Green growth

How a P.E.I. venture capital fund is helping local startups grow their businesses

P.E.I. ENTREPRENEURS searching for venture capital to grow their businesses now have a source in their home province.

That source is Island Capital Partners, a venture capital fund founded by four island heavy hitters who want to invest in startup companies from P.E.I.: ‘retired’ global tech CEO Stephen Nicolle; Ron Keefe, best known from his work with Diagnostic Chemicals Inc. and Biovectra Inc.; former CEO and executive partner of Grant Thornton LLP, Alex MacBeath; and, Paul Lypaczewski, a veteran tech executive and the first Canadian to receive the NASA Space Act Award for exceptional merit.

“There are not a lot of pools of capital here,” says MacBeath, the CEO of Island Capital Partners. “But there is a demand and a need for it in P.E.I.” The interest the fund has received since it was launched in the fall of 2017 corroborates MacBeath’s words. The $4 million fund ($2 million has come from over 20 private investors; the remaining $2 million was provided by the P.E.I. government for an equity stake in the fund) has already received 18 formal investment pitches from Island businesses. It has invested in four and is doing its due diligence on three others. As this magazine went to press, the fund had invested $820,000 in P.E.I. businesses to date.

When MacBeath retired from Grant Thornton and returned to P.E.I. in 2012, he noticed access to capital was an issue for island startups. That’s not surprising. Most of Canada’s venture capital funds are based in Toronto. When you come from a place with a population of just over 146,000 people, it can be tough to stand out among the global competitors vying for investor attention.

MacBeath says the benefit of having such a fund based in P.E.I. and run by Islanders is that it focuses on emerging businesses from the province. Island Capital Partners also differs from most venture capital funds in that it doesn’t just invest in companies; their staff are also mentors. “Many of the companies tell us they are looking for our advice as much as our capital,” says MacBeath.

Launch pads
Island Capital Partners is one of a small cadre of investment funds based in Atlantic Canada. Here are three others doing similar work in the region.

New Brunswick Innovation Foundation
Created in 2003, the Frederictonbased non-profit corporation specializes in providing venture capital to New Brunswick businesses and helps bring promising new business opportunities to life. The Foundation says it has invested over $85 million since its inception, although some of that includes research investments.

Build Ventures
Based in Halifax, this regional $65-million venture capital fund was launched in 2013 and is focused on “early-stage technology companies across the Atlantic region.” Unlike other funding bodies in Atlantic Canada that make investments between $100,000 to $900,000, Build Ventures goes bigger, investing chunks of $1.5 to $2 million.

Pelorus Venture Capital Limited
The St. John’s-based firm was launched in 2015, and it created the Venture Newfoundland and Labrador LP venture capital fund. Its goal is to invest in and partner with entrepreneurs with innovative technologies, to help get their products and services to market.

 

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