Kensington Capital Partners (Kensington) has launched the Kensington Venture Fund with an initial closing of investor commitments totalling CAD160 million.
This marks the next step in the Government of Canada's Venture Capital Action Plan (VCAP).
This new fund of funds will invest in promising VC funds and companies in the technology, cleantech, IT, telecommunications, and digital media sectors. The announcement will occur at the Canadian Innovation Exchange (CIX) today in Toronto.
Following an exhaustive review process, Kensington was selected to managethis large scale fund of funds. Kensington was chosen because of its financial performance in venture capital, the strength of its investment team, as well as the depth and breadth of its venture capital, private equity and technology relationships.
"Canada needs a robust venture capital ecosystem that helps increase private sector investments in start-ups across Canada," says Hon Joe Oliver, Minister of Finance. "We all want the next global leaders – and the jobs that will come with them – to be founded here in Canada. That is why the establishment of the Kensington Venture Fund is so important."
Silicon Valley remains the dominant global hub of venture capital investment for start-ups. According to CVCA data, Silicon Valley-based companies raise dramatically more capital than their counterparts in Canada (and elsewhere in the world), enabling them to grow faster and be the buyers when emerging companies consolidate. As a result, Canadian companies and entrepreneurs have been at a significant disadvantage. The VCAP aims to help level this playing field.
"By giving Canadian technology companies the ability to grow and thrive at home, this Fund will help stem the gravitational pull that is driving so many of Canada's leading entrepreneurs, engineers, scientists, and our most promising emerging technology companies to Silicon Valley," says Rick Nathan, Managing Director, Kensington Capital Partners and a former Chair and President of the CVCA, Canada's Venture Capital and Private Equity Association. "This new Fund is an opportunity for Kensington to become a larger part of Canada's growth story. We appreciate the confidence of the Government and our investors and we are excited to build great new companies across Canada."
The Kensington team has developed a strong track record in venture capital dating back to the firm's formation in 1996. They are active participants in the Canadian and U.S. venture markets and active investors across a broad range of alternative assets in managing private equity, infrastructure and hedge funds. Recently, Kensington announced record distributions and profits for its flagship Kensington Private Equity Fund (KPEF).
The VCAP's approach will be purely market-driven − a key requirement for investors. The Government's stake in the Kensington Venture Fund will be 33 per cent, meaning that a majority of the investment will come from the private sector.
While the Fund's investment mandate covers the entire country, Kensington sees particular opportunities in the underserved markets of Western Canada. On a sector basis, investments are expected to include allocations to energy technologies and cleantech, as well as information technology, telecommunications and digital media.
Investors in the Fund include Richardson GMP, OpenText Corporation, Royal Bank of Canada, BMO Financial Group, CIBC, TD Bank Group, and Scotiabank as well as individual investors, all alongside the Government of Canada.
The Fund has also received an investment commitment from the Kensington Private Equity Fund (KPEF), a diversified private equity mutual fund also managed by the Kensington team. KPEF has an established allocation to the venture capital and growth sector of 30 to 40 per cent, which will now largely be satisfied through this new commitment.
The fund remains open to new accredited and institutional investors until it reaches its maximum size of CAD300 million.
