The fund has secured $14 million from entrepreneurs and family offices.
Innovobot has secured $14 million CAD in an initial close of its seed-stage fund focused on investing in deep tech from an environmental and social-conscious lens.
The Montréal-based firm is targeting a total fund size of $40 million (all numbers CAD) for Innovobot Resonance Ventures, its first fund since the firm was created in 2018.
Innovobot is investing in an increasingly popular deep tech sector that it feels is lacking in highly-knowledgeable investor support, but doing that by putting ‘tech for good’ first.
“We only invest in companies that have a positive impact on society or the environment.”
“We only invest in companies that have a positive impact on society or the environment,” said managing partner Zoya Shchupak. “We believe that those are the companies that are going to outperform financially as well: companies that focus on the greater good, they are the ones that are going to have outsized returns.”
Innovobot’s initial close for the fund comes from a group of family offices and entrepreneurs. In addition to Innovobot’s partners, investors include Nadine Martel, an angel investor through various groups including Capital Angel Network; Jean-Michel Lemieux, former CTO at Shopify; Peter Nicholson from family office Tiger 21; Flinks CEO Yves-Gabriel Leboeuf; and the founders of Heyday, one of Innovobot’s pre-fund investments.
Innovobot is now looking to secure some institutional investors to round out the rest of its fund. Having been fundraising since mid-2020, the Innovobot team expects institutional investors will be more inclined to invest now that the federal government’s Venture Capital Catalyst Initiative (VCCI) funding has been allocated.
“Of course, the markets have been tough, but the fact that VCCI was approved but not deployed before just recently … some of the more institutional LPs told us, ‘you should come back next year,’ when we met them last year,” said Innovobot general partner and tech for good lead, Sylvain Carle.
While Innovobot only recently closed on its deep tech fund, the firm made a handful of pre-fund investments (from its balance sheet), to some success. Its investments include Heyday, which was bought by Hootsuite last year for $60 million, and CarbiCrete, which is recognized for having created the first carbon-negative concrete. CarbiCrete is being rolled into the fund as Innovobot’s “first portfolio company.”
Innovobot is now ready to deploy capital from its venture fund with a focus on seed-stage companies. The firm plans to take a hands-on approach with its portfolio companies by providing services through Innovobot Labs, its “R&D and Innovation Design House.”
With the lab focused on human-machine interface, robotics, AI, advanced materials, and IoT, Innovobot plans to provide its portfolio companies with expertise to help with everything from prototypes to commercialization.
“Because these companies are more complex, you really need to help them address the challenges, and productize, and industrialize, and scale,” said Shchupak.
“There’s a huge need for funds that will lead these [deep tech for good] seed rounds in Canada,” added Carle, who joined Innovobot in March after departing Real Ventures with the goal to focus on climate change and social impact.
“When we talk about the deep tech whitespace, we really think that the funds leading seed rounds for these kinds of companies in Canada, there is certainly not enough and we hear that from investors that are downstream,” he said, acknowledging BDC Capital, which has both cleantech and deep tech venture funds.
With a targeted $40 million, Innovobot plans to make 16 initial investments with half reserved for follow-on at the Series A stage. Shchupak noted that Innovobot may look to increase its target size to $75 million, at which point it would look to make 20 initial investments with follow-on at the Series A and B stages. Initial cheque sizes will be between $500,000 to $2 million.
The Innovobot Resonance Ventures is led by Shchupak in addition to Innovobot founding partners Mario Venditti and Danny Grant, with support from Carle.
“The world is facing real challenges. For all its promise, software alone is not the solution,” said Shchupak. “We believe that solving humanity’s pressing problems requires the development and deployment of complex systems that combine the physical and digital worlds.”