Communitech, one of Canada’s foremost innovation hubs, is spearheading an effort to raise between $200 million and $350 million to invest in growth-stage technology companies in Canada.

The True North Fund I will be the ​​first traditional venture capital fund affiliated with the Kitchener-Waterloo-based organization. The accelerator’s new CEO Chris Albinson will lead the investment team as managing partner, according to a confidential pitch deck obtained by The Logic.

According to the deck, dated May 2021, the fund is designed to fulfill Albinson’s goal of building 14 more Canadian companies that generate at least $1 billion in revenue by 2030. 

It aims to invest in about 30 companies over 10 years. Initial cheque sizes will range from $1 million to $5 million, with follow-on investments of up to $30 million. 

The fund borrows its thesis from Own the Podium, an organization established in 2005 to support athletes in sports most likely to earn Canada Olympic medals. Albinson recently named Cathy Priestner Allinger, Olympic speed skater and Own the Podium founder, as his executive advisor at Communitech. The pitch deck lists her as an investment-committee member for the new fund. “We aim to build a vehicle that invests in a different kind of athlete—Canadian entrepreneurs—to help them not only compete, but win on the world stage,” the deck reads. 

Companies have to meet a set of performance standards to be considered for funding, according to the presentation. A third of the funding will go to companies that make at least $40 million in annual revenue and have to be growing at least 40 per cent year over year. Another third will go to firms with just $20 million in annual revenue and growing at least 60 per cent. 

“We’ve heard time and time again—directly from Canadian founders at Communitech—there is a gap in the investment landscape for our later-stage companies,” Albinson said in an email to The Logic Monday afternoon. “The True North Fund I is something that we are exploring in direct response to this need identified by founders—subject to finalization of legal documents, etc.”

BetaKit, a Canadian tech news website, also published a story on the fund Monday afternoon. 

The True North Fund will add to the large flow of public money that has traditionally fuelled Canada’s tech ecosystem. Communitech reported nearly $33 million in revenue for fiscal 2021. Of that, 76 per cent came from government sources, up from 40 per cent in 2020. Governments have covered about 56 per cent of Communitech’s funding on average over the past eight years.

Startups have been attracting more private capital in recent years, however, particularly since the pandemic hit. Investors’ appetite for larger deals in Canada is growing especially fast. The most recent report from the Canadian Venture Capital & Private Equity Association (CVCA) shows the average deal size has nearly doubled since 2019, the previous highest year on record, from $11 million to $20.7 million. Investments in later- and growth-stage companies accounted for 63 per cent of total venture capital dollars in the third quarter, up from 49 and 50 per cent in 2020 and 2019, respectively. 

“Canada’s tech and innovation economy has had a blockbuster year. Communitech member companies have raised over $2.7 billion this year alone—more than was raised during the entire 2010–2020 decade,” said Albinson. 

CVCA CEO Kim Furlong said there’s still opportunity for new venture capital funds servicing high-growth companies. “We need to have higher ambitions,” she told The Logic. “I know everyone is super excited that we’re [past] $11 billion year-to-date investments in Q3, but there’s always room for more investment.” 

Furlong said a Communitech-affiliated fund also makes sense, given Albinson’s experience and the network of founders and investors linked to the hub. “What doesn’t surprise me is that the new CEO is someone who comes from the Valley that has a history of being an investor,” she said. “In that sense, that ambition is linked to who they’ve chosen to run the organization. If they can have someone continue to successfully identify and grow companies within the Communitech family and then have the capital attached to it to continue to support those companies, then I think it’s a winning combination.”

True North will be structured as a traditional venture capital fund, backed by limited partners. The deck describes plans to leverage connections with Canadians working abroad with “global giants,” to raise money, as well as governments, institutional investors and U.S. and Canadian funds-of-funds. The True North Fund will get 20 per cent of net profits on its investments.

Communitech COO Rick Coccimiglio will act as CFO, and Waterloo-based investor and Communitech’s director of strategic capital Amber French as principal. The fund will appoint another managing partner who isn’t named in the deck. 

According to the deck, Tom Jenkins, chair of Waterloo-based software firm OpenText, will join Priestner Allinger on the investment committee, along with other founders who aren’t named in the document. The broader “True North Community” includes 80 members, including alumni from the renowned U.S. accelerator program Y Combinator, government and industry leaders and “Canadian icons” in sports and other sectors, the deck states. Separately, some 86 local founders have contributed to the fund, the deck says, including Axonify founder Carol Leaman, Faire co-founder Marcelo Cortes, Bridgit co-founders Lauren Lake and Mallorie Brodie, and Inovia Capital CTO and ex-Google Canada engineering head Steve Woods. 

The pitch document makes reference to something called the True North Foundation “for the support of the community.” According to the deck, the foundation will be governed by an independent board and get 25 per cent of the fund’s carried interest on its investments. On Monday, Communitech spokesperson Candace Beres told The Logic that figure was a typo, and that the figure is actually five per cent. The document also names Communitech as a strategic partner, providing funding and services. It doesn’t elaborate on what those services are or how much funding it will provide.

The deck highlights features of Kitchener-Waterloo’s tech ecosystem that make it attractive for companies and investors, citing a deep talent pool, and rapid growth in funding and startup creation, particularly over the past couple years.

Albinson returned to Canada from San Francisco to take the top job at Communitech in May, replacing longtime CEO Iain Klugman. He quickly launched what he called the True North Strategy in September to help grow local companies faster by tackling challenges like attracting talent and landing government procurement deals. “We are going to help Canada take its place as the world’s leading tech ecosystem by helping 14 founders reach $1 billion in annual revenue by 2030,” he said during Communitech’s annual meeting the same month Albinson co-founded C100, a network of Canadian entrepreneurs in Silicon Valley, and has invested in five funds and more than 70 companies. He’s generated $1.49 billion in returns on $410 million invested, the pitch deck notes. 

The fund is targeting an initial close in January or February 2022, and a final close that December.