Canadian venture capital firm Portag3 is continuing its global push with the close of a C$427 million ($320 million) fintech fund this week.
The firm’s second fund will focus on early-stage startups that cover wealth management, banking and insurance, including direct-to-consumer and business-to-business models. The fund broadens Portag3’s institutional backing and diversifies its corporate limited partner base.
“Our mandate has always been global and we’ve been [focused] on where we thought the best opportunity was regardless of where it was domiciled, but having limited partners in different parts of the world will drive origination,” said Adam Felesky, Portag3 CEO. “I would think it will enhance our [outside] Canada origination.”
According to Felesky, the geographic distribution of Portag3’s investments that are part of its second fund is 50% in North America, 40% in Europe and 10% in Asia.
The firm said it’s interested in direct-to-consumer businesses that are beginning to scale, and are building adjacencies in their models while cross-selling new products and services. For business-to-business solutions, Portag3 is interested in the infrastructure layer, particularly the shift to flexible cloud-based platforms from mainframe, legacy solutions.
Felesky acknowledged that the business-to-business infrastructure field is particularly crowded. The platforms that will stand out, he explained, are companies that offer a tech-first approach, a skilled technical team and a solution that’s easy to implement.
“We look for modularity [with these solutions], so that the incumbents aren’t looking to rip and replace everything at once,” noted Felesky. “They’ll see the ability to take some risk on one part of the solution and build trust over time, and slowly land and expand.”
While Portag3’s approach is global in scale, he emphasized that the Canadian market is still attractive to fintech investors, given the opportunity for a “winner take all” scenario for companies that offer compelling value propositions.
“What’s great about Canada is that once you establish a leadership position, it becomes easier to become the leading brand and it becomes more difficult for others to raise capital against your leading solution,” said Felesky.
New strategic investors committing funds to this round include Alterna Savings and Credit Union, Aviva France, BDC Capital, Caisse de dépôt et placement du Québec and the Public Sector Pension Investment Board.
To date, Portag3’s second fund has made investments in 17 companies, including banking startup Koho, insurance platform Clark, enterprise software company Integrate.ai and Diagram Ventures. Through Portag3’s first fund, which was valued at C$198 million ($150 million) the firm invested in large fintech startups including Borrowell, Wealthsimple and Clearbanc.
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