(Reuters) – Canada’s Edgestone Venture Capital Fund has reached a deal to merge with Bridgescale Partners, a $200 million Silicon Valley fund, several sources with direct knowledge of the deal said.
The sources, speaking on the sidelines of Canada’s top annual venture capital meeting, said the merger is driven by Edgestone’s desire to create a crossborder partnership with a leading Silicon Valley private equity firm so it can help build Canada’s next-generation technology leaders.
It thinks it can get that with Bridgescale.
“Edgestone and its owners get to leverage Bridgescale’s Silicon Valley network and management team with Edgestone’s management team and portfolio,” said one of the sources.
Further details on the structure of the deal were not available.
The Canadian venture capital industry, which gave birth to such Canadian technologies as the BlackBerry smartphone, slowed to 14-year lows in the first quarter, even worse than at the height of the crisis a year ago.
“This could be a game changing move for the Canadian technology venture landscape that needs some fresh good news. If I was an Edgestone portfolio company, I would be excited about the merger,” said another source.
“The deal makes sense for Bridgescale in that it expands its investment team and further deepens its deal flow in Canada,” the source said on condition of anonymity because the deal has not been officially announced.
Sources said the merged company could help U.S. technology start-ups do an initial public offering on the Toronto Stock Exchange, instead of waiting years to grow to sufficient size to be able to list on the Nasdaq. (Reporting by Pav Jordan in Ottawa; Editing by Gary Hill; editing by Carol Bishopric)