Andrew Ray has been named the new Vice-President of Investment at Innovacorp, and he has a singular priority: to see the Nova Scotia venture capital agency make money for the provincial government.
The Crown corporation announced last week that Ray, who has been an Innvovacorp IT investment manager for four years, would succeed Charles Baxter, who retired earlier this year. Innovacorp hired a head-hunting firm to search for Baxter’s replacement but, after rounds of interviews, decided the best candidate was already an employee.
Ray is a rocket scientist (literally -- nine years as a spacecraft design engineer) who has spent the past four years with Innovacorp, helping to build up a portfolio of startups he believes is under-rated. And he wants his investment team to continue nurturing their companies so they do not just preserve the government’s money but make enough to return money to the province.
“We need to be a fund that actually returns money [to the government] and not just breaks even,” said Ray in an interview last week. “Malcom [Fraser, Innovacorp’s CEO] and myself are both of the impression that we should actually be in the position to make money . . . and can actually return money to investors.”
Ray believes Innovacorp’s portfolio of about 40 companies offers a great opportunity to reap financial rewards, with investments in companies like social media monitoring company Dash Hudson and CarbonCure Technologies, which produces environmentally friendly concrete. On a few metrics (such as follow-on funding by its companies) the portfolio is in the top quartile of VC funds in North America.
“I’m actually excited about our portfolio, not just on a regional level but also on a national level or across North America,” he said.
Innovacorp engages in venture capital investment, overseeing incubation facilities and entrepreneurship competitions. The investment side that Ray is taking over has been changing. Innovacorp recently announced that it will invest in the second Build Ventures fund as well as the pre-seed fund to be managed by Halifax investor Patrick Hankinson.
Hankinson’s fund and Innovacorp will both target pre-seed investments. Ray said he and Hankinson have discussed how the two funds could work together. They would both be interested in fast-growing Software-as-a-Service companies that can get to market and reward shareholders quickly, he said. But the IT space also includes other deep-technology companies like Halifax’s QRA Corp. or Sydney’s Ubique Networks. These companies have the potential to make a return for investors, Ray said, but may require patient investors (like Innovacorp) that will give the companies time to grow.
Aside from IT, Ray said Innovacorp can bring funding and expertise to other innovation sectors like life sciences, cleantech and oceantech, again with the aim of being a patient investor that is eventually looking for a return.
Innovacorp has been active while the search for an investment head took place. Its Nova Scotia First Fund – which the government topped up with $40million in funding in late 2016 – has invested about $7.5 million so far in calendar 2018. That’s more than the $5 million to $6 million the agency usually invests in a given year. Ray said the NSFF is on track to invest $10 million to $12 million this year.
[Disclosure: Innovacorp is a client of Entrevestor.]