Fabio Banducci spent years “throwing nickels around like manhole covers” while he was CEO of Peer 1 Hosting.
Now armed with tens of millions in growth capital to invest, the former head of the Vancouver-based tech firm says he doesn’t want other high-growth companies to experience those same funding limitations when they’re on the brink of going big.
Vistara Capital Partners, the brainchild of Banducci and business partner Randy Garg, announced Wednesday (July 29) it’s raised $100 million for the five-month-old growth capital fund.
The two founders, who’ve known each other since 1994, are setting their sights not on the hot startup scenes of Vancouver or Toronto, but on more mature tech companies that have already built up their operations and consumer base.
“We’ve seen through our careers a significant gap when it comes to the mid-to-later-stage companies,” Garg said.
The funding gap means companies lack the growth capital to get them to the point where they can go public, consider selling for a high price or else become the next big anchor company.
Instead, “they stall out or they sell,” Garg said.
Banducci and Garg aren’t the only ones in Vancouver to recognize the funding gap later-stage tech companies are dealing with.
When PlentyOfFish founder Markus Frind agreed to sell his online dating service earlier this month for US$575 million, he told Business in Vancouver he wasn’t interested in investing in startups.
Instead, he’s focused on putting money into mid-to-later-stage companies like Cymax, for which he wrote a $21-million cheque earlier this year.
And the B.C. Technology Industry Association launched its new HyperGrowth program in July.
Mentors are teaching startup founders accepted into the program techniques to boost revenue and investment. The goal is to create the next set of mid-to-large-size companies throughout Vancouver.
“The access to that capital within the Canadian context in particular is really quite limited,” Banducci said, adding the inaugural $100 million fund was open only to Canadian accredited investors.
The Vistara fund will invest $5-15 million in individual tech companies throughout Canada and the Western U.S. that produce $10-200 million in annual revenue.
Its first investment, Toronto’s GuestLogix, received $9 million.
Banducci and Garg are putting up 10% of their own money toward the fund, while
Vistara plans invests in about a dozen companies over the next three or four years.
