Toronto-based venture capital (VC) firm N49P has completed the first close of its fourth fund, securing $25 million USD ($34 million CAD) in commitments towards its $70-million target.
N49P announced the news on Thursday morning. This close is more than double the size of N49P’s second fund, which it raised in early 2020, and nearly on par with its $27.7-million USD third fund from mid-2022. The VC firm plans to use this money to invest in more nascent but promising technology startups with strong Canadian ties. N49P aims to cut $500,000 to $1.5 million first cheques and build a portfolio of 27 to 30 companies.
“Waving that Canadian flag is something we’re proud of.”
Alex Norman, N49P
N49P partner Alex Norman views this milestone as evidence that the eight-year-old VC firm’s approach has resonated among founders and limited partners (LPs). “We’re starting to get to the point where, for lack of a better word … we have product market fit,” Norman told BetaKit in an interview.
Fund IV’s LPs include new backer Toronto-based Northleaf Capital Partners, as well as undisclosed returning investors that include ultra-high-net-worth individuals, family offices, and Canadian tech founders.
“N49P has a consistent track record and differentiated position within the early-stage ecosystem,” Northleaf managing director and venture partner Ian Carew said in a news release. “They have built a reputation for identifying and backing high-potential founders, while providing the hands-on support startups need to scale.”
Since launching its first, $1.4-million USD fund in 2018, N49P has invested in more than 90 startups, from Appetronix to EvenUp, Spellbook, and Quandri, and posted “several meaningful exits,” including SafeKeep and zofiQ. Norman claimed N49P has been able to demonstrate 90th percentile or above fund performance to date.
Like its predecessors, N49P’s fourth fund will be sector-agnostic and focus on leading or co-leading pre-seed financings for startups that are either based in Canada, or led by Canadians and have a strong presence in the country.
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The N49P partner said global macroeconomic uncertainty and the pace of AI development have been headwinds lately amid what has become an especially tough VC fundraising environment. “It’s very easy now in this market to be consensus-driven,” he said.
This is something Norman said N49P has strived to avoid by maintaining “a wide aperture” and taking more introductory calls than some of its peers. The firm tends to steer clear of particularly capital-intensive tech and “super hot” deals. “If it’s obvious and everyone’s throwing money at it, it’s very hard to pick a winner,” Norman said.
“The founders we back are not necessarily consensus founders at the beginning,” Norman added. “A big portion of our portfolio is diamonds in the rough.”
N49P says it has already made two investments out of Fund IV, including in Toronto-based cybersecurity intelligence platform NexRisx. As the VC firm gears up to raise the remainder of Fund IV and ramp up its deployment, Prem Kalevar has also returned as a venture partner.
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Kalevar, who recently departed Inovia Capital after building out and leading the Montréal VC firm’s first, $25-million USD Discovery Fund for emerging managers, previously spent a year working as an entrepreneur-in-residence at N49P. Norman said Kalevar brings a complementary perspective and strong connections within Kitchener-Waterloo tech.
Norman, who helped bring AngelList Ventures to Canada and supports the local tech community as co-founder of TechTO, remains bullish on the country’s tech scene.
“The Canadian market does produce some amazing companies, and will continue to produce them, so I think waving that Canadian flag is something we’re proud of,” Norman said.
Feature image courtesy TechTO.