Veteran Canadian venture-capital firm Relay Ventures has closed its third fund, topping out at $200-million.
Relay, whose first fund way back in the Jurassic age of mobile in 2008 was known as the BlackBerry Partners Fund (the name was licensed from then-limited partner Research in Motion), said it had also made 10 investments from its latest fund, eight of which are Canadian. Like its previous two funds, Relay is focused on early stage investments in mobile software, services and content. Past investments by Relay funds have been roughly evenly split between Canadian and U.S. companies.
Investors in the latest fund, which has offices in Toronto and Silicon Valley, include Northleaf Capital Partners and Kensington Capital Partners, Generation Capital, La Caisse de dépôt et placement du Québec, EDC, AEC, Royal Bank of Canada and U.S. mobile operator U.S. Cellular. A portion of money in the fund comes through a $400-million federal program to stimulate the venture-capital investment sector in Canada, introduced by the previous government.
This is the ninth fund led by Relay's veteran VC managing partners Kevin Talbot and John Albright dating to the mid-1990s, including two Mr. Talbot led when he headed RBC's venture-capital group and four that Relay's predecessor JLA Ventures managed under Mr. Albright.
It's also the latest in a slew of Canadian funds to reach the $200-million mark, helped in large part by the federal venture-capital investment program. The four fund-of-funds managers that received $450-million in federal and provincial dollars in turn raised another $900-million from private investors, and more than one-third of the total has already been invested in 126 Canadian firms, according to the federal government.
That has helped fuel one of the busiest years for the Canadian VC industry: According to Thomson Reuters, Canadian firms raised $2.5-billion in venture financing in the first three quarters of 2016 – the strongest showing in 15 years – while VC firms participated in 446 deals, the most in that nine-month period since 2005. The domestic VC industry has been aggressively pushing Ottawa for a sequel to the venture-capital funding program.
Just under a third of the 76 companies that Relay has backed have "exited," either through a sale or initial public offering. Current holdings include several firms Relay backed early on that have received later-stage backing, including restaurant point-of-sale platform provider TouchBistro, smart thermostat maker Ecobee, smart clothing maker OMSignal and digital marketing firm Influitive.
Mr. Albright said the entrepreneurs he's seeing today "are very optimistic and very confident and very different" than those he backed in the mid-nineties, who were often self-taught and didn't go to university. "Today, they're all coming out of higher education with real strong domain focus and passion with regard to what they care about, and chasing it," he said. "Our firm is overwhelmed with [investment] opportunities, the funnel is huge and it's overflowing. It's allowing us to be very picky about who and what we finance."