Top Down Ventures has now closed what might be the first institutional venture capital (VC) fund dedicated to early-stage managed service provider (MSP) software and AI startups.
To date, Top Down has backed 12 companies through Founders Fund I.
The Vancouver VC firm announced the final close of Founders Fund I at $28 million USD ($38 million CAD) today, surpassing its original $25-million USD target. Top Down secured the money from over 100 limited partners (LPs), 75 percent of which come from the MSP world.
Pax8 founder and chairman John Street, Upward Trajectory Fund, and undisclosed family offices from across Canada and the US are among the LPs in Founders Fund I.
“Our LP base is not just capital, it’s a flywheel of operators, founders, and industry leaders helping the next generation of MSP software companies scale faster and smarter,” Top Down managing partner Joel Abramson said in a news release.
MSPs are third-party firms that take on a range of outsourced functions—such as IT, marketing, or human resources—for other companies, including many small and medium-sized businesses (SMBs). Top Down, which calls MSPs “the invisible infrastructure of the global economy,” deploys a venture studio model to invest in the next generation of MSP software and AI.
“Two things are happening at once,” Abramson told BetaKit over email. “SMB IT spend is on track to surpass enterprise IT spend in 2026 for the first time, which means the largest segment of the global IT market is now also the fastest-growing. And MSPs, the channel that serves those SMBs, are in the middle of an AI-driven productivity step-change.”
Abramson said the companies that are enabling this shift “are mostly still under the radar,” noting that this is where the firm is focusing.
Top Down held its first close of this fund 18 months ago, in October 2024, raising $10 million USD. Its new milestone comes despite a tough VC fundraising market for emerging managers.
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“We weren’t asking LPs to bet on a generalist fund in a crowded category,” Abramson said, noting that Founders Fund I focuses on a large MSP ecosystem “with real momentum” that has garnered limited attention from institutional VC to date.
Abramson said the MSP folks in the firm’s LP base served as helpful references for the family offices and other strategic investors that joined later. “That cross-validation is hard to manufacture, and it’s the main reason we closed oversubscribed in an environment where a lot of emerging managers didn’t close at all,” he said.
Founded in 2018, Top Down is led by founder and chairman Chris Day, as well as Abramson and fellow managing partner Mark Scott. This trio, which has a history of launching businesses in the MSP space, was previously leaders at Fully Managed, an MSP that specialized in digital transformation and was acquired by Telus in 2022.
Top Down targets software and AI startups building tools to help MSPs serve their SMB clients better. Founders Fund I is geared primarily towards pre-seed and seed-stage startups with select Series A investments, cutting initial cheques of between $250,000 and $2 million.
To date, Top Down has deployed 40 percent of the fund across 12 companies. Four of those startups are Canadian, and Abramson expects Top Down to back several more as the firm builds a 20-company Founders Fund I portfolio.
This group includes Vancouver-based digital risk protection platform Styx Intelligence and Toronto’s zofiQ, which focuses on agentic AI for MSPs.
ZofiQ also marks the fund’s first exit, as US IT management software company ConnectWise acquired it this year, returning 5.3 times what Top Down initially invested.
As Abramson told BetaKit in 2024, Founders Fund I is technically Top Down’s second fund. Its first, Top Down Capital, was made up of internal capital. Through these two funds, Top Down has now invested more than $30 million into 25 companies.
Feature image courtesy Top Down Ventures.