Inovia Capital wraps up its latest growth fund amid pandemic

The fund, backed by existing and new LPs, gives the firm $1.5bn in total AUM. Partner Chris Arsenault says the firm came to market with the vehicle sooner than expected.

Similar to other fund managers in the past year, Inovia Capital partner Chris Arsenault has a couple of observations about working under a pandemic.

First off, his flights have gone from about 54 a year to zero since he is no longer traveling from North America to Europe and back to visit the firm’s offices and meet with portfolio companies. Secondly, deals remained unabated. Investment activity is so robust, especially in Europe, Arsenault said Inovia raised a second growth fund quicker than expected.

The Montreal-based tech investor has closed on $450 million for its latest growth vehicle, which is backed from new and existing LPs. The fund is 12.5 percent larger than its predecessor $400 million inaugural growth fund, which it raised two years ago. Arsenault said the firm had enough interest to expand its latest to $500 million.

Chris Arsenault, Inovia Capital

The second growth fund brings the firm’s total assets under management to $1.5 billion. Inovia was founded in 2007.

“We’ve been building up the practice, opening up new offices prior to the pandemic,” Arsenault told Venture Capital Journal. “And although we as a staff have not been meeting with each other in person in the last year, our strategy is working out well.”

Arsenault said the new growth fund – which invests in current Inovia portfolio companies and in new relationships – has already made its first investment, backing Zwift, operator of an online fitness and virtual cycling platform.

Long Beach, California-based Zwift is reportedly valued above $1 billion, making it a unicorn, following its $450 million raise from investors last year. Representing the firm on the company’s board is Inovia partner Patrick Pichette, who joined the firm in 2018 to direct its growth-equity practice. Pichette is also currently chair of Twitter and is formerly chief financial officer at Google.

Pichette also sits on the board of Lightspeed POS, a Montreal-based provider of a point-of-sale solutions for retailers, which went public two years ago. Inovia was a backer of Lightspeed from its early- and growth-stage funds.

Patrick Pichette, Inovia Capital

In addition, Arsenault pointed to the firm having recently invested in primary care provider Forward Health, which is looking to expand its healthcare model across the US.

Arsenault and Pichette manage the new growth fund alongside a third partner, Dennis Kavelman, the former executive at Blackberry who joined Inovia in 2018.

In all, the team operates offices in Montreal, Toronto, Calgary, San Francisco and London. The London office opened two years ago and houses four people.

LP backers and co-invesments

Arsenault said the second growth fund includes 20 percent new investors. In all, backers came from Canada, the US and Europe and included funds of funds and pensions, as well as more than 20 family offices and individuals, including friends and family.

Disclosed LPs include the Bank of Montreal, Caisse de dépôt et placement du Québec and Northleaf Capital Partners.

Of course, this was the firm’s first fundraise done virtually, and Arsenault said he saw some benefits from using online technology to make initial pitches to investment committees.

“I hope certain things stick around after the pandemic, such as virtual presentations,” he said. “I miss the one-on-one interactions, but it was way more efficient to pitch over Zoom or Meet or Teams and we could have five meetings a day that way, too.”

Arsenault also noted how LPs have been much more involved in co-investments in recent years, including participating in special-purpose vehicles, or SPVs. He noted in the last four years, his firm has helped its LPs put $634 million to work in the firm’s portfolio in co-investments.

“It helps lock up the term sheet and helps us stay competitive when vying for deals,” he said. “It’s also an added benefit for LPs.”