StandUp Ventures, a seed stage firm investing in women-led companies has secured $13 million CAD in new follow-on funding commitments, bringing its total fund to $18 million CAD.
“This follow-on funding…demonstrates that investors are actively beginning to support women entrepreneurs and businesses.”
-Michelle McBane
This is the second close of the fund since it was originally launched in 2017 with $5 million (all numbers CAD) from BDC’s Women in Technology Fund. This new raise surpasses the fund’s initial goal of $15 million, and StandUp is now targeting a final close of $25 million.
The additional $13 million comes from LPs including CIBC, Export Development Canada (EDC), Northleaf Venture Catalyst Fund II, RBC, and Vancity. Managing director of StandUp Michelle McBane noted that since the fund was launched she has seen a difference in how fund-of-funds investors approach women in tech investing.
“[In 2017] I was getting those questions, can you actually build a portfolio with this sort of lens,” she told BetaKit. “People talked about meritocracy at lot at that time. You don’t hear that as much now, but it was ‘well it should be that the best person wins.’ But I said, what defines the best person when there is no data.”
McBane noted that BDC and StandUp decided that making a few deals with that first $5 million, and showing there can be successful deal flow with women in tech companies would attract future LPs. Making those investments, in successful women-led or co-led companies, told the story for this group of investors, she stated.
“There’s a global conversation happening about this. I think Uber was just so big, people fully realized at that point, and it’s still discussed to this day post IPO, how a toxic culture can happen if you’re already hiring all the same people all the time,” McBane said. “This follow-on funding from top financial institutions demonstrates that investors are actively beginning to support women entrepreneurs and businesses.”
Along with BDC’s Women in Tech Fund, with its mandate to invest $200 million in women-led tech companies and VC firms, Northleaf is part of the federal government’s Venture Capital Catalyst Initiative (VCCI) program that was created in 2017 to invest $400 million in five funds-of-funds. One of the requirements for VCCI funding is to enhance diversity and increase the participation of women across the venture capital ecosystem. EDC, CIBC, and RBC respectively all have varying programs to support women entrepreneurs. Vancity is a Vancouver-based financial cooperative with typical banking services that also includes an impact fund that invests in Indigenous communities, impact real estate, labour unions, social enterprise and venture, and more.
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StandUp is an early stage firm investing in women-led or co-led tech companies at the pre-seed and seed level. It was founded in 2017 after BDC approached McBane, who is also a director at the MaRS Investment Accelerator Fund (IAF). McBane noted that, without really trying, IAF was investing in 12 percent women-led ventures and BDC’s WIT Fund, with its new mandate of growing the number of women in tech companies and VCs, approached McBane with the idea for StandUp.
McBane called StandUp’s decision to invest in the early stages as key to helping women in tech surpass typical biases. She noted that once companies surpass the Series A and B milestone those biases start to pass, and the goal with StandUp is to give women founders the opportunity to cross that line.
To qualify for investments from StandUp, companies must have one woman founder in a C-level role. StandUp specifically looks for women that have a significant ownership position, commensurate with the stage of the company. For example, if a company has three founders, and one is a woman, and those three founders own 60 percent of their company, that women founder should own close to an equal share as the other founders.
To date StandUp has made seven investments with the majority of the companies having a sole woman founder, and the rest having been co-founded and run by women. The firm’s portfolio includes Bridgit, which raised a $6.6 million Series A round led by BDC’s WIT Fund earlier this year, as well as Coconut Software, which announced the close of a $1.75 million round in April. Other portfolio companies include Emovi, Nudge Rewards, Tealbook, and one undisclosed company that is still in stealth mode.
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McBane noted that with the new $13 million, things will be business as usual at the fund, but with the opportunity to cut larger initial cheques. When the firm was launched it planned to make investments of $250,000 to $1 million, and while she would not disclose the current plans for cheque size, said it will be much higher with a larger fund. StandUp still plans to make between 12 to 20 investments over the next three to five years.
The managing director also noted that she will not be expanding the StandUp team to match this larger fund, since it still works closely with IAF and is able to use its platform to help source deals across Canada. She did state, however, that StandUp will likely be looking to bring on an additional partner once the firm raises Fund II, but noted that won’t be for a couple more years.