[ad_1]
With Fund I, Toronto’s CBIV targets both market returns and impact.
Two years after its launch, Toronto-based Cross-Border Impact Ventures (CBIV) has closed its first fund, securing over $90 million USD ($135 million CAD) in total commitments.
Through its Women’s and Children’s Health Technology Fund, the women-led, impact-focused venture capital (VC) firm invests in tech startups across North America and Europe that address the health needs of women, children, and adolescents or improve health systems.
CBIV’s limited partners (LPs) are betting that the firm can generate both quality returns and positive health outcomes. “The dirty secret, if you will, of impact investing is that everyone wants market returns and impact,” CBIV co-founder and managing partner Annie Thériault told BetaKit in an interview. “We’re not sacrificing one or the other.”
CBIV approached more than 1,500 prospective investors to land its nearly 40 LPs.
While CBIV officially announced Fund I in late 2021, the VC firm initially began fundraising for it a week before COVID-19 hit. The final close in November 2023 marked the end of a challenging journey that took longer than expected and saw the firm fall shy of its original target, between $100 million and $200 million.
CBIV’s latest crop of LPs includes German national development bank KfW, the United Kingdom’s M&G Catalyst, investment vehicles managed by Netherlands-based impact investment firm Wire Group, and various family offices and foundations. They join existing backers like the Children’s Investment Fund Foundation, Bill and Melinda Gates’ Global Health Investment Corporation, the Hamilton Community Foundation, Rally Assets, Grand Challenges Canada (GCC), and Johnson & Johnson Impact Ventures, among others.
Thériault considers KfW and Global Health Investment to be CBIV’s lead LPs. She said that KfW, Global Health Investment, and GCC provided “concessionary capital,” allowing other LPs to earn higher internal rates of return and providing them with downside protection, while the remainder of CBIV’s Fund I LP base is all “return-seeking.”
“They saw that our fund fit their risk-reward parameters, and on top of that, that we’re able to achieve meaningful impact for women, children, and adolescents,” said Thériault.
In addition to the concessionary capital provided by KfW, Global Health Investment, and GCC, the Swedish International Development Cooperation Agency provided a guarantee. Combined, Thériault said that they offer CBIV’s other LPs 30 percent downside protection, creating a fund “with similar economics” to the Government of Canada’s Venture Capital Catalyst Initiative.
“These enhancements were provided as incentives to make [CBIV] attractive in a tough market for healthcare impact first-time funds,” said Thériault, who noted that this helped the firm garner the support of institutional investors that are “often out of reach” to emerging managers and secure larger than usual allocations from them.
Despite the pandemic, economic downturn, and various shifts in impact investment priorities in recent years, CBIV was still able to secure a sizeable amount, especially for an emerging manager and first-time fund.
With help from Government of Canada-backed nonprofit impact investor GCC, CBIV was created in 2019 by Thériault (then GCC’s chief investment officer) and fellow managing partner Donna Parr—a pair with plenty of investment experience at organizations like the Canada Pension Plan, EDC, OMERS, and Northwater Capital Management. Thériault and Parr later spun CBIV out of GCC as a standalone private impact VC fund. Before the launch of CBIV, GCC served as an anchor investor in the Global Health Investment Fund.
“We wanted to use the proceeds from that investment to support Annie’s vision to create a fund focused on the incredibly neglected area of women and children’s healthtech,” former GCC co-CEO Jocelyn Mackie told BetaKit, noting that GCC provided the funding and support to help CBIV get off the ground.
When CBIV first set out to raise its first fund, Thériault said there was a movement in impact investing towards gender-based strategies. During its fundraising process, there was a shift to addressing racial inequities, followed by a push to tackle climate challenges. While gender remained in focus, Thériault noted that these other worthy causes led to healthcare being “deprioritized,” making it more difficult for CBIV to fundraise.
“Unfortunately, what we see often in the impact community, when there’s a new priority that comes to light … whatever pot of money was allocated to the [older] priorities gets split,” said Thériault.
CBIV initially targeted a final close for Fund I by the end of 2022. But heading into the firm’s final close in late 2023, CBIV wondered if it would hit $60 million. Fortunately for CBIV, its fundraising strategy, structure, and the long-term relationships the VC firm had built paid off.
Thériault attributed this to CBIV’s strong communication, execution, and persistence—it approached more than 1,500 prospective investors to land its nearly 40 LPs, some of which said no multiple times over multiple years before eventually saying yes—as well as the “acyclical component” of what the firm does.
“What drove us to raise such a large fund was the fact that the majority of allocations we have, those investors were moving money towards impact investing no matter what,” said Thériault.
CBIV invests in early growth-stage startups commercializing medical devices, and diagnostic, therapeutic, and digital health solutions. CBIV targets healthtech firms with “global growth, high return, and impact potential.” Target companies include startups with a product that has Europe’s CE Mark or approval from the US Food and Drug Administration or healthcare software firms with $1 million to $10 million in revenue.
RELATED: Spring Impact Capital launches $20-million fund to back cleantech, healthtech startups
The VC firm typically leads or co-leads Series A or Series B rounds with initial cheques of about $2.5 million to $3 million and investing up to $10 million per company, including follow-on capital. With its now scaled-back size, Thériault expects CBIV to back nine or 10 startups through Fund I, and deploy half of its capital in North America and half in Europe.
CBIV has already made five investments to date across the US and Europe. This includes Seattle-based artificial intelligence supply chain startup Pendulum, Atlanta oncology software firm Oncolens, London-based gynecological tech company Daye, UK medical device startup Mom Incubators, and Paris-based pregnancy monitoring software firm Sonio.
Given the ongoing Israel-Hamas war, Thériault no longer expects CBIV to make any investments in the country through Fund I. She hopes the ecosystem recovers and rebounds in time for CBIV’s second fund.
“My hope for future funds is that we can bring in a bit more Canadian capital.”
Mackie is excited by CBIV’s progress to date. “The CBIV team has proven that it can be done—that an impact fund led by two women can crowd in investment capital to invest in creative and sustainable companies solving real challenges to save and improve the lives of women and children around the world.”
Within Canada, Thériault claimed that CBIV is unique in terms of its focus and approach. The firm has found far more collaborators across the US and Europe.
While CBIV counts GCC, Toronto’s Rally Assets, the Hamilton Community Foundation, Ottawa-based Equality Fund, the Foundation of Greater Montréal, and the Montréal-based McConnell Foundation, and a US-based fund created by Canadian and former eBay leader Jeffrey Skoll among its LPs, it raised Fund I primarily from investors outside of Canada.
Speaking to the relatively small number of Canadian LPs in its first fund, Thériault noted that there is a “very, very limited amount of cash” available in Canada for firms like CBIV. “The reality is that if we don’t exist in Canada, this sector can never grow,” she said.
Given the existing pipeline of Canadian tech companies focused on women’s and children’s health, Thériault said it is difficult to build an entire portfolio in Canada. But she said this also made things difficult because many prospective Canadian LPs—government-affiliated ones particularly—do not possess the mandate to invest in global funds like CBIV.
“My hope for future funds is that we can bring in a bit more Canadian capital.”
Feature image courtesy Cross-Border Impact Ventures.
[ad_2]
Source link
