A venture capital firm founded by the family behind real estate giant Cadillac Fairview Corp. has raised $110 million for a new fund.
Toronto-based Whitecap Venture Partners said it has raised funds from past investors Kensington Capital Partners and Bank of Montreal, and from several new institutional investors and high-net worth family offices. One of its new investors is the Inuvialuit Investment Corp. which manages federal land claims settlement money on behalf of Inuit peoples of the Western Arctic.
Whitecap is targeting a total fund size of $125-million, and the new fund will focus on “Series A” investments, where firms are typically raising their first institutional capital. The VC fund is aiming to invest between $3-million and $8-million per company.
Whitecap managing partner Carey Diamond, the son of late Cadillac Fairview founder A. E. (Eph) Diamond, is one of the longest-standing VC investors in Canada. In 1993, six years after the sale of the real estate giant, the family “decided to change focus from real estate to predominantly investing in early-stage, high-growth companies,” particularly in technology, he said.
For more than 20 years Carey Diamond managed only family money through Whitecap, backing companies in internet infrastructure, medical technology, food and software, including Protenergy, a natural food maker which sold to TreeHouse Foods, Inc. in 2014 for $170-million.
Mr. Diamond attributed Whitecap’s success to being “very selective” and only backing a few companies reachable by a short flight from Toronto (including companies in Winnipeg and Halifax) and “by paying a tremendous amount of attention to each of them."
Based on his success managing family money, Mr. Diamond decided in 2014 to open the firm up to outside investors. He recruited his son Shayn Diamond and Russell Samuels - an investment professional with startup management experience - as partners and they raised $100-million in 2015 largely from outsiders. That included Bank of Montreal Capital Partners, a fund that had a “disastrous” experience backing venture capital firms during the dot-com boom and had avoided such risky investments for more than a decade, said BMOCP vice-president Alex Baniczky
But that changed after Mr. Baniczky got to know Whitecap through the bank’s commercial relationship with the firm and after BMOCP co-invested in two deals alongside the family company. “We felt comfortable not only with the management team but their strategy," he said, adding that Whitecap doesn’t focus on backing a handful of “home runs” that make up for a majority that don’t succeed – the typical venture capital playbook - but sticks to “companies that can develop over time … [with] good long-term prospects."
Whitecap’s first outside fund backed eight companies, including online real estate services firm Real Matters, which went public in 2017, mobile hearing test provider Clearwater Clinical – sold last year to Singapore’s Sivantos Group - and Bold Commerce, a prosperous Winnipeg-based maker of apps used by customers of retail software giant Shopify Ltd.
The new fund will see Whitecap increase the number of companies it backs to 10, while adding a new partner to its all-male investment team, Steve Lau, a software entrepreneur who previously handled private equity deals for Canada Pension Plan Investment Board.