Teralys Capital has secured the largest amount ever raised for a fund-of-funds backed by the federal government’s Venture Capital Catalyst Initiative (VCCI), but the firm has yet to hit its hard cap.
The Montréal-based fund manager officially announced this week that it has raised $475 million CAD for its VCCI-backed fund, which is notably also backed by the Government of Québec through Investissement Québec. The close represents a significant portion of Teralys’s targetted hard cap of $570 million, which it “should” reach by the end of 2024, managing partner Éric Legault told BetaKit in an email statement.
The fund will target 25 indirect investments and 15 direct co-investments.
Other partners supporting the fund include CDPQ, Beneva, Fondaction, Bpifrance, Concordia University, Polytechnique Montréal, HEC Montréal, and several other Canadian entrepreneurs and family offices.
Teralys’ VCCI fund will finance venture capital (VC) funds that are investing in information technologies, life sciences, and clean or industrial innovations, the firm said in a statement.
Legault told BetaKit that 30 percent of the fund has already been committed and will continue to make commitments for the next three-and-a-half years. He added that the fund is targeting approximately 25 fund investments and about 15 direct co-investments.
VCCI is a federal program managed by the Business Development Bank of Canada (BDC) aiming to inject more capital into the ecosystem by leveraging private sector funds. All VCCI funds act as fund-of-funds, largely investing in Canadian VC and growth funds as limited partners with some capital set aside for directly investing in companies. Under VCCI, the federal government provides one dollar to every three dollars raised by the selected fund managers up to a cap.
Legault said the current fundraising environment was difficult, reflecting the sentiments from a variety of GPs and LPs BetaKit spoke with at Startupfest. The firm still raised significantly more than the three other VCCI-backed funds helmed by Kensington Capital Partners, Northleaf Capital Partners, and HarbourVest Partners. Kensington and Northleaf fully closed their funds in June at $290 million and $370 million, respectively. Teralys told The Globe and Mail in June that it had secured $470 million of its $570-million target.
Teralys principal Beatrice Couture told BetaKit in July that the downturn allowed limited partners the time to ensure that they were investing in solid franchises.
“You can really see who is there for the long run, and who might not be there for the long run,” Couture said at the time.
At Startupfest, Couture noted to BetaKit the firm’s intention to close its fund in the coming months. A revised timeline to the end of the year might indicate that fundraising hurdles still remain in the market, but as Couture said in July, “the proof is in the pudding.”
With files from Josh Scott.
Feature image edited by Josh Scott. Source photos courtesy Teralys Capital.