EnerTech Capital, SAIL Capital Meet Different Fates in Canada


Ted S. Warren/Associated Press

Is Canada a friendly place for venture capital, or the land where venture dreams go to die?

Depends on who you ask.

EnerTech Capital recently raised about $120M for a new fund that will invest both in Canada and the U.S. in energy technology companies. The firm, whose headquarters are in the U.S., is growing its presence in Canada, with two new offices opened in recent months. Its fund attracted numerous Canadian limited partners.

Wally Hunter, managing director at the firm, said that Canadian investors haven’t been hurt as much in the 2008 financial crisis as some U.S. counterparts, leading them to be more interested in venture investments. One of Enertech’s investors, for example, is Teralys Capital, Canada’s largest investor in venture funds, managing $1.3 billion, and one that was formed in 2009.

SAIL Capital, on the other hand, abandoned efforts to raise a new venture fund focused on clean technology opportunities that it had been planning in Toronto via a joint venture with Stifel Financial Corp., as VentureWire reported Wednesday. Managing Director Walter Schindler blamed Stifel’s not living up to its commitment to raise up to $100 million for the effort.

“We had a lot of encouragement from Stifel Nicolaus. But they were never able to raise a single dollar,” Mr. Schindler said.

“Canada does not have a culture of investing in venture capital,” he added.

Data gives credence to both perspectives. Canadian venture funds were able to attract funding at a much faster growth rate last year than U.S. venture funds. But the Canadian venture market is still much smaller than that in the U.S.

Canadian venture funds raised $1.8 billion in new funds last year, up 73% from the total in 2011, according to Canada’s Venture Capital & Private Equity Association. In the U.S., by contrast about $20.3 billion was raised by venture funds in 2012, about as much as in the previous year, according to Dow Jones LP Source, a research unit of VentureWire publisher Dow Jones & Co.

SAIL, for its part, suffered from partnering with Stifel, an investment bank and financial services firm that’s closing its Canadian subsidiary entirely by the end of the year. Its representative didn’t respond to a request for comment regarding the SAIL joint venture. David Fowler, president and chief executive of Stifel Nicolaus Canada, declined to comment.

And EnerTech was helped by the fact that it has been established in Toronto for a long while, and already had numerous investments in Canada by the time it went out for its fourth fund.

Write to Yuliya Chernova at yuliya.chernova@wsj.com. Follow her on Twitter at @ychernova

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