Another step forward: the Brightspark Canadian Opportunities Fund
In the Canadian venture capital ecosystem, Brightspark is often recognized as the VC firm that’s “doing things differently” – and we take that as a huge compliment. Because we balance discipline in investing with openness to evolving in the market, we have kept the startup spirit alive even as an investor.
The next step in our business is the launch of an exciting new way to invest in Canadian Venture Capital with Brightspark: a new $50-75m fund.
A bit about our journey so far:
A few years ago, Brightspark pivoted as the Canadian VC market changed (Yes, some VCs actually take their own advice – we call it “eating your own dog food”). We had observed two market trends:
Companies are staying private longer, and investors noticed. Individuals, family offices, investment groups and smaller institutions observed companies remaining private companies longer than previously, AND they creating most of their “significant value” earlier. These investors tell us that they want to invest in these VC-quality Canadian startups, but they have almost no access to these deals - the VCs take them all.
On the dealflow side, we are witnessing the best deal flow we have ever seen. Canada’s tech ecosystem is maturing, and repeat entrepreneurs are creating top-quality companies.
So we created our unique model of investing by using Special Purpose Investment Vehicles (SPVs). Every time we make an investment in a new company, we set up a new VC fund (SPV) just for that investment – and make it available to any accredited investor in Canada, small or large.
Four years later, we have invested in 14 companies with this model and we now have over 5,000 people in our investor network monitoring our deals. Just like any “sprouting company”, we have been refining the model as we grow: we also launched the Brightspark Reserve Program for investors looking to easily invest in multiple SPVs, and we tripled our team size in both Montreal and Toronto.
In addition to deal-by-deal investments, our network of investors has been asking us for more ways that they can invest with Brightspark. We have decided to offer a new VC fund, that is structured as a more traditional VC fund that will invest in synch with our deal-by-deal SPVs.
Announcing: The "Brightspark Canadian Opportunities Fund"
The fund is specifically set up to invest in the growing opportunity of predominantly Series A investment opportunities in Canada that we have focused on for 20 years. We are aiming to create a $50-75m fund – we want to be big enough to capitalize on the great investment opportunities we are seeing, but not too big to lower the quality bar.
In true Brightspark fashion, our new fund is unlike other VC funds:
Lowered barriers to entry in the VC asset class
Most VC funds have a very high entry level, restricting investment only to larger institutional investors. We set the minimum investment to C$100k (paid by capital calls over 5 years, meaning about C$20k/year). This opens the opportunity to small investors and larger institutions alike.
Support from the Canadian federal government
Under the Venture Capital Catalyst Initiative (VCCI), the government of Canada has recognized our entrepreneurial and inclusive model: they are investing C$12.5m in our new fund. As a unique incentive, VCCI will only get financial returns after other investors receive back all their invested capital. This means that non-VCCI investors get their money back earlier – making the “wait” for VC exits to materialize much shorter (it also lowers the overall risk in a worst case scenario). We are thrilled - and grateful - that VCCI is supporting our approach in this way.
Worldwide access to the Canadian tech industry
The fund is open to accredited investors worldwide. We have created a simple way for international investors to invest in this fund and capitalize on the growth of Canadian tech. Canada is recognized as a “safe haven” given international politics, and the tech industry is a very interesting opportunity for investors around the globe.
Ability to “double down” with a particular company
We will, of course, continue to offer our deal-by-deal SPV model, so non-fund investors will be able to continue to capitalize on our unique model. Fund investors also now get the chance to double down on any specific Brightspark investment if they choose to – they can invest additional capital in the SPV for any specific company.
We are in a fortunate position to have visibility on unique dealflow in Canada: our reputation and our network reach into the industry from over 20 years of investing/ operating is paying off. Our focus on high-quality, strong team driven investment remains our basis for investment.
As we approach our 20th year in business at Brightspark, we are more energized than ever by the quality of investment opportunities, and the rapid growth of the Canadian market. It remains exciting to see repeat entrepreneurs, industry changing ideas, and teams that can execute.
And we are not stopping there! We have been preparing for our Exempt Market Dealer (EMD) status for over a year now, and once we are an EMD, we will be able to take further steps in our journey of capitalizing on Canadian opportunities. We have been following a parallel Canadian journey to the recent announcements from Andreessen Horowitz (for those who don’t know them – a leading US VC) who recently announced that they are broadening from regular VC. Stay tuned for more info on this over the next few months.
It has been an exciting 20 years, but we are just getting started…