Inovia Capital has raised $450 million USD for its second growth stage fund as the Montréal-based venture firm aims to build on its success with Lightspeed and create more Canadian unicorns.

The new fund exceeds Inovia’s target raise of $400 million and brings the firm’s total capital under management to more than $1.5 billion USD.

Growth Fund II comes a short two-years after Inovia raised its first growth fund of $400 million USD. That fund made significant investments in a number of companies, including Montréal-based Lightspeed.

Around 80 percent of the capital for Fund II came from recurring Inovia investors; limited partners that participated in Fund I or other Inovia funds. LPs for Fund II included the Bank of Montreal (BMO), Caisse de dépôt et placement du Québec (CDPQ), Northleaf Capital, Investissement Québec, Alberta Enterprise Corp. (which invested $15 million USD), Fonds de solidarité FTQ (which invested $26.25 million USD), and Kensington Capital Partners. Inovia does not traditionally name investors in its funds and didn’t disclose all LPs that invested in Fund II.
 

The fund will operate on the same thesis as Fund I and will continue to be run by general partners Chris Arsenault, Dennis Kavelman, and Patrick Pichette, the latter of whom was also named chairman of Twitter last year.

Inovia is one of Canada’s most active venture capital investors. With five active funds, Inovia makes investments from early-stage to late, growth stage – a strategy that was borne out with Lightspeed.

Inovia invested in Lightspeed through multiple funds, dating back to an early-stage investment in 2014. Lightspeed is now valued at more than $10 billion. The firm most recently invested in Lightspeed through Growth Fund I, supporting the company with its Lightspeed’s public offerings on the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE).

Noting the liquidity that investment in Lightspeed brought Inovia (the firm remains an investor in the company), Arsenault said the idea behind the second growth fund is to use the same strategy with other companies.

“At the same time, we’re able to generate great returns for investors across the growth fund and also the early-stage fund, [and] that helps because it basically takes a business case, a model, and says, ‘okay, so how many times can we do that.’ Well, we can actually do it many times because the market is now ripe for this type of transaction,” said Arsenault.

Early-stage investing will continue to be an important component of the firm’s thesis, with Arsenault telling BetaKit Inovia plans to raise another early-stage fund next year.

“The growth fund benefits 100 percent from what we’ve built over the last decades, from the venture deals,” said Arsenault. “We’re one of the few full-stack funds that can actually put in a pre-seed cheque of a few $100,000, or early-stage cheque of a few million dollars, or a growth stage check of $25 or $33 million and still have two times more capital for follow on.”

“That model right now is quite highly beneficial to us, so we expect to continue to build on that,” he added.

Inovia’s portfolio consists of a number of companies that have seen success as of late, including Top Hat, Clearbanc, Vidyard, and Sonder. Recent liquidity events for the company include Rubikloud, which was acquired by Ottawa-based Kinaxis, as well as North, which was acquired by Google last year after struggles with its smart glasses products.

Inovia has been active amid COVID-19, making new investments as well as doubling down in its existing portfolio, such as Symend and Snapcommerce. Last year, Inovia Growth Fund I led rounds for AlayaCare and WorkJam and co-led Sonder’s $170 million USD Series E. Notably, Inovia decided to invest in only 10 companies compared to 12 for Fund I, leaving additional capital for secondary and doubling down.

Much of this activity stemmed from the venture firm making a point to sit down with its portfolio companies when the pandemic hit to talk about how to not only ride it out but succeed. Arsenault said this led to around 80 percent of Inovia’s portfolio seeing positive outcomes over the past year, with many raising capital.