Toronto-based venture capital (VC) firm Northside Ventures has closed its inaugural fund, hitting its $15-million CAD ($11 million USD) target last month despite tough market conditions.
Northside’s Fund I LPs consist of a mix of institutional investors, funds-of-funds, corporate VC arms, other VC funds, family offices, and experienced tech founders and operators. The group includes Inovia Capital, Bain Capital Ventures, Intact Ventures, Notable Capital, Golden Ventures, FJ Labs, Bling Capital, Coolwater Capital, and Garage Capital among others.
The VC firm also counts more than 50 individuals from companies like Google, Uber, Affirm, Deel, Rippling, Wave, and PointClickCare among its LPs, such as former Wave Financial and now GoConfirm head Kirk Simpson, ex-PayBright and current Affirm leader Wayne Pommen, Uber senior vice president Andrew Macdonald, and Kindred co-founder George Babu.
“We’re building Northside to scale, but we invest, from a founders’ perspective, like an angel investor.”
Founded last year by solo general partner (GP) Alex McIsaac, a former Canadian partner at Germany’s Global Founders Capital, Northside targets Canadian founders at the earliest stages, where McIsaac said a lack of institutional capital exists. “There are obviously a few funds that do it, but just not enough,” McIsaac told BetaKit in an exclusive interview.
“That true pre-seed cheque that comes before the Golden Ventures invest is still pretty hard to find for founders, and so that’s the gap that I’m trying to fill,” McIsaac added.
Northside backs startups based in Canada or the United States that have at least one founder with a strong connection to Canada and a focus on artificial intelligence, vertical SaaS, FinTech, or cleantech. The VC firm aims to participate in its first round of external funding, often at inception and ideation, with initial investments of between $100,000 and $500,000 at the pre-seed and seed stages.
To date, Northside has deployed about 40 percent of its fund across 15 investments, backing a group that includes Datacurve, Switch, Terminal, and Veritree, among others. Two-thirds of its existing portfolio consists of Canadian companies, while the remainder is Canadian founders building south of the border. The VC firm plans to make another 15 to 20 investments over the next one to two years, at least half of which will be in startups based in Canada.
According to McIsaac, Northside hopes to differentiate itself with what he described as an “institutional angel investor” approach that combines the best of both worlds from his time working at startups and as an early-stage investor at three other large institutional funds with Northwater Capital, BDC Capital, and Global Founders Capital. He said this involves building Northside into an “institutional-grade” fund with a “founder-friendly approach.”
“We’re building Northside to scale, but we invest, from a founders’ perspective, like an angel investor,” McIsaac said. “We invest with agility, we can make decisions quickly.”
Inovia, one of Northside’s two largest LPs alongside Intact, backed the firm through its $34-million Discovery Fund for early-stage VCs. Inovia Discovery Program vice-president Prem Kalevar told BetaKit that McIsaac has built a relationship with the Inovia team over many years and has collaborated on investments.
“His relentless hustle and speed of execution stood out to us, and he continues that nimble execution with Northside Ventures’ first fund,” he said.
McIsaac began working in tech as an associate at Northwater Capital focused on cleantech investing, before joining Northwater-incubated, Toronto-based energy storage tech startup NRStor as its first employee, where he led business development for seven years until around when the company was acquired by Blackstone. In 2019, he joined BDC Capital, where he spent a year as a principal on its Women in Technology Venture Fund and Seed Fund.
He left BDC Capital and joined Global Founders Capital as its first and only Canadian partner in February 2020, and spent the next three years building out and leading its operations in Canada, investing close to $40 million across 30 Canadian startups over three years, including AutoLeap, Aviron, Clutch, Disco, Float, Ledn, Pine, Secoda, Shakudo, and Wombo.
As BetaKit previously reported, McIsaac left Global Founders Capital in late 2022, handed over its Canadian portfolio to the VC firm’s European investment team, and launched Northside, securing a first close of $5 million in February 2023 and a second close that summer, which brought its total to $6.25 million of its $15-million target.
Since then, McIsaac has been working on closing the remainder amid what has become the worst fundraising environment for Canadian VC in the past decade, especially for emerging managers. McIsaac said it was tough raising a fund amid these conditions and the firm prepared for a long process from the outset, and received “lots of no’s” along the way.
During Northside’s 18-month fundraising process, McIsaac said he connected with more than 700 prospective LPs, ultimately securing 77 commitments from this group, while another 200 expressed interest in investing in Northside’s future funds. “It wasn’t easy,” he added.
“[McIsaac’s] relentless hustle and speed of execution stood out to us, and he continues that nimble execution with Northside Ventures’ first fund.”
Prem Kalevar, Inovia
As BetaKit has previously reported, LPs have become more cautious and selective amid the downturn, which has led to smaller funds and longer fundraising timelines for Canadian VC firms.
According to McIsaac, most LPs who passed on Northside did so because they didn’t have the liquidity, weren’t interested in early-stage VC as an asset class, or didn’t make Fund I investments. This meant smaller cheques and more conversations for Northside.
Northside recently brought on a number of undisclosed family offices, founders, and operators as LPs. McIsaac said he found that the family offices were more open to joining in subsequent closings after the VC firm had secured sizeable commitments from other players.
McIsaac’s strategy ultimately proved fruitful as the firm was able to meet its target. For his part, Kalevar credited McIsaac’s structure and discipline, noting he “applies a very structured process to everything he does, and is extremely disciplined with his time and execution.”
“It’s been a lot of work, but it feels really rewarding now being at the end of the fundraising journey, but the start of the bigger journey in terms of investing and building a lasting firm,” McIsaac said.
Feature image courtesy Northside Ventures.