Panache Ventures has announced a final close of $58 million in its inaugural fund, surpassing its initial $40 million goal.
Since announcing its initial close in March 2018, the firm has received support from existing investors Alberta Enterprise Corporation, Fonds de solidarité FTQ, and Investissement Québec, as well as new investors, National Bank of Canada, Telus Ventures, Bank of Montreal, and BC Tech Fund, managed by Kensington Capital.
Panache also welcomed a group of Yukon First Nations, along with the Government of Yukon, as a major investor, making it the first-ever syndicate of Yukon First Nations to invest in a venture fund. The Yukon First Nation Investment Corporation, made up of Yukon First Nation development corporations, will invest a total of $5 million into Panache, with $2 million coming from the Government of Yukon.
“Our mission is to invest in the most ambitious and creative Canadian entrepreneurs with disruptive, venture-scale businesses.”
“It’s been a super interesting process for us, especially when you look at Mike [Cegelski] and myself, the two entrepreneurs in the group that have had a couple of pretty significant exits each,” Patrick Lor, managing partner at Panache Ventures, told BetaKit. “Raising money was a new skillset for us because we’ve dedicated most of our careers towards building products. It was a lot harder than we thought it would be.”
With a focus on seed-stage companies, Panache was created by Lor, Mike Cegelski, David Dufresne a partner in Montreal, and Nicolas Bouchard, a principal in Montreal. The firm launched with $25 million in capital, with the goal of closing $40 million. Last year, Telus Ventures joined on as an LP in the fund, increasing Panache’s target to $50 million.
Despite facing a year and a half of a difficult raise process Panache has managed to become one of the most active venture funds in the country. Lor said understanding founders, their needs, and the firm’s vision for its portfolio companies, were keys to helping Panache scale.
To date, Panache has backed 52 Canadian startups, including MedStack, Korapay, Lane, and MobSquad, taking what has been called a generalist approach to its investment thesis, co-investing alongside angel investors and seed-stage funds. The firm is industry-agnostic, investing in sectors spanning artificial intelligence, FinTech, healthtech, proptech, and B2B software.
With offices in Montreal, Toronto, Calgary, and Vancouver. Panache Ventures’ investment portfolio is distributed across Canada with approximately 30 percent in Ontario, Quebec, and Western Canada, respectively, and 10 percent in Atlantic Canada. The Montreal-based firm touts itself as the only national venture capital platform that focuses on seed-stage investments. Lor added that Panache looks for companies with a post-money valuation between $5 and $10 million, with Panache investing between $150,000 and $500,000 on the first cheque.
“Raising money was a new skillset for us. It was a lot harder than we thought it would be.”
“It’s hard to rise above the noise in the big markets like Toronto, Montreal, and Vancouver, but I think that you can see from our stats, we’ve made a good brand for ourselves [and that] we really can go in and take a great leadership position,” Lor told BetaKit.
“Empathy plays a massive role,” he added. “We’ve established a connection where we’ve been able to not only work with [founders] on setting goals and doing the usual, but I think we go a level beyond that, which is we understand that the founders are the spirit and the culture. They (founders) want some pressure, but they also want somebody to help guide them through the process as well. If you don’t do that, you’re ignoring a key piece of what it takes to push your company to success.”
Ben Asquith, the lead representative for the Yukon First Nations Investment Corporation, noted that the syndicate’s investment in Panache “will support our efforts to expand First Nations’ investments in the knowledge sector.”
“We are excited to support the Yukon First Nation Investment Corporation investment in Panache Ventures to help Yukon startups access local capital and mentorship opportunities that will grow Yukon’s tech sector,” added Ranj Pillai, deputy premier and minister of economic development for the Government of Yukon.
Lor also told BetaKit that Panache’s LPs are not looking to cut one-fund cheques, meaning the VC firm will be looking to launch three to five more funds and hopes to keep Panache going for at least 15 years.
With files from Meagan Simpson
Image courtesy Panache Ventures