business and be successful,” Ms. Pacella said in an interview. “I want to go out of my way to help because I had help from others.”
In the cases of Copperleaf and Jane, Pender invested by buying shares from other founders, not directly from the company, in what is called a secondary transaction. Pender prefers to seek out non-competitive financing opportunities rather than bid to get into hot deals at high prices.
Buying into secondaries “has been a great strategy for fund one,” Ms. Pacella said. “We worked hard looking for under-the-radar opportunities, companies that weren’t necessarily fundraising.”
Ms. Pacella said the new fund will focus primarily on Canadian software firms in the health care space and will typically invest $2-million to $3-million apiece in companies that are generating a few million dollars a year in revenue and are looking to scale up.
Pender’s new fund has already made three investments, including financings for Traction Rec Technologies Inc., a provider of customer relationship management for community centres and non-profit organizations, and DistillerSR Inc., which sells an artificial-intelligence-driven tool to automate reviews of regulatory submissions for drugs and health care devices.
Pender is raising money during a challenging time for the sector: Technology valuations have crashed, companies have laid off more than 200,000 people globally since the start of 2022 and some institutional investors have gotten cold feet about backing startups.
Ms. Pacella acknowledged in an interview “it’s going to be a stretch” to reach her fundraising goal, which is four times the size of the first fund, which fell short of its $60-million target when it closed in 2020 because of COVID-19-related uncertainty.
“Even in a good market that’s hard,” she said. “But I think we’ve proven ourselves with fund one, doing what we said we’re going to do. It’s performing well and the returns are good.”