The Vancouver Founder Fund (now just VFF) has officially closed its second fund at $31 million CAD.
Launched in 2015 by Recon Instruments co-founders Fraser Hall and Dan Eisenhardt—which sold to Intel for $175 million—VFF’s first $14.1 million fund has since invested in 10 companies. Considered now by the pair as a “proof-of-concept,” Eisenhardt said at the time the fund’s approach was to “be the funding partner we always wished we had as entrepreneurs.”
To that end, Hall described Fund II’s LPs as “other exited entrepreneurs,” and family offices. BDC is the only institutional investor in the fund.
“We’ve got this concept of the service-based VC,” said Hall. “So rather than, we write you a cheque, you add us on your board, and you give us certain KPIs and numbers that we want to hear, and we essentially tell you what to do, and we think you should pivot this way or that…we say, ‘what we can do for you? What do you need more than anything right now? What that becomes is a lot of strategic advice, a lot of recruitment, and a lot of contact with people in a similar boat.”
To scale its desire to help founders in a more curated way, VFF launched its VFF Community platform. Open to its portfolio companies, VFF Community—run by VFF community manager Candace Hobin—works with founders in several ways. It organizes meetups for founders to talk candidly about their challenges, access technology like HubSpot at a preferential rate, and provides access to a database of playbooks in areas like executive compensation and financing. The most high-interest area in the Community is recruitment, helping founders get introductions to potential candidates once they’re ready to scale.
For VFF, the platform is an opportunity to build a network of experts in specialized areas like HR and finance, while allowing a fund of its size to retain a close relationship with founders. Asked if the decision to launch a community platform is part of a larger trend of VCs looking to launch more targeted services through impact teams, Hall said it’s something he’s seeing more of amongst larger teams in places like San Francisco and Boston, but not necessarily on Canada’s west coast.
In VFF’s first fund, the average cheque size was $800,000, but moving forward it will invest at least $1.5 million, acting as a lead investor in most of its deals.
“We think some have gone a little overboard with these huge teams. They’ll have an actually internal recruitment firm, an actual internal legal consulting department, and supposedly, you pick from all these services–I don’t know how much there actually is,” said Hall. “We try to take a more close relationship with our founders where we’re still curating the process, we’re still helping them find third-party help if it’s required, but it’s different.”
VFF invests in founders in the west coast of Canada, primarily in British Columbia. In the firm’s first fund, the average cheque size was $800,000, but moving forward it will invest at least $1.5 million, acting as a lead in most of its deals. This fund will also invest in 10 to 12 companies in order to keep up their mandate of working closely with founders; its first investment includes AvenueHQ, which announced a $4.5 million funding round in May 2018.
When VFF first launched, Hall told BetaKit that Vancouver was “starved” of this type of capital, and that a lot of venture investment in the sector came from the resources sector. Speaking several years later, Hall said that the atmosphere in western Canada has become “more ambitious,” more funding sources are starting are emerging, and more seasoned founders are helping earlier-stage founders.
“We’re seeing a lot of attention from down south. VCs from the Valley are coming up regularly and meeting with us, so there’s quite a spotlight on Vancouver right now, especially with the addition of the Amazon office and Facebook office here…we’re seeing more and more attention here.”
