GPs attribute change to VC market conditions and personal factors.
After 10 years and three funds, Information Venture Partners (Information VP) has announced a shift to single-asset, special-purpose vehicle (SPV) investing.
Since it was spun out of RBC 10 years ago, the Toronto-based venture capital (VC) firm has focused on early-stage North American business-to-business (B2B) FinTech and enterprise software-as-a-service (SaaS) companies across three funds. After recently taking a step back to consider its options amid a particularly tough VC fundraising environment, Information VP has decided to invest more selectively in later-stage B2B FinTech and enterprise SaaS startups on a deal-by-deal basis.
“Our plan is not to disappear quietly into the night.”
David Unsworth, Information VP
Information VP co-founders and general partners (GPs) Robert Antoniades and David Unsworth shared the news in an Oct. 9 LinkedIn post. The pair elaborated on their decision in an interview with BetaKit, attributing the timing of this move to a combination of present market conditions and personal factors.
“In this current environment … it’s been difficult to get institutional investors’ attention on early-stage investing, which is what we do,” Unsworth told BetaKit. “We’ve had success in the past doing later-stage SPV investing … It just seemed like an opportune time to shift strategy and focus on more later-stage deals,” he added.
Antoniades and Unsworth, who have 50 years of combined experience in VC, indicated that committing to managing another fund for the duration of the typical fund lifespan—usually 10 years but often stretching to 12 to 15 years at liquidity—was also a consideration. Compared to that, they said the terms of SPVs, with deal-by-deal carry, shorter duration to exit, and no preferred return, made this strategy more appealing.
Asked how far along the firm got in the process for Fund IV before making this decision, Antoniades told BetaKit, “We’ve had conversations with our [limited partners], but when it came down to it, this is Dave and [my] decision and our future, and so this is a path that we’ve selected because it made sense for us.”
Information VP closed its first, more than $100-million CAD fund in 2014 with the buyout of RBC Venture Partners’ portfolio, which Antoniades and Unsworth previously helped manage after the bank rethought its VC strategy in the wake of regulatory changes post-2008 financial crisis. The GPs raised their second fund in 2016, ultimately securing just over $100 million, and then their third, most recent $124-million fund in 2019.
Over the years, Information VP’s limited partners (LPs) have included BDC, CIBC, HarbourVest Partners, Kensington Capital Partners, Manulife, National Bank, Northleaf Capital Partners, RBC, Roynat Capital, and Teralys Capital, among others.
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Fund I reached the end of its life between the deployment of Fund II and Fund III, leading Antoniades and Unsworth to restructure its remaining assets into a separate SPV. By adding leverage to the transaction, the GPs claim they were able to generate a strong return for Fund I LPs and create an equally exciting return at exit for SPV investors.
During this time, the VC firm has invested in 26 startups, according to its website. This group includes Canadian tech companies like Arteria AI, Cinchy, Flybits, Helcim, Procurify, and Wisedocs. Information VP has also backed and exited PostBeyond, Q4 Inc., and Sensibill, among others. Its biggest wins to date include Adaptive Insights, BigID, eSentire, Varicent, and Verafin: the VC firm has achieved complete or partial liquidity from its investments in each of those five companies, which are all considered unicorns.
Information VP led Saskatoon-based Coconut Software’s initial Series A round and participated in the appointment scheduling platform’s Series A2 and Series B financings. Coconut Software founder and CEO Katherine Regnier told BetaKit that Antoniades and Unsworth are “no ego, all substance,” noting that Information VP had been a “class act” through good and hard times for the startup.
According to Antoniades and Unsworth, who declined to share specific metrics with BetaKit, Information VP’s performance has been strong. “The good news is that performance has not been an issue for us, which also gives us the opportunity to do what we’re doing 1729131499,” Antoniades said. The pair claim that Information VP has structured and invested in three later-stage SPVs to date, generating strong returns from two of them while still holding investments in the third.
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Antoniades and Unsworth said that this change to SPVs will not impact current Information VP portfolio companies. The VC firm intends to use its remaining reserves and look to maximize returns for its LPs through its second and third funds, supporting its existing portfolio, and reinvesting in its winners. “Nothing’s changed on that front,” Unsworth added.
After many invested heavily in VC when the market was hot, LPs have become more cautious and selective during the tech downturn, which has led to smaller funds and longer fundraising timelines for Canadian VC firms. Industry players that BetaKit has spoken with expect to see more turnover across the industry as Canadian VC firms adjust their strategies or shut down amid these conditions.
Per RBCx, the first half of 2024 put this year on pace to see the fewest total dollars allocated to Canadian VC in a decade. Things have picked up a bit since then with Radical Ventures’ $800-million USD AI fund and other recent fundraises from firms like Diagram Ventures, GreenSky Ventures, Luge Capital, Northside Ventures, and Pangaea Ventures.
“We have observed the many challenges faced by GPs and their LPs,” Antoniades and Unsworth wrote in their LinkedIn post. “As a country, we have made great strides to grow entrepreneurs and their supporting cast of executives, change our cultural perspective on startups, and build a growing (albeit slowly) roster of LPs. But there is much work to be done.”
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Asked whether they considered taking a step back and passing on the Information VP brand to other up-and-coming folks at the VC firm before making this decision, Antoniades and Unsworth said that they did. However, they noted that former principals Alex Tong, who is working on a new fund, and Jane Podbelskaya have chosen different paths. According to Information VP, the rest of the team will execute its new SPV strategy.
The GPs noted that single-asset, SPV investing in more mature companies will afford them greater flexibility than a fund-based approach and the capacity to focus on fewer startups. It will also require fundraising per deal, which Antoniades and Unsworth intend to continue working with existing Information VP LPs and select new investors through their own family offices to accomplish.
“It’s been difficult to get institutional investors’ attention on early-stage investing.”
David Unsworth, Information VP
Information VP’s focus will remain on B2B FinTech and enterprise SaaS startups in Canada and the United States, where Unsworth said the pair has experience and differentiated deal flow thanks to the time they have been in the market.
“It’s what we know,” Antoniades said.
Previously, Information VP targeted scaling startups at the Series A stage with approximately $1 million in revenue and strong founding teams. To date, the VC firm has focused on four key areas: FinTech; cybersecurity and governance, risk, and compliance; software for the CFO’s office; and payments. Going forward, the GPs plan to back companies with closer to $10 million in revenue and see room to provide growth capital to previously bootstrapped startups.
“Our plan is not to disappear quietly into the night,” Unsworth said. “We’re still here supporting entrepreneurs, still working hard at making sure we’ve got a robust ecosystem.”
Feature image courtesy Information VP.