TLDR:
- Northleaf and Kensington have closed their VCCI-backed funds with a total of $660 million in funding.
- Both funds will primarily focus on Canadian venture capital and growth funds as limited partners with some capital set aside for direct investing in companies.
Two Toronto-based investment firms, Northleaf Capital Partners and Kensington Capital Partners, have closed their indirect venture capital funds with backing from the federal government’s Venture Capital Catalyst Initiative (VCCI). Northleaf has closed its “hard cap” of $370 million for its Venture Catalyst Fund III (NVCF III), while Kensington closed $290 million for its Kensington Venture Fund III (KVF III). Both funds act as fund-of-funds, largely investing in Canadian venture capital and growth funds as limited partners with some capital set aside for direct investing in companies.
Northleaf and Kensington were two of four fund-of-funds chosen to dole out VCCI funding in October 2022, with the other two being HarbourVest Partners and Teralys Capital. The Globe and Mail reported today that the latter two funds are on track to hit their funding targets.
VCCI is a federal program managed by the Business Development Bank of Canada (BDC) aiming to inject more capital into the ecosystem by leveraging private sector funds. Under VCCI, the federal government provides one dollar to every three dollars raised by the selected fund managers up to a cap.
Kensington said that KVF III has attracted capital from new and returning investors, including TD Bank, BMO Capital Partners, and BDC, as well as “several wealth management firms.” KVF III will primarily focus on the Canadian market, and has allocated 75 percent of its capital to venture capital funds and the remaining 25 percent to direct investments. Through VCCI, the federal government committed to providing 25 percent, or $72.5 million of the fund’s $290 million float. In a statement, Kensington senior managing director Rick Nathan expressed appreciation to the fund’s backers.
When it comes to Northleaf, the firm said that in addition to the Government of Canada’s support through BDC, a number of Canadian institutional investors committed capital to NVCF III, including Canada Pension Plan Investment Board and “high-net-worth individuals and family offices.” Since launching the NVCF III in July 2023, Northleaf says it has invested in 11 venture capital funds and directly invested in three companies.
