Win-win: Edmonton venture firm closes $10 million seed fund


“There’s a lot of talent in this city, but you can’t do it alone, and you can’t do it without some kind of funding”

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A new venture capital fund could make Western Canada fertile ground for some growing tech startups.

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On Tuesday, Edmonton-based announced the first closing of Sprout Fund II, a new seed fund that has raised nearly $10 million in capital. Firm partner Kristina Milke told Postmedia that the fund aims to invest in 30 to 40 early-stage startups in Western Canada that provide software as a service (SaaS) in a business-to-business (B2B) capacity.

The startups selected for investment will gain more than just capital, Milke added, but also tips to accelerate their growth.

“We’re going to mentor them and help them in any way we can,” she said, “because if they win, we win.”

Sprout Fund II follows a $1 million pilot fund the company launched in 2019 (Sprout Fund I), Milke added, which raised $1 million and invested in 10 companies — one in the Kitchener area. -Waterloo in Ontario, four in British Columbia and five in Alberta.

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Dryrun, an Edmonton-based company that offers financial modeling software, was among a handful of local startups to secure funding through the pilot project. CEO and co-founder Blaine Bertsch said the investment gave the company the push it needed to start building momentum, while guidance from prepared the startup for future challenges. subsequent and larger funding rounds.

“It’s like a snowball rolling downhill,” he says. “I owe them a lot for stepping up, not only with funding, but also with guidance and mentorship that helped us grow quickly as an Alberta company. »

Milke said the first fund was fully rolled out in July 2021 and most of the company’s portfolio companies had seen their value increase three to tenfold in less than three years.

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The team behind Dryrun has grown from around three to nine people since receiving a share of the pilot fund – the first outside investment the company has seen since its launch in 2016, Bertsch said.

“There’s a lot of talent in this city, but you can’t do it alone, and you can’t do it without some kind of funding,” he said. “It’s a tough place to fundraise and grow a tech company like this.”

According to the Canadian Venture Capital Association (CVCA), a private equity industry advocacy group, Canada saw $14.7 billion in venture capital investments in 2021. Alberta said a record $561 million in venture capital investment during this period – up 15.7,100 from the previous year, but still trailing Ontario ($7.9 billion), Colombia British Columbia ($2.9 billion) and Quebec ($2.8 billion).

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The CVCA also reported fewer transactions in Alberta (87), compared to Ontario (291), Quebec (189) and British Columbia (105).

Since receiving backing from the first fund, Dryrun has managed to secure funding from some local angel investors, Bertsch added, but now the company has expanded its reach to connect with funds. south of the border.

Unlike its predecessor, Sprout Fund II is ready to provide “follow-on” or subsequent investments in some of the selected companies, Milke said.

In the meantime, she added, the company will continue to raise capital and is targeting the second closing of the new fund later in the year.

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