With the announcement of an additional $180 million raise, Real Ventures doubles down on their efforts to support the tech ecosystem on the ground level with their newly launched Orbit strategy, as well as a pledge to donate part of the fund’s carried interest to the OSMO Foundation.
Right in time for the tenth anniversary of Real Venture’s first $3 million seed fund in 2007, the VC has raised two new pools of capital totaling $180 million to broaden and deepen support for Canada’s most promising tech startups and entrepreneurial ecosystems. This brings Real’s total funds under management to over $330 million.
Previous investors, Teralys, BDC Capital and Investissement Quebec invested once again, and significant new commitments were received from Caisse de dépôt et placement du Québec (CDPQ), HarbourVest, and Asia-headquartered investors, Tencent and Temasek.
“I think we got started at a point where we recognized that it was significantly cheaper to start a software business, a tech business, with cloud computing,” John Stokes, Montreal-based Partner at Real Ventures told MTLinTECH.
“And as a result of it being cheaper to start a businesses, all these businesses need capital, but the investment needs to be in right-sized amounts as opposed to big investment checks to start off. That’s what kick-started us ten years ago. Now there’s been a massive proliferation in the number of tech startups because of the fact that, on one hand it’s easier to start the business, and on the other hand, I think the fact that it’s become easier to start a business has inspired more and more entrepreneurs to have a go. But what that’s meant is it’s even harder to actually break out and differentiate yourself. Companies have tended to be able to start their businesses with little capital, but they need significantly more capital in order to really break out.”
“Companies need different levels of support at different phases of their development,” said Toronto-based Partner, Janet Bannister. “The amount of investment and guidance must match the stage in the life cycle of the company and our new capital and strategies will enable us to help guide stellar
Canadian companies through the next stages of their evolution.”
The new funds will enable Real to continue running FounderFuel and Techstars Toronto for newly launched companies, support the firm’s creation of the it’s newly formed Orbit strategy, and early-stage companies can leverage it’s significantly increased pool of capital in addition to the connections and experience that its team has developed over the past ten years.
“From a strategy point of view, it’s not only important to write the right sized initial check, but also for those that do have traction, it’s important to have more capital to get behind them. I think that’s probably the biggest evolution. There’s also been changes in the nomenclature. What used to be a Series A is now called seed funding, and what used to be a seed investment is now called pre-seed, and pre-seed is now sort of the concept of an accelerator. It’s an expanding ecosystem.”
-John Stokes, Partner at Real Ventures
“Orbit will continue to do what Real has been doing for many years, which is to be really embedded in the ecosystem, provide capital and networks and support, and help contribute to the development of that ecosystem,” said Stokes. “Maintaining that Orbit strategy is something we want to make sure we’re doubling down on, as Real Ventures continues to provide a pan-Canadian approach. I think the Orbit strategy is our belief that being involved in local ecosystems is really important.”
Of the capital raised $30 million will be dedicated to OrbitMTL, the firm’s accelerator and pre-seed investment strategy in Quebec, and $150 million will build upon Real’s established, pan-Canadian, early-stage strategy.
In the past ten year’s Real Ventures has supported high profile Canadian startups including Breather, League, Planora, SweetIQ, Universe, Vrvana (which was acquired by Apple for a rumored US $30 million last week), Password Box and Frank and Oak. Real was also an early believer and supporter of AI’s potential, acting as a key player in the founding of Element AI, which raised a historic $137.5 million Series A this summer.
OrbitMTL also redoubles Real’s efforts to stay involved on the ground level with early-stage local startups. FounderFuel is the leading venture accelerator in Canada, and has helped some of the country’s fastest-growing startups get their start, including Sonder, Transit, Opencare, Bus.com, One Class, Oohlala and Unsplash. The firm also co-founded the OSMO Foundation, a not-for-profit initiative which owns Notman House, the 30,000 square foot home of Real Ventures and hub for tech entrepreneurship in Montreal. Real also worked with Techstars to co-launch Techstars Toronto earlier this year.
As part of the firm’s funding announcement, Real Venture’s also revealed that, as part of it’s ongoing ecosystem building mandate, the Real team will be donating 20 percent of their carried interest from OrbitMTL to the OSMO Foundation.
“As a firm we’ve decided to donate some of our profits, some of our carried interest, back into the OSMO Foundation. And I think that again restates that we believe it’s not just about writing checks to startups, it’s about contributing. That’s something we think is very important. And as we look into other ecosystems, we want to try to support initiatives that are having an impact bigger than a VC might have.”
“For Real, it starts with the desire to contribute to an ecosystem in a manner that benefits others as much or even more than we benefit ourselves,” said Montreal-based Partner, Alan MacIntosh. “It’s this collaborative mindset that inspires us to launch initiatives that lay, or build upon, the foundations of
rapidly growing tech hubs across Canada, and wherever else we may go.”