San Francisco-based Builders VC announced the launch of its Builders Fund II with $250 million USD. As with Fund I, Builders VC plans to deploy some of that capital into Canadian startups.
Mark Blackwell, a general partner based in Canada, said that Builders VC used between 15 to 20 percent of the total capital from its $200 million USD Fund I for Canadian investments.
“I’d say I’m more bullish on Fund II than I was on Fund I just around the prospects and opportunities,” Blackwell said.
He noted that in the first three weeks of the fund, which closed in late December 2021, it is already about to make a $12 million investment in a Waterloo-based equipment sharing business (Blackwell did not share the name of the firm). Blackwell also noted that with a full team now in Canada, he’d expect Fund II to invest even more in Canadian startups than did Fund I.
Besides Blackwell, the team in Canada includes Alison Sunstrum, who also recently joined The51’s new Food and AgTech Fund as a general partner, and Paul Verhesen. Sunstrum is a venture partner with Builders VC, as is Verhesen.
Canadian LPs in the fund include Alberta Enterprise Corporation, Farm Credit Canada, and then a number of family offices in the industrial and real estate space-based in Western Canada. The Alberta Enterprise Corporation announced today it made a $10 million investment in Fund II. Alberta Enterprise Corporation and BDC Capital also made undisclosed LP investments in Builders VC‘s Fund I just before the new year in 2019.
“We tend to invest in those unsexy sectors,” Blackwell told BetaKit. “We tend to call them the antiquated industries in agriculture, food, supply chain, industrial, logistics, the relatively underrepresented in a large portion of the pie in traditional venture [capital].”
Builders VC looks for entrepreneurs who have experience in the sectors in which they work. “The spaces we tend to invest in particularly, agriculture and industrials, get the special flavour of entrepreneur who has been in the space and category, understand the team, are able to building a team, and understand what it takes to get early traction in some of those nascent industries,” Blackwell said.
Builders VC invests in seed to Series A-stage companies. The first fund has 42 portfolio companies, including such Canadian ones as Provision, GoFor, SomaDetect, and QuoteToMe. “We love to go really early at the beginning, fund some great entrepreneurs from under $500,000 to $1 million,” Blackwell said. “GoFor is a great example of that. Then we typically like to lead the Series A.”
Blackwell said the difference between Fund I and II is Builders VC is finding better access to really strong syndicate partners that have domain expertise as opposed to competing for deals, which is what the firm typically does in the US. He called the latter a “little bit more cutthroat.”
He said Canada’s backdrop of agriculture, industrial, and logistics sectors really work well with Builders VC’s focus. “It was on purpose we established an office up here [in Canada] just because of the natural advantage we have of finding entrepreneurs who have deep expertise in the areas of focus we invest in,” Blackwell added. “It’s a natural place for us to put a stake in the ground.”
Builders VC is not the only American investment firm active in Canada. Most recently, United States-based venture firm 2048 Ventures secured $67 million USD for its second fund in January, to continue pursuing investments outside of Silicon Valley.