Toronto-based venture capital firm Framework Venture Partners announced today that it has raised $100 million of a target $150 million fund focused on supporting rapidly scaling tech companies in Canada.
The VC firm has obtained $50 million in capital commitments from Royal Bank of Canada, Cadillac Fairview, and the BC Tech Fund (managed by Kensington Capital), with a matching $50 million from BDC Capital. The firm will be led by co-founders and partners, Peter Misek and Andrew Lugsdin, both former BDC VCs.
Sources indicated that the seven-month delay from Framework’s original announcement to its first close was spurred by tensions between the fund and Fidelity following that announcement, resulting in the potential LP backing out.
“We want to build world-class companies, that’s what our mission is,” said Misek. “And we believe most of those companies should, and can be, built in Canada.”
An offshoot from BDC Capital, Framework plans to invest primarily in Canadian B2B SaaS companies in the late A, early Series B range with a focus on machine learning, in addition to FinTech. The fund will have a Canadian focus, with 70 to 80 percent of investment remaining in Canada, Misek told BetaKit. The company is eyeing Toronto, Vancouver, Montreal, Kitchener-Waterloo, and Calgary, which is an emerging technology hub.
The Framework spinout is part of an ongoing restructuring for BDC Capital, which hopes to follow Framework’s launch with a similar spinout of its life sciences fund later in 2019, according to The Globe and Mail. Framework will continue to manage $125 million of investments made via BDC Capital’s IT Venture Fund, as BDC continues to shift the focus of internal funds on women-led businesses (as a BDC-backed firm, Framework notably has no women investors), manufacturing, and agriculture. Those IT Venture Fund investments include Wave Financial, TouchBistro, Wattpad, Elastic Path, and Trulioo.
“The current venture funding landscape in Canada has been very successful in producing a critical mass of early-stage companies over the last several years,” said Misek. “All of this investment has fuelled opportunities in later stage companies looking to raise larger rounds to support continued growth. We founded Framework Venture Partners to tap into this unmet investment need and help fulfill the promise of the Canadian technology industry.”
“We want to build world-class companies, that’s what our mission is. We believe most of those companies should, and can be, built in Canada.”
– Peter Misek
It has been a long road for Framework towards its first close. Sources familiar with BDC’s restructuring process indicated that the bank was hesitant to be seen as competing for dollars with private Canadian funds, and Framework was instructed to solicit international LP investors. Roadshowing for much of last year, Framework appeared to have its first commitment from Fidelity Investments, and announced an expected close with Fidelity as a lead LP in July 2018. Framework was expecting papers to be signed at the end of that month as part of a scheduled board meeting (BetaKit did not report on the news at the time, per editorial policy regarding funding announcements prior to full close).
Sources familiar with the matter indicated that the seven-month delay from Framework’s original announcement to its first close was spurred by tensions between the firm and Fidelity following that announcement, resulting in the potential LP backing out of the fund. The result is a first close comprising solely Canadian LPs.
Through a representative, Misek declined to comment on Fidelity’s lack of participation in Framework’s fund, but did provide the below statement.
“A fund is a partnership and we’re excited about the partners we have on board – including a $30 billion global commercial and real estate conglomerate, Canada’s largest bank, BDC Capital, and the BC Tech Fund,” he said. “The calibre of partners we have secured for this fund speaks to the expertise of the Framework team and the strength of the Canadian startup ecosystem.”
With files from Douglas Soltys. Image courtesy Framework Venture Partners.