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