Vancouver-based Vistara Growth has closed its fifth private credit fund at $321 million USD ($450 million CAD), ending a nearly two-year fundraising process and freeing up the firm to focus its efforts exclusively on backing mid- and later-stage tech companies.
While Vistara fell shy of its initial, “pretty ambitious” $386-million USD ($540-million CAD) target, the raise still gives the firm a Fund V that is 66 percent larger than its $193-million USD ($270-million CAD) predecessor.
“What we saw in the [fundraising process] was that narrative is only so important.”
In an exclusive interview with BetaKit, Vistara Growth founder and managing partner Randy Garg and partner Noah Shipman credited the firm’s performance, consistency, and existing limited partners (LPs) for helping it achieve this milestone amid tough market conditions.
“We’re super happy with where we ended up,” Garg said. “We think that’s a testament to our track record, the opportunity, [and] the continued support of our LPs.”
Vistara claimed that the vast majority of its limited partners (LPs) from Fund IV have returned and collectively contributed even more capital to the fifth fund. This group includes the Beedie family office, other undisclosed family offices, private foundations, and successful entrepreneurs from fields like tech, real estate, and hospitality.
To date, Vistara has completed 42 investments across its five funds. It has exited 23 of them while incurring zero losses and delivering a net annualized internal rate of return of just over 15 percent. Vistara’s current portfolio includes Brim Financial, D3 Security, and Sama. It counts Alida, Martello, Mobify, Reach, and Zafin among its exits.
Last year, market research company Preqin ranked Vistara’s second and third funds among the top 10 performers globally in their asset class by vintage and size. Vistara claims it has also already returned 88 percent of its fourth fund to LPs. Since mid-2022, Vistara says it has distributed more than $230 million USD to its investors across 12 exits, despite “choppy” market conditions that have featured little venture capital (VC) liquidity thanks to fewer exits.
Garg credited the firm’s success on this front to the strength of its 15-person team, the quality of its underwriting and due diligence, and its active involvement in the companies it backs.
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“What we saw in the [fundraising process] was that narrative is only so important,” Shipman said. “Investors are really focused on tangible results and how much, frankly, cash has been returned … I think we stacked up really well on that basis.”
With the final close of Fund V, Vistara has raised $700 million USD ($980 million CAD) since 2015. This amount has come predominantly through non-institutional LPs, with the majority from investors in British Columbia, despite recent inroads in Alberta and Ontario.
“This is friend-raising to the max, but we’re running out of friends,” Garg said, adding that he anticipates that Vistara will return to market to raise a larger, sixth fund in late 2026. While its investment strategy for Fund VI will remain the same, Vistara hopes to rally some institutional LPs behind it and emerge from the so-called “tweener” category.
Vistara caters to mid-and later-stage private tech companies across North America with between $10 million and $100 million CAD in annual recurring revenue, including those in the fields of FinTech, artificial intelligence (AI), and healthtech.
RELATED: Government software provider Clariti Cloud secures $24.6 million CAD from Vistara Growth
While the investment firm typically invests in VC-backed tech companies at the Series B stage and beyond, it also finances bootstrapped businesses. Vistara creates tailored investment structures composed of debt, equity, or some combination of the two, providing credit to those businesses while also obtaining equity sweeteners like warrants to buy their stock at a future date, or convertible debt.
Recipients typically use this capital to finance organic growth, mergers and acquisitions (M&A), or shareholder liquidity initiatives without diluting ownership, and those equity sweeteners can help Vistara boost its returns if clients close equity funding or sell at a higher valuation.
“This isn’t just short-term bridge financing,” Garg said. “This is a three-to-five-year solution. Many of our companies call it rental equity.”
Garg and Shipman noted that some customers have turned to Vistara as a means of extending their runway without pricing equity amid a challenging period for raising VC funding on favourable terms, including for valuations beyond AI.
Other entrepreneurs, they said, have sought the firm’s help buying out early investors, co-founders, or employees to alleviate pressure to sell too early and own more of their businesses ahead of an exit at a later date.
Vistara has already made eight of a planned 15 to 18 total investments through Fund V thus far, backing companies like Vancouver-based government technology provider Clariti Cloud, Florida software firm DataCore, Columbus-based insurtech Matic, and Philadelphia healthtech company Tendo. The firm expects to build a Fund V portfolio with a 70-to-30-percent split between the US and Canada, where Garg said it would love to do more deals.
Feature image courtesy Vistara Growth.