Sean Silcoff
Toronto-based venture capital fund McRock Capital has added a third big global investor to its first fund, which has closed after raising $65-million, the top end of its target.
McRock, which seeks to back early-stage companies focused on the "industrial internet of things" sector, closed out the McRock iNFund LP with a $10-million commitment from the HarbourVest Canada Growth Fund, managed by global private markets giant HarbourVest Partners LLC. The HarbourVest fund joins McRock backers Électricité de France and Cisco Investments as well as Canadian backers Alberta Enterprise Corp., BDC Capital, Export Development Canada, Kensington Venture Fund LP, and Teralys Capital Innovation LP.
"McRock is a great example of an emerging breed of Canadian venture managers who are thought leaders in their domain of expertise … not only in Canada but at a global level," said Senia Rapisarda, principal of the HarbourVest fund. "This domain expertise and global network is vital for connecting early stage companies with large, global industrial players."
McRock's co-founders are industrial strategy and finance executives-turned-venture capitalists Scott MacDonald and Whitney Rockley. The pair in the early 2000s invested on behalf of their respective employers Ontario Power Generation and EPCOR Utilities into RuggedCom Inc., a Canadian communications network technology provider for industrial operations founded in 2001 that grew to $94-million (U.S.) in revenue before it was snapped up by Siemens AG in 2012 for $440-million (Canadian). "We're trying to replicate [the RuggedCom] success," said Ms. Rockley. RuggedCom founder Marzio Pozzuoli is an adviser to the fund.
McRock looks to invest in early-stage revenue-generating companies seeking their first outside funding and that use internet-based technology to help big industrial firms such as power generators improve operating efficiencies. The fund is targeting initial investments of between $2-million and $4-million, and has committed close to $10-million combined into Montreal data analytics firm mnubo and RtTech Software, a Moncton-based software app maker that gathers operational intelligence for industrial facilities.
"People play in this space, but right now we're the only fund focused exclusively on the industrial internet-of-things domain," said Mr. MacDonald, a one-time international-level gymnast. "We know big industry because we're Canadian, we grew up in water utilities, the power industry and manufacturing, and we knew this whole internet-of-things [space] would provide a level of expertise into the traditional industrial sector."
Amit Chaturvedy, head of Cisco's IoT Investment Fund, said Cisco chose McRock because "it fit squarely with our goals and objectives for Canada." Cisco has also invested in recent OMERS Ventures and Georgian Partners VC funds and backed Burnaby, B.C.-based startup Bit Stew Systems.
HarbourVest has been active in Canada since 1989 and manages $1.5-billion on behalf of Canadian institutional investors. It has invested directly in Canadian companies including Kinaxis Inc., a supply chain management software firm that went public last year, and participated in a $160-million venture financing by enterprise software startup Intelex this summer.
More recently, the HarbourVest Canada Growth Fund was selected as one of four "fund of funds" managers, alongside Kensington, Teralys and Northleaf Venture Catalyst Fund, to receive and disburse federal funding through the government's $400-million Venture Capital Action Plan program to help stimulate venture financing in Canada. The HarbourVest fund had its initial closing in April after raising an additional $131.5-million from Canada's Big Five banks, Canada Pension Plan Investment Board and three other institutions.