One of Canada’s top seed investors, Golden Ventures, has raised two funds after earning a windfall return this year on one of its early investments in Wattpad Corp.
Toronto-based Golden raised US$100-million for its latest fund to back early-stage ventures, mostly in the Toronto-Waterloo region. “There has certainly been a huge shift [to] a belief that Canadian founders can absolutely create multibillion-dollar companies in Canada, and there’s no shortage of those swings happening now,” said founding partner Matt Golden.
Golden Ventures has also raised an “opportunities fund,” a special purpose vehicle to back a handful of its top-performing companies in later-stage rounds beyond the scope of its core funds. Golden’s US$20-million opportunities fund is anchored by Northleaf Capital Partners, which has backed similar funds by Version One Ventures, Garage Capital and Georgian. These new opportunities funds are relatively new to Canada after becoming well-established south of the border over the past decade.
“The results are really interesting across all these [opportunities] funds,” said Ian Carew, managing director of Northleaf. “For [fund managers] it’s a chance to stay closer to their companies, have a bigger presence and generate incremental economics without upsetting their original strategy. For us, it’s a chance to get exposure to some really interesting companies at a different stage than our original exposure.”
Mr. Golden started his career as a lawyer before jumping into tech during the dot-com bubble. He served as director of ventures with Brightspark Ventures and co-founded mobile game maker Tira Wireless in 2001. Mr. Golden shifted to venture capital in 2008, eventually founding his eponymous firm in 2011. Golden Ventures initially backed mobile products and services before broadening to a range of technologies, from e-commerce to satellite communications to quantum computing. One of Golden’s first investments from its debut $16-million fund was in Wattpad, a mobile platform for amateur authors to post their works, led by his Tira co-founder Allen Lau. Ameet Shah, an engineer at Tira, joined Golden as general partner in 2015.
At the time, Canadian tech success stories and access to capital were scarce and venture capitalists were pleading with governments for help. Industry veterans fretted about foreign companies snapping up Canadian tech enterprises for bargain prices and Silicon Valley venture capitalists told local startups they would only invest if the startups moved south.
But a new wave of Canadian entrepreneurs was starting to build digital companies to take advantage of emerging trends including the mass adoption of smartphones and social media, the shift to cloud-based software and commercialization of artificial intelligence. Golden Ventures backed some of the most promising of those companies locally and established connections with many U.S. venture capital firms, introducing them to their portfolio of companies and the burgeoning Toronto tech scene in general.
“Matt was one of the early investors who just made a bet that the Toronto ecosystem would reach a level of liquidity that was very comparable to the Valley,” said Ray Reddy, who raised $2.5-million in 2014 from Golden and others for his food takeout app provider Ritual Technologies Inc. “That paid off in a big way. Before there was no evidence there could be very large Canadian outcomes.”
Today the local sector is booming, led by some of the companies Golden has backed, including Tophatmonocle Corp., Clear Finance Technology Corp. and Xanadu Quantum Technologies Inc., which each raised nine-figure financings this year. “There are a lot of people interested in what Golden is doing and, in particular, interested in Toronto and that ecosystem,” said Lindel Eakman, managing director with Boulder, Colo.-based Foundry Group Next, a Golden investor.
An early investment in Winnipeg-based food delivery service SkipTheDishes Restaurant Services Inc. delivered a huge return for Golden, equal to almost half of its $50-million second fund, when it sold to Britain’s Just Eat PLC for $200-million in 2016. (Golden’s latest $100-million fund is the fourth it has raised.) Golden’s stake in Wattpad returned more than the size of its entire first fund, when Korean giant Naver Corp. bought it for US$660-million this year.
Golden’s new US$100-million fund aims to make 20 to 25 “core” initial investments of up to US$1.5-million per company, plus an equal amount of angel investment deals for $500,000 or less.
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