Toronto-based venture firm Round13 Capital is set to acquire venture debt platform TIMIA Group from Vancouver-based alternative lender Montfort Capital for $6.5 million.
The transaction, announced Thursday, includes a $4.5-million cash payment and a $2-million debt repayment to Pivot Financial, a creditor connected to TIMIA Capital. Montfort has agreed to sell all its rights and interests in the entities that make up the TIMIA Capital business unit. The sale also includes Montfort’s equity stake in the TIMIA Group investment funds.
BetaKit has reached out to Montfort Capital to confirm whether the acquisition also includes TIMIA Group’s employees.
“TIMIA is an exceptional complement to our core equity funds.”
Brahm Klar, Round13
In a LinkedIn post, Round13 said it will be providing “significant” new liquidity to TIMIA to expand its current lending capabilities. Brahm Klar, managing partner of Round13, said the deal will allow Round13 to offer “a full suite of expanded financing options to grow their businesses.”
“As a leading venture debt platform supporting a long-underserved segment of the Canadian private credit market, TIMIA is an exceptional complement to our core equity funds,” Klar added.
Founded in 2015, TIMIA Group lends to B2B software firms based in Canada and the United States. The group targets firms with between $2 million and $50 million in annual recurring revenue and cuts cheques between $500,000 and $10 million.
On its website, TIMIA claims to have established $200 million in loan facilities, supported 80 portfolio companies since 2015, and achieved 35 successful early exits to date. The organization trades on the TSX Venture Exchange.
While the company initially was named TIMIA Capital, it rebranded to Montfort Capital in 2022 to reflect its expanded focus on private credit. TIMIA Group became a subsidiary of Montfort, among other private credit subsidiaries, including asset-backed lender Pivot Financial, residential mortgage-focused Brightpath Capital, and insurance lender Langhaus Financial.
In June 2023, TIMIA partnered with American institutional asset manager Arena Investors to establish a joint tech lending venture with initial capacity to deploy up to $100 million USD to tech entrepreneurs across North America, following the collapse of startup lender Silicon Valley Bank.
It’s uncommon for a venture capital firm to acquire a venture debt platform in Canada, as most venture firms focus primarily on equity investments in high-growth startups.
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While some financial institutions like BDC Capital and RBCx offer both venture debt and equity financing as part of their services, a venture firm expanding into lending is still a unique move within Canada’s venture capital ecosystem.
Founded in 2013, Round13 secured $95 million for its inaugural fund in 2017. By 2019, it launched a second fund, closing at $158 million. During this period, the firm also rolled out its first growth fund. Additionally, Round13 runs a fund targeting blockchain and Web3 infrastructure investments. Last year, the venture firm raised $200 million in the first close of its third fund.
“After successfully growing the business to its present size, TIMIA will now benefit from becoming part of Round13’s portfolio which focuses on technology investments within North America,” Ken Thomson, CEO of Montfort Capital, said in a statement. “Montfort remains focused on its other lending units that provide scalable and focused private credit opportunities.”
The deal is subject to customary closing conditions and is expected to close by the end of October.
Feature image courtesy Unsplash. Photo by Amina Atar.