Kinaxis, a “software as a service” cloud computing play, was one of HarbourVest's Canadian plays.pressureUA/Getty Images/iStockphoto
Private equity group HarbourVest Partners LLC sees potential in Canada's growing tech and start-up market and is establishing an office in Toronto to build its venture capital investment business.
HarbourVest, which manages $1.5-billion (U.S.) on behalf of Canadian institutional investors, has hired Senia Rapisarda to lead the Canadian office as principal. Ms. Rapisarda has been getting to know the firm for more than a year as a consultant, and has a VC background.
The Boston-based firm saw Canada's thriving venture market and decided that having relationships and a visible presence in Canada would be helpful, rather than being seen as a partner that just flies in and out of the U.S.
Ms. Rapisarda has seen the changes first hand through her work at HarbourVest and before that, as vice president, strategic initiatives and investments, venture capital for the Business Development Bank of Canada. She said the venture market has stronger managers with financial and operational backgrounds than ever before. When it comes to building a company, "It takes a village," she said. "You need a lot of people around the table that know what they're doing."
In the past, the Canadian market didn't have a deep bench of talented, knowledgeable people on the technical side, said Ms. Rapisarda. But this is changing as more international investors step in, the talent pool grows and the "tourists" that saw venture capitalism as a way to make a quick buck are gone.
The plunge in oil prices and the Canadian dollar have underscored "how important it is to be knowledge-based, rather than resource based," Ms. Rapisarda said. "But also we are much cheaper in terms of talent, companies and establishing operations."
On April 3, Montreal-based specialty pharma company Knight Therapeutics Inc. said they had committed $10-million (Canadian) to HarbourVest Canada Growth Fund L.P., which it said is part of the Government of Canada's Venture Capital Action Plan. The investment fits with Knight's "strategy to leverage proven life science funds to help secure innovative pharmaceuticals for Canada and select international markets," the company said in a press release.
The Canadian government has prioritized investing in new businesses, including life sciences and technology. About $300-million dollars have been allocated to investment in the NorthLeaf Venture Catalyst Fund, for example, one-third of which comes from the Ontario and federal governments.
Ms. Rapisarda said that she couldn't comment on any of the HarbourVest's investment products, which are offered as "private placements" under SEC rules.
But the firm has been busy in the Canadian market of late – the company was among the early investors in Ottawa software company Kinaxis Inc., which debuted in a $100-million initial public offering.
HarbourVest plans to bring its suite of capabilities to Canada including solutions focused on buyouts, mezzanine debt, infrastructure and co-investments. But first, the company is focused on venture capital – where Ms. Rapisarda says Canada has room to improve.
For example, she cites the lack of involvement of larger Canadian corporations as anchor customers in young companies. "It's important validation to have Canadian companies as customers before they tackle global ones," Ms. Rapisarda says, adding that she finds the lack of such relationships " a little bit disconcerting."
The other major hurdle is getting all the small start-up darlings to grow into acquisitive mid-size companies. Developing a business after it has more than 30 people still has "growing pains," Ms. Rapisarda said.
But as more talented people are choosing to live and stay in Canada, Ms. Rapisarda is excited about the growth potential growth of hubs such as Montreal, Waterloo, Ont. and Toronto. And with HarbourVest's connections and offices in Asia, the U.S. and Europe, she's eager to get started.