Pender Ventures has secured $50 million CAD in the first close of its second venture fund, bringing the Vancouver-based venture firm halfway to its $100 million CAD target.
The limited partners (LPs) that took part in this close include the Export Development Bank of Canada (EDC), Vancity, Bank of Montreal (BMO) Capital Partners, CIBC, Western Canada wealth management firm Kinsted Wealth, and undisclosed individual investors.
As the venture capital arm for the broader PenderFund Capital Management organization, Pender Ventures also saw participation from the group’s growth fund.
“We wanted to build out that bench strength across the country, in Ontario [and] Québec in particular.”
While the firm did not disclose all the LPs in its first fund, many of those disclosed are returning investors, including Vancity and Export Development Canada through its Women in Trade program, which focuses on women-led businesses.
Managing Partner Maria Pacella leads Pender Ventures, which was launched in 2019 as the venture capital group for public and private asset manager PenderFund Capital Management.
Its first fund was $25 million in size and focused on B2B enterprise and healthtech startups around the Series A level. Pender Ventures’ portfolio includes Edmonton-based drug data provider DrugBank, Toronto wound care management startup Swift Medical, Vancouver-based clinic management software company Jane Software, Winnipeg collaboration software firm Librestream, and Vancouver’s Copperleaf, which went public on the Toronto Stock Exchange in 2021.
“EDC committed to the Pender Technology Fund I in 2020 based on their investment thesis, the diversity in their investment team, and their values,” said Guillermo Freire, senior vice president of mid-market at EDC. “Particularly compelling was Pender’s strong track record of growing Canadian exporters through their hands on approach and high level of engagement with their portfolio companies.”
After focusing primarily on British Columbia and Western Canada with Fund I – with a small number of investments outside the region – Pender Ventures plans to expand its presence in other parts of Canada for its second fund.
Alongside Pacella, the Pender Ventures team includes Isaac Souweine who joined as partner last year after departing Real Ventures. The team also consists of one analyst and two principals, including Meryeme Lahmami, who joined Pender Ventures last year from BDC Capital’s Women In Tech Venture.
Having both joined Pender Ventures last year, and both based in Montréal, Souweine and Lahmami are sure to help with the Vancouver-based fund’s national expansion plans.
“We wanted to build out that bench strength across the country, in Ontario [and] Québec in particular,” Pacella told BetaKit last year.
In an interview with BetaKit, Souweine added that Pender Ventures was pleased with the performance of its first fund and feels it has proven its thesis to the point that it makes sense to go national. “Hey, if this works in Vancouver and in Edmonton is probably going to work in Ontario, it’s probably going to work in Québec, it’s probably going to work in the Maritimes,” he said.
Beyond the more pan-Canadian reach, fund two represents a continuation of Pender’s first fund thesis, though with a larger pot of cash to pull from. Rather than cutting between $1 million and $2 million cheques, Pender is looking to take more leading roles with between $2 million to $4 million initially invested in companies.
Currently focused on its new fund, Pender Ventures has finished making new investments out of its first fund. The group told BetaKit last year that it had expected to hold the first close for its second fund in the fall.
Pender is not the only venture firm that has faced difficulty securing capital during the current economic climate. Framework Venture Partners, which closed its own $100 million fund last year, noted that diligence from LPs had increased “50x” from years past. Last fall, Real Ventures paused fundraising for its new fund as part of a managing partners swap.
Recent BetaKit reporting has also revealed that Canadian VCs are also struggling to receive already committed funds from their LPs, with capital calls not being honoured.
In the current market, LPs have been hit by equity market volatility that’s lowered their liquidity and devalued their portfolios. The result is an overexposure to venture capital, which is considered higher risk and tends to make up a small sliver of investor portfolios.
“You have now VC funds, whose paper worth in their fund has dropped maybe even in half or more—we get a list of all the late-stage companies and what they’re worth now compared to before and the drops are crazy,” Hustle Fund general partner Elizabeth Yin told BetaKit. “They’re all over 50 percent cuts in valuation. And so late-stage investors’ portfolios are now … cut in half or more.”
For Pender Ventures’ part, Souweine told BetaKit the firm expects to close its $100 million target within 12 months.
He called the team’s fundraising experience “very promising,” citing Pacella and his experience in venture. “The other thing that really is helping out our fundraise is how diverse our investment team is, which is a big priority for LPs as it should be,” he added, noting that diversity is a priority both within Pender Ventures’ team as well as its investment thesis.
This article has been updated with commentary from Pender Ventures.