Draper Fisher Warms Up To Its Chilly Neighbor –

Tim Draper donned a Batman costume over three years ago during the launch of DFJ Gotham, the New York affiliate of Draper Fisher Jurvetson. Does that mean the fun-loving VC will next appear as Canadian Mounty Dudley Do-Right if his firm is successful with a similar effort in Canada?

Redwood City, Calif.-based DFJ has partnered with Primaxis Technology Ventures of Toronto to raise and invest in a new fund dedicated to tech companies in the Great White North. The fund has a target of $100 million and will be raised jointly by the two firms.

“In Toronto and that whole corridor, there are some very, very high-quality universities and extraordinary technology,” says Tim Draper, founder and managing director of DFJ. “They have very little venture capital and we think there is a neat opportunity to link this great Canadian firm into the DFJ network.”

Draper believes his Canadian venture will work very well for both DFJ and Primaxis. “They can now link their entrepreneurs to a worldwide market and check due diligence to our network,” he says.

In the last nine years, DFJ has expanded its network to include venture capital partnerships with 70 professionals. It has 15 affiliate agreements similar to Primaxis and one international joint venture. In total, it has offices in 30 cities worldwide, including 25 in the United States.

There may be more to come. While DFJ’s focus remains on North America, Draper says the firm has generated interest from potential partner firms for more international expansion, particularly in Europe and Asia.

The new Canadian fund, which has not yet been named, will be under the direction of Ilse Treurnicht, president and CEO of Primaxis. She has been active in the Canadian venture capital industry for the past five years.

“DFJ’s track record and extensive network will help us realize our vision of enhancing startup technology investing in Canada,” Treurnicht says.

DFJ’s foray into northern territory is “welcome news for the Canadian venture capital community,” says Mary Macdonald, CEO of Canadian VC research firm Macdonald & Associates. The participation of U.S. investors in the Canadian market has dropped during the past several months, she says.

“But this partnership signals a growing recognition of excellent Canadian investment opportunities coupled with strong venture management teams to exploit them,” she says.

Canadian entrepreneurs could certainly use the help. The second quarter marked the “slowest pace of venture activity in Canada since 1996,” according to a report by the Canadian VC research firm Macdonald & Associates. Canadian venture firms collectively invested just $151 million in the second quarter of 2003, down from $224 million in the first quarter.

The Canadian Venture Capital Association (CVCA) cited the SARS epidemic as a factor in the shortfall and says that a recent increase in the rate of acquisitions is a positive sign. Brad Ashley, CVCA president and managing partner, says preliminary figures for the third quarter indicate a greater of VC transactions taking place although he says that the investment recovery will remain a gradual one.

Draper acknowledges that Canadian venture activity is due to ramp up, albeit slowly, and says that “Gretzky-land” is perhaps ripe for the plucking. “This is perfect timing,” he says. “If other venture capitalists have pulled away, it’s a perfect time for us to go in.”

Draper says DFJ and Primaxis will approach both U.S. and Canadian limited partners to raise the fund. DFJ’s limited partners include Investment Fund for Foundations and “several institutional investors and several prominent American families” according to the firm.

Primaxis Technology Ventures’ limited partners include Battelle Memorial Institute, BTG, Crown Investments Corp. of Saskatchewan, DuPont Canada, MDC Corp., RBC Ventures and Richardson Ventures.