One of Canada's most successful early-stage venture capital firms, Montreal's Real Ventures, has closed its third fund, an $89-million pool co-managed by Janet Bannister, who created and built the online classifieds business Kijiji for eBay.
The fund is noteworthy for several reasons aside from the leadership of Toronto-born Ms. Bannister, an all-too-rare female general partner in the male-dominated VC scene. Its backers include the Government of Canada, which has invested $10-million through its Venture Capital Action Plan program, as well as one of Canada's largest and oldest private foundations, the $635-million McConnell Foundation of Montreal.
The McConnell Foundation, which has thrown $5-million into the fund, is looking to increase its venture investments in Canada to create more opportunity for graduates.
"We believe it's an important element in an economy like ours, which invests significantly in R+D but isn't capitalizing very successfully on that – at least at the rate we should be," McConnell CEO Stephen Huddart said.
"It looks to me like we're losing ground in Canada, and that providing opportunities for young people and entrepreneurs to develop their companies in Canada should really be an overarching economic and social imperative," he said. "We put a lot of money into creating first-class postsecondary institutions … and I think we can be doing a better job of providing the steps forward for brilliant and bright young people coming out of those schools.
"With Real Ventures we've got a top-quality management team who we have confidence in. We'd like to see more of that kind of thing going on in Canada."
Real's first two funds, the $5-million Fund I launched in 2007 and $50-million Fund II launched in 2010, put the VC firm on the map in Canada, as it invested in several successful early-stage tech startups including PasswordBox (sold in 2014 to Intel), Varage Sale (which has since decamped to Toronto) and online clothing merchants Frank & Oak and Beyond the Rack. Real has invested in up-and-coming Canadian companies including Breather – the meeting-room equivalent of AirBnB – alongside several big-league U.S. VC firms such as Khosla Ventures and RRE Ventures.
Real's second fund ranks among the top quartile of funds launched in 2010, meaning it has generated annual returns in excess of 20 per cent for investors.
The newest fund is a departure for Real, Ms. Bannister said: It has a mandate to invest across the country, particularly in the Toronto-Waterloo corridor. Ms. Bannister is also working out of a Toronto office, while the fund is managed out of Real's Montreal headquarters.
"Fund III represents a very different focus," she said. "It's our step out to become a more national fund."
Since joining last September, she has led nine investments, participating in a $4-million financing for League, the latest venture from Kobo founder Mike Serbinis. Four investments have been in "fintech" firms, which are aiming to disrupt the big banks by offering financial services online. "The banks are not great at innovating," she said.
Ms. Bannister, who worked at Procter & Gamble and McKinsey before joining eBay in the early 2000s, and her partners will be looking to initially invest between $250,000 and $800,000 in early-stage companies, with an intention of investing up to $10-million in cumulative financing rounds. She said about 90 per cent of the fund will be invested in Canadian companies.
Editor's note: The location where Real's newest fund is managed has been corrected in the online version of this story.