Saskatchewan’s Conexus Venture Capital (CVC) has launched its second $30-million CAD venture capital (VC) fund with a $15-million first close from its founder, Conexus Credit Union.
With Fund II and new leadership, the Regina-based VC firm aims to build on the groundwork laid by its first fund and Conexus-founded incubator Cultivator. Through its latest fund, CVC plans to invest in more early-stage Saskatchewan-based technology startups.
“We’ve proved out the thesis that world-class companies can be built anywhere, and we’ve got some amazing founders, talent, and scalable businesses right here in Saskatchewan,” CVC managing director Jordan McFarlen told BetaKit in an exclusive interview.
“No one knows the Saskatchewan tech ecosystem better than us.”
Celina Philpot, Conexus
After six years leading Cultivator, McFarlen joined CVC last fall and announced Fund II this evening on stage at Saskatoon’s Uniting The Prairies conference. Its launch comes amid challenging market conditions and after a year in which Saskatchewan VC funding dipped to $37 million, per the Canadian Venture Capital and Private Equity Association (CVCA).
“We feel like now is the time for us to double down and reaffirm our commitment and belief in this ecosystem, in the companies and the opportunity that exists here,” said McFarlen, who expressed hope CVC can help increase that number with Fund II.
CVC’s first fund was created alongside Cultivator in 2019 and backed by nine institutional limited partners, including six Saskatchewan credit unions. The fund made 17 total investments into Prairies-based startups, 13 of which are based in Saskatchewan, amassing a portfolio that includes two of the province’s most successful tech startups, 7shifts and Coconut Software, playing an important role in the growth of the Saskatchewan tech ecosystem.
To date, CVC has exited two companies (Curatio and Thinkific) and taken secondaries on another pair. CVC claims that the fund, which it finished making new investments out of in early 2023, ranks within the top quarter of other 2019 vintage funds across North America.
“I think Saskatchewan is no longer becoming a fly-over province when we look to venture-backable companies, and [CVC] has had a large part in making that happen,” Coconut Software founder and CEO Katherine Regnier told BetaKit. “They are not only giving Prairie companies a spotlight within our own ecosystem, but they continue to expand our presence beyond our borders.”
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CVC was previously led by Sean O’Connor and Kyle Scott as managing directors. O’Connor and Scott also led Conexus’s other, $60-million, AgTech-focused VC fund, Emmertech. McFarlen has taken the reins for CVC’s second fund, while Laura Mock took on his former role leading Cultivator. He has been joined by Gabrielle Schubach as manager of finance and operations and Harrison Lars-Hansen as an analyst.
As BetaKit previously reported, O’Connor left CVC last September to join British Columbia-based 4AG Robotics (formerly TechBrew), which is building mushroom-picking robots. For his part, Scott ceased working with CVC in February but continues to lead Emmertech as its managing partner.
Speaking to this latter leadership change, McFarlen said Conexus decided it was best to have CVC and Emmertech run by separate, dedicated management teams.
With an initial $15-million commitment from Conexus towards its target of $30 million, CVC aims to ensure that its second fund is the same size as its first. McFarlen said this approach felt like “the right fit” for a few reasons. “It allows us to deploy a significant amount of capital but also be mindful of the current state of venture and our ability to have a big impact,” he added, noting that CVC sees similar market conditions to 2019 today.
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Conexus CEO Celina Philpot told BetaKit that the credit union decided to reaffirm its commitment to CVC through its second fund given the opportunity it sees across the Saskatchewan tech ecosystem. She also expressed Conexus’s confidence in the revamped CVC team, which includes McFarlen and two other new additions.
McFarlen described Conexus as “a huge champion of Saskatchewan.” Philpot, who took the reins of Conexus as CEO in late 2022, noted that the organization has “a long history of innovation,” adding, “the current chapter of that story is supporting home-grown companies through a credit-union-led [VC] fund.”
“We feel like we’ve got the perfect storm brewing for … an exciting few years here.”
Jordan McFarlen, CVC
“No one knows the Saskatchewan tech ecosystem better than us,” said Philpot.
As founding incubator manager at Cultivator, McFarlen said he learned what early-stage Saskatchewan tech startups needed to succeed and helped build out a pipeline of companies. The opportunity to shift to investing “felt like the natural evolution,” he added.
McFarlen expects CVC’s second fund, which it plans to begin investing out of later this year, to follow a similar strategy to its first. With a focus largely on Saskatchewan-based software startups, CVC plans to back 10 to 15 companies through Fund II across the pre-seed to Series A stages and lead and co-lead rounds.
From CVC’s first fund to organizations like Cultivator and Saskatoon’s Co.Labs and support from the provincial government via the recently doubled startup investor tax credit, McFarlen believes that Saskatchewan now has “strong infrastructure and a strong breeding ground for more success.”
“We feel like we’ve got the perfect storm brewing for … an exciting few years here,” McFarlen said.
Feature image courtesy Conexus Venture Capital.