Impression Ventures has secured $64 million CAD for its latest venture fund through which it hopes to continue to fill a gap for FinTech-focused seed investment in Canada and the United States.
Feeling like they’ve hit their stride, managing partners Maor Amar and Christian Lassonde say Impression will remain a hands-on, seed-stage investor with Fund IV. But with winners like Wealthsimple and Symend under their belts, the pair want to be able to better capture the value of their winning bets.
“We believe that if we want to build global champions there is going to have to be a lot of hard work in the ecosystem.”
Fund IV will continue to focus on seed investments, but with follow-on capital saved for both Series A and Series B rounds. To do that, the firm is looking to secure $70 million total for its fourth fund, almost double the size of Impression’s third fund, which closed in 2020. The increase in capital for Fund IV is meant to help Impression make those later-stage investments.
“We’ve been very fortunate that a lot of our businesses have matured to that Series B,” said Amar. “So rather than launching eight SPVs [special purpose vehicles] to allow our limited partners to take advantage of our pro-rata rights, what we’ve decided to do is just incorporate that into our portfolio strategy.”
Amar noted that it is a strategy Impression’s limited partners (LPs) had asked for, adding that with Impression’s hands-on approach, the firm also brings a level of knowledge to the table that can help founders as they grow their companies.
LPs for Impression Ventures Fund IV include return investors the Bank of Montreal and CIBC, and undisclosed family offices (the managing partners told BetaKit that an insurance company also took part but declined to disclose the name). Having financial corporates as LPs is beneficial for Impression on multiple fronts: it gives the firm’s portfolio companies access to major players in the space, and Impression also confers with its LPs to discuss pain points in the financial landscape.
“That has helped us really hone in on our outreach to companies because we do quite a bit of outreach as well to identify companies that may solve some of these pain points,” said Amar.
Amar and Lassonde also invest in each of their own funds, representing 30 percent of the overall capital.
Amar and Lassonde have co-managed three funds to date, comprising just over $70 million in assets under management. Through the years, Impression has invested in the likes of Wealthsimple, Symend, and Brim Financial. The firm backs startups looking to disrupt the financial and insurance sectors, typically making investments in seed to early Series A-stages.
When Impression first launched in 2014, its first investment was Wealthsimple, well before the FinTech startup was the Canadian household name that it is today. Impression took part in Wealthsimple’s seed round $2 million, and claims to have been the company’s first institutional investor.
The seed round would be the only Wealthsimple round that Impression took part in, and the firm eventually exited in 2019 when Wealthsimple secured $100 million from Allianz X. Impression went on to invest in other Canadian FinTech startups making waves in the financial space, including Brim Financial, Owl.co, and Symend.
“Data over 20-plus deals has us convinced there is a lot of value in the B rounds.”
“We believe that if we want to build global champions there is going to have to be a lot of hard work in the ecosystem,” Amar said. “And we’ve accepted that at the seed stage that gap of founders looking for partners that are not just capital partners, but also business partners that help them navigate the challenges of a startup.”
It’s a model that works very well for early-stage investing, but like many Canadian firms of late, Impression wants to remain invested in its winners through later stages.
“[Wealthsimple] had some influence in our thinking but wasn’t the thing that changed our world view,” said Lassonde regarding the additional Series B follow-on capital in Fund IV. “When we started Impression, we knew that the A rounds would be attractive from a return perspective but didn’t have enough info to form conviction that the B rounds would be equally attractive. Data over 20-plus deals has us convinced there is a lot of value in the B rounds.”
With Symend, for example, Impression invested in the startup’s seed and then took part in its Series B round, which was one of the largest such rounds in Alberta history.
Impression’s aim to capture the value of its winners in later stages reflects broader interest from Canadian venture firms to ensure they continue to win on early bets. Symend’s lead investor, Inovia Capital, is notable for having launched both a late-stage and continuation fund in recent years. Golden Ventures and Georgian have done the same.
Another area where Impression is expanding its reach is geography; initially, Impression focused solely on the Canadian market.
Nearing the end of its second fund, network connections from Lassonde’s time in Silicon Valley led to some deal flow in the United States (US). Impression started to dip its toe into the US market, and over the last couple of years has more seriously considered American startups for investment.
“Our belief prior to that deal flow, frankly, was that the FinTech market in particular in the US was filled – there were players in that space, they’re reasonably well known, and we didn’t think that … there was a vacuum to fill there,’ said Lassonde. “But the market spoke for itself, and the market said there’s a vacuum there just as much as there was in Canada.”
With high demand for seed capital in Canada, Impression claims to see between 700 to 800 deals a year, and does pre-diligence work on between 20 to 30 before settling on its investments.
In line with its past two funds, Impression plans to invest in between eight to ten companies for Fund IV. Around 80 percent of the fund will go towards $2 million seed round cheques, with the remaining capital saved for follow-on financing.
Amar and Lassonde expect to make their initial investments soon; the pair is nearing the full deployment of Fund III and expects to close the final deal from that fund in the second quarter of this year.
While Lassonde acknowledged that many Canadian funds have focused on later-stage deals of late, he differentiated Impression’s model by noting a continued focus on putting seed capital into a small group of companies.
“We see a distinct advantage of actually digging in and doing the work, raising small funds,” said Lassonde. “We don’t want to raise a $200 million fund, it’ll break our model, it’ll break exactly what we do and we have great returns …. the market is telling us that what we’re doing is working. Why would we ever change it? So we continue to just keep our heads down and do exactly what we’ve always been doing.”