Yaletown holds first close on $65m

Vancouver, Canada-based Yaletown Venture Partners has held a first close on $65 million for its second venture fund targeting $100 million from investors in Canada and the US.

The firm began fundraising in mid-February without the help of a placement agent and will remain open to new investors for as long as 12 additional months. Yaletown counts pension funds, fund of funds, financial institutions and family offices among its limited partners.

Yaletown plans to invest in roughly 10 to 12 companies out of the fund. “We are definitely looking to be able to put more money into our companies throughout their life cycle,” general partner Steve Hnatiuk told PEO, compared to the firm’s debut fund, which closed on $42 million in 2003.

The firm is always a seed or Series A entrant making an initial investment of about $1 million to $2 million and then investing in follow-on rounds. “We consider ourselves an early stage entrant but a full cycle participant in our companies,” Hnatiuk said.

Yaletown invests 70 percent of its capital in cleantech and IT companies in Western Canada, largely in British Columbia but also in Alberta. The remainder of the capital is invested in cleantech in the US Pacific Northwest as well as elsewhere in Canada.

Within cleantech, Yaletown focuses on the energy segment including transportation systems, renewables, waste energy, energy efficiency and investments that “sit at the intersection” of energy and IT. The firm’s broad definition of IT includes software, networking and communications and internet and digital media.

Canada’s Venture Capital & Private Equity Association, which represents more than 1,500 private equity firms in the country, said in October that venture capital investment in early stage Canadian companies dropped 42 percent between 2002 and 2007. The trend has continued in 2008, as activity in the venture capital market was down 31 percent in the second quarter from a year earlier, marking its lowest recorded level in three years.