Patrick Lor, managing partner of Panache Ventures.Chris Bolin/For The Globe and Mail
The Yukon government and seven of the territory’s First Nations are the latest Canadian institutions to fund Canada’s thriving technology scene, backing a seed-stage venture capital fund founded by former principals of 500 Startups’ short-lived Canadian fund.
Panache Ventures said Monday it had surpassed the $40-million fundraising target for its first fund, drawing a total of $58-million from investors including Alberta Enterprise Corp., Fonds de solidarité FTQ, the Quebec government’s Investissement Québec arm, Bank of Montreal, National Bank of Canada, Telus Ventures and British Columbia’s BC Tech Fund.
But Panache’s Calgary-based managing partner, Patrick Lor, a tech entrepreneur and angel investor, highlighted the participation of the Yukon government, along with half of the territory’s 14 First Nations, which are investing a combined $5-million. The territory, which has a small but growing group of roughly 10 to 20 tech startups, follows most Canadian provinces in backing Canadian venture funds in recent years.
Panache, which typically invests up to $500,000 apiece in young companies, isn’t just collecting a cheque from its northern investors; the partners have also pledged to visit frequently to coach local startups and angel investors and help develop the local scene, even bringing other startup CEOs along. “We’re quite excited about this,” said Mr. Lor, a key player behind the growth of Calgary’s tech sector. Panache has also backed Whitehorse-based Proof, a startup selling software to help public-sector institutions manage project workflows, whose first customer was the territory government.
It’s the latest in a string of moves by the Yukon government to diversify the territory’s resource- and tourism-heavy economy into digital sectors, Economic Development Minister Ranj Pillai said, including the opening of a startup accelerator and planned construction of a 777-kilometre high-speed fibre loop. He added the investment supports government policy to help its First Nations succeed in the modern economy. The government’s $2-million contribution, its first investment in a tech venture fund, “really hits that goal but also gives an opportunity for our companies that are doing well to access capital and to have a presence in the North, which has never been done before,” he said.
Ben Asquith, CEO of the Da Daghay Development Corp., owned by the Ta’an Kwach’an First Nation, one of the seven in the fund, said Panache is “the perfect fit for the Yukon. Panache … really showed an effort to be here on the ground and support First Nations development corporations. That meant a lot to us.”
Panache had an unusual start. Mr. Lor and fellow Montreal-based partners David Dufresne and Mike Cegelski were previously part of 500 Startups Canada, an offshoot of Silicon Valley-based seed capital financier 500 Startups that set up here in 2016. By mid-2017, the Canadian partners had raised $23-million for their first fund and backed 38 startups, including Element AI, ApplyBoard and Avidbots. They were set to raise $25-million more when 500 Startups’s American general partner Dave McClure abruptly resigned, admitting to inappropriate advances toward multiple women in work-related situations.
Faced with a backlash from Canadian investors over Mr. McClure’s continued involvement and economic benefit from the fund, 500 Startups Canada’s leadership suspended operations. “It penalized people that didn’t deserve it [and] destroyed a great fund on its way to doing great things,” Mr. Lor said. “But we were energized by our limited partners to keep going.” The trio (later joined by ex-OMERS Ventures investment team member Prashant Matta) announced in March, 2018, they had regrouped as Panache and raised $25-million so far. About 60 per cent of 500 Startups Canada’s investors supported the Panache fund, which has now exceeded what the suspended fund would have raised. Panache has backed 52 startups to date.
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Editor’s note: An earlier version of this article incorrectly referred to Yukon as a province.