White Star Capital has launched a new seed fund to fill what it sees as a key gap in Canada’s venture capital (VC) market.
The global, multi-stage VC firm has secured a first close of $25 million USD for its North American Seed Fund, with a $50-million USD target. With this, it aims to lead pre-seed and seed financings for tech startups across Canada and the United States (US).
“We’ve been really happy with our track record overall in Canada.”
Sanjay Zimmermann, White Star Capital
Recent data from the Canadian Venture Capital & Private Equity Association indicates that there has been a steep decline in pre-seed and seed investment activity in Canada. While the latest results from Québec are slightly stronger in this respect, some industry leaders have been sounding the alarm in light of poor fundraising figures for startups and VCs, declining entrepreneurship, and performance anxiety.
In an interview with BetaKit, White Star general partner (GP) Sanjay Zimmermann said he is “definitely concerned” about the state of early-stage Canadian VC. White Star’s diagnosis is that “the missing piece” is often a lack of lead investors at the seed stage who are capable of cutting cheques for more than $1 million. This was a problem that CMD Capital also set out to tackle, but fell short after failing to secure anchor investors.
White Star hopes its seed fund will turn things around, and the firm has secured backing from a slew of big Canadian institutions to do just that. Fonds de solidarité FTQ is anchoring the fund. Other limited partners include Capital régional et coopératif Desjardins, the La Caisse-funded Fonds québécois d’amorçage Teralys, and Toronto-Dominion Bank’s TD Innovation Partners (TDIP).
“By investing in White Star Capital’s new fund, [TDIP] aims to help fill this critical early-stage funding gap in the Canadian innovation ecosystem, helping to give founders the backing they need to launch, grow, and scale their ventures,” TDIP director of capital solutions Michelle Sabourin told BetaKit.
Zimmermann, a Toronto-based VC that has been working with White Star for nearly nine years and was recently promoted to GP, is co-leading the fund alongside fellow GP Catherine Ouellet-Dupuis. She is located in Montréal and served as chief legal officer and chief strategy and corporate development officer at local human resources tech company Workleap, helping it scale to more than $100 million in annual recurring revenue.
Zimmermann said the pair brings “complementary” skillsets across operations and VC investing. With its final close, White Star intends to round out the fund’s leadership team by announcing a third GP based out of New York, where the firm already has a presence.
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White Star intends to focus its investments on these three markets and work closely with founders based in or near each city. “We truly believe that there is a golden triangle of Montréal, Toronto, [and] New York,” Ouellet-Dupuis said.
Zimmermann said the fund’s goal is to exclusively lead and co-lead rounds while building a portfolio of 30 companies, likely deploying more funding in Canada than the US. It will write initial cheques of $500,000 to $2 million USD, with follow-on capital reserved to support breakout companies through Series A and beyond. The firm is currently finalizing its first two investments.
White Star intends to back a mix of software startups through the fund. Zimmermann said investments will reach both business-to-business and direct-to-consumer companies, but not biotech, deep tech, and particularly capital-intensive businesses. Themes of interest include automation, cybersecurity, healthtech, and the sustainable economy.
White Star was founded in 2014 by managing partners Eric Martineau-Fortin and Jean-Francois Marcoux—who are both Canadian—as well as former co-leader Christian Hernandez Gallardo. It is headquartered in the United Kingdom (UK) and New York, with a strong presence in Canada. Since its founding, White Star claims it has backed more than 100 companies across the globe, growing to 50 employees (including seven in Canada) and $1 billion USD in total assets under management. Today, the firm has operations across North America, Europe, and Asia.
