Canadian Investment Fund to Help Tech & CleanTech Startups

Tandem Expansion, a new private investment firm, has secured $300 million to help young Canadian technology companies expand to a global level.

The fund will invest between $10 million and $40 million on companies with the potential to become “global market leaders.” Eligible companies must have a commercial technology and a roster of paying clients, Tandem specified in a conference call.

“For Canada to succeed in the knowledge economy, we need entrepreneurs who can turn research into world-class companies,” said Jean-Ren© Halde, president and CEO of the Business Development Bank of Canada. “They need access to growth capital pools from investors who back them.”

Along with the BDC, other institutional investors contributing liquidity to Tandem include Export Development Canada, and Teralys Capital, a “fund of funds” that funnels money to venture capital firms.

Tandem Expansion, headed by CIBC chairman Charles Sirois, seeks to fill a void in the venture-capital ecosystem where early stage funds are plentiful, but lack those that can write bigger cheques for aggressive growth.

“The sustainability of the Canadian technology sector is hampered unless we anchor a few companies and let them grow here,” said Stephen Poloz, a senior vice-president at EDC. “Existing tech clusters will remain fragile unless we build a strong nucleus for startups to gravitate around,” he added, citing BlackBerry maker Research in Motion as a model.

Tandem Expansion will focus on companies in such high-growth tech fields as software, cleantech, life sciences and industrial innovation.

John Reid, president and CEO of the Canadian Advanced Technology Alliance, praised the new fund, but cautioned that Canadian-only investors cannot support all the country’s young companies. CATA is lobbying Ottawa to simplify the red tape facing U.S. venture capitalists seeking Canadian opportunities.

“We only have one-third of the investment capital as the U.S.,” he said. “That really crimps new enterprise development.”

Tandem Expansion is one of the many latest Canadian institutions expanding into the fast growing cleantech sectors ‘” another company is Toronto Stock Exchange (TSX) which has established dedicated team to encourage cleantech companies to consider listing onto TSX. This strategy has worked successfully in 2010 and first quarter of 2011, of which TSX had attracted both North American and non-American cleantech companies to list onto TSX; it had also enjoyed success from a number of Asian cleantech companies selecting TSX as their primary stock exchange in North America.

TSX sees this as an important strategy for it to strengthen its global position as one of the top stock exchanges in the world; and not to miss the cleantech sector which has been dominating the IPO activities in 2010 and 2011.