Looking at Vancouver’s tech sector, Rick Nathan sees an ecosystem that hasn’t looked this good for startups in more than 15 years.
With more venture capital coming in and spurring growth in the midst of the ongoing smartphone revolution, the managing director of Kensington Capital Partners said initial public offerings (IPO) for tech companies are due to skyrocket in 2015.
“The time is really right,” the Toronto-based investor told Business In Vancouver over the phone.
“We’ve seen lots of companies start up, lots of products get launched, lots of venture capital…and the next step is for them to kind of graduate into the public market.”
Kensington Capital, which specializes in private equity investments and hedge funds, launched a fund in November dedicated to emerging tech companies.
Kensington Venture Fund has secured $160 million in investor commitments so far and on January 19, it announced its first four investments.
Nathan said he couldn’t disclose just how much money Kensington would be putting into Georgian Partners, Novocap TMT, Blue Ant Media and Walden Venture Capital.
But he was quick to point out Georgian Partners' portfolio includes Vancouver-based Vision Critical.
“Our fund is expecting to invest disproportionately into Western Canada because we have seen only a handful of strong Canadian venture investors active in the Vancouver market,” Nathan said.
“There’s really just two or three that are there and they’re great firms. There’s nothing against them, it’s just that there’s more (untapped) opportunity available, in our mind, that we think we want to participate in.”
He noted many of the companies that began focusing on mobile technology, social media and the cloud going back as far as 2009 have now reached the level of growth and maturity needed for big returns in 2015.
“We have not seen this many strong emerging tech companies in our market probably since the 1990s in the dot-com era,” he said, adding there are about 10-20 “strong” Canadian tech startups on the radar of most investors.
“In the normal course, if you have a bunch of companies that are successful that started around five years ago, then this would be the time when you’d expect to start to see them hitting that benchmark.”
Nathan said Vancouver is particularly well positioned to take advantage of this.
Geographically, the city is much closer to angel investors in the Silicon Valley and Seattle who would like to take advantage of the low Canadian dollar.
Meanwhile, Toronto-based investors are looking for strong companies that may have been overlooked in regions where there is less access to capital.
