Ottawa’s newest venture capital fund has raised over $10 million and has closed its first round, the head of the fund announced at City Hall on Monday morning.
Silicon Valley investor Code Cubitt.
Mistral Venture Partners was announced in July 2012 with the goal of raising $35 million overall, which will be used to make $50,000 to $100,000 investments into 15 to 20 companies in the Ottawa area.
Claiming strong partnerships in the United States and China as well as with experienced local venture capitalists, the fund – led by Silicon Valley investor Code Cubitt who was recruited for the job – will shortly begin looking at early-stage companies that need first or second round funding.
“It’s a challenge for sure,” Mr. Cubitt said about closing the first round. “Raising a fund is a lot like being an entrepreneur. You have to talk to a lot of folks and you have to tell them your story and at the end of the day it’s … really your reputation that you’re selling as opposed to a product.”
After making an investment, someone from Mistral will sit on the firm’s board of directors for a year to track its progress. In order to secure follow-on funding, the company is required to get capital from an American syndicate partner, which Mr. Cubitt said will give it a better chance of success.
It took only six months to close the first round – half the time that was expected, which suggests that the investment community in Ottawa is starting to revive, Mr. Cubitt said.
“Its a testament to the enthusiasm and the desire of the market to participate,” he said.
At the end of the third quarter of 2012, investment deal activity in Ottawa totalled $114 million, which is an improvement from 2011, according to a press release.
Mistral is the first new fund to close in Ottawa in more than a decade. The rest of the $35 million is expected to be raised later in 2013, Mr. Cubitt said.
Upon the launch of Invest Ottawa – the local economic development agency formerly titled OCRI – president and CEO Bruce Lazenby identified the lack of venture capital funding as a key challenge for the organization to tackle.
While Invest Ottawa will maintain a “friendly relationship” with the fund, there will be no preferential treatment for firms spending time in the economic development agency’s accelerator program, Mr. Lazenby said in a previous interview with OBJ.
“This is tremendous news for Ottawa’s startup community and a key component for growth for our knowledge-based businesses,” stated Ottawa mayor Jim Watson. “Crucial investment dollars for our emerging companies will lead to job creation and sustainable economic development.”
- With files from Mark Brownlee