Island Capital Partners, a new $4-million-plus investment fund, has launched to fund startups and add some investment power to the deepening startup ecosystem on Prince Edward Island,.
The new early-stage investment fund will be managed by a committee of four business people, most with international business experience. They have received commitments of $2 million from the P.E.I. government and roughly the same amount from about 20 angel investors based on the island. The enthusiasm of the private investors may allow the team to increase the size of the fund to as much as $5 million. The founders said in an interview Monday that many of the private investors may also invest individually in some of the companies selected by the fund.
Island Capital is coming about as the startup community on P.E.I. is adding depth and diversity. The Startup Zone has opened in downtown Charlottetown as a working and mentoring space for startups, and the life sciences sector (always a strength on the island) has been strengthened by the development of such support groups as EmerGence and Natural Products Canada.
“There has been a perceptible buzz around Charlottetown in the last little while,” said Island Capital managing investment director Alex MacBeath, a former CEO of Grant Thornton Canada. “The Startup Zone was created about 16 months ago and now we have Island Capital. So there is a lot coming along at this time.”
The investment managers for the fund are: Ron Keefe, the former CEO of Charlottetown drug manufacturer BioVectra; Steve Nicolle, former CEO of Halifax-based STI Technologies; and Paul Lypaczewski, who has run several IT companies over the past 30 years.
These four businessmen, who are not receiving a management fee, aim to invest about $200,000 to $400,000 in each company, meaning that the fund has the ability to back about 10-20 high-growth companies.
The investment directors say they will invest only in companies that have high growth potential, and they will mentor the companies to position them to attract further rounds of investment. They would like to participate in follow-on rounds but admit they have limited funds so the later investment rounds will be led by other funds.
Island Capital has already invested in Forestry.io, an IT company that went through TechStars New York last year. The Charlottetown fund is in discussions with five other companies and is tracking a total of 17 startups.
Nicolle stressed that the fund is independent of government. “I would not be involved in this if the government was in any way running the fund and they’re not,” he said. “They’ve giving us complete autonomy.”
The launch of the Island Capital Partners means that all four Atlantic Provinces now have funds supported by provincial governments to provide early-stage financing to startups. The New Brunswick Innovation Foundation and Nova Scotia’s Innvoacorp have been in operation for more than a decade. The Invest Newfoundland and Labrador fund, managed by Pelorus Venture Capital, was launched two years ago. The P.E.I. government has been studying how to provide funding to its startups, and has now backed Island Capital.
The funding environment in the region should be further developed soon, as the Nova Scotia government is due to name who will set up a new venture capital fund based in Halifax. About half a dozen firms have applied to manage the fund, which will receive $25 million from the provincial government and is expected to attract capital from other sources. The Halifax-based fund will invest in and beyond Atlantic Canada.