Eight years ago, Montréal-based venture capital (VC) firm Brightspark Ventures began developing software to manage its limited partner (LP) relationships more efficiently.
Brightspark had been doing lots of special purpose vehicle (SPV) investing, which involved many different investment vehicles and LPs, and required a great deal of manual, back-office labour, Brio co-founder and CEO Audrey Ostiguy told BetaKit in an interview.
“We think we are in a good position to take the market [because] we already have the tech.”
Audrey Ostiguy,
Brio
Ostiguy—then Brightspark’s fund operations manager—said that the VC firm decided to build Brio after failing to find a solution on the market to support these initiatives.
Since then, Brightspark has used Brio’s platform to support its four VC funds, 50 SPVs, and over 1,000 institutional and individual LPs. Ostiguy described Brio as the firm’s “secret sauce.”
After seeing demand from other VCs and alternative asset managers pick up over the past year, Brightspark decided to spin out Brio as a standalone FinTech startup in January under the stewardship of Ostiguy and two other ex-Brightspark leaders who also helped develop Brio, with Brightspark as majority shareholder.
Toronto and Montréal-based Brio has now closed $3 million CAD in seed funding to bring its platform to more general partners (GPs) across not just VC, but also the private equity (PE), real estate, and multi-family office worlds.
“We think we are in a good position to take the market [because] we already have the tech,” Ostiguy said.
Brio’s all-equity, all-primary seed round was co-led by two firms with ties to Brightspark: Montréal’s Walter Global Asset Management (Walter GAM) and Toronto-based Canso Innovations. Brightspark also participated in the financing, using a dedicated SPV and Brio’s platform to do so. Ostiguy declined to share Brio’s valuation.
Walter GAM and Canso became investors in Brightspark’s management company prior to this round because they were interested in what the VC firm was building with Brio, Brightspark partner Sophie Forest told BetaKit in an interview.
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“Through the years, I can’t count the number of GPs that came and said, ‘Can I put my fund on your platform? Can I use your platform to do this?’” Forest said.
Now that Brio’s product is “mature” and can be white-labelled and customized, Forest said it made sense to roll it out to other fund managers.
Ostiguy most recently spent more than four years serving as Brightspark’s chief compliance officer and head of operations. Brio’s other two co-founders are former Brightspark CTO Ab Fadel and Brightspark head of growth Émilie Parker Jones. Fadel is now Brio’s CTO, while Jones leads product and marketing for the now 10-person startup.
Brio aims to save GPs time and money by centralizing and automating LP management, including deal marketing, subscriptions, onboarding, compliance, reporting, capital calls, and distributions. Brio claims its software-as-a-service platform is better tailored to the needs of alternative asset managers than legacy systems and other emerging solutions.
“We understand firsthand the operational challenges faced by alternative asset managers and immediately appreciated how Brio’s proven technology directly meets those needs,” Walter GAM managing partner Julie Lalonde said in a statement. “Brio’s comprehensive platform is what the industry has been waiting for.”
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Brightspark, which closed its latest fund last fall at $100 million, invests in early-stage Canadian tech startups. Before Brio, Brightspark relied largely on manual labour. Ostiguy claimed that Brio enabled Brightspark to manage its wide array of LPs and investment vehicles with the equivalent of less than one full-time employee per year.
Forest said Brio helped Brightspark scale its business, enabling it to raise nearly $100 million from individuals over the years across a range of different investment vehicles. “It would be impossible to do what we did manually,” she added, estimating that without Brio, the VC firm would have had to hire a team of 20 people.
“I can’t count the number of GPs that came and said, ‘Can I put my fund on your platform? Can I use your platform to do this?’”
Sophie Forest,
Brightspark Ventures
According to data from Carta and Sydecar, SPVs have since become more popular. Forest said that many VCs have turned towards SPVs as a means of diversifying their LP bases, and acknowledged they have increasingly sought to do this amid today’s especially challenging VC fundraising market conditions.
With many alternative asset managers now juggling multiple funds, SPVs, and increasingly diverse LP bases, Forest and Ostiguy argued that the need for Brio is more acute.
For its part, Brio claims that it has already landed multiple multi-year contracts with a range of alternative asset managers.
Ostiguy noted that the investors in the company’s seed round also give it a window into a few of the segments it is targeting, with Brightspark in VC, Walter GAM in PE, and Canso in the multi-family office world. Brightspark remains a client of Brio, while Walter GAM and Canso are exploring how they can use its platform.
Brio’s target customer has more than $100 million in assets under administration. “The more LPs and the more funds you have, the more sense it makes,” Ostiguy said. But the startup is also offering a lighter version of its platform for smaller clients.
The startup intends to use this funding to grow its team across product, sales, and customer success, as well as invest in artificial intelligence and platform integrations, as it looks to position itself as “the definitive operational backbone for alternative asset managers.”
Feature image courtesy Brio.