TORONTO – Looking to capitalize on discount broker TD Waterhouse’s Internet presence, TD Bank Financial Group in late January launched first time venture fund, TD iCapital to focus on online financial businesses that provide services, financial content or enabling technologies, said David Grossman, vice president of New York-based TD iCapital. TD Waterhouse and TD Capital, another subsidiary of TD Bank Financial Group, each provided $50 million to the fund, bringing its total to $100 million. The vehicle, to be managed by TD Capital, will invest mostly in United States-based companies at all stages of development, Grossman said, adding it also will look for overseas opportunities.
“The idea is that we should be able to help accelerate growth at these companies, and we ought to be able to get into some deals and become partners as well,” Grossman said. “We see TD Waterhouse as a great platform for growth and believe there are other strategic relationships throughout our growing portfolio.”
Deals in the Pipeline
TD iCapital at press time had not made any investments, said Grossman, who declined to name any potential candidates in the pipeline. TD Capital and TD Waterhouse had invested individually in three deals, which will be added to TD iCapital’s portfolio, he said.
TD Waterhouse is one of a growing number of online financial services companies looking to profit from the growth of the Internet. In March 1999, the E*Trade Group Inc. formed a $150 million captive venture capital unit to help enhance the company’s core business by speeding the development of other Internet start-ups. (VCJ, May 1999, page 5).
Meanwhile, technology-oriented corporations, like computer maker Oracle Corp.(VCJ, March 1999, page 6) and long distance telephone carrier Frontier Communications (VCJ, April 1999, page 5) have also formed venture units over the past year.
Grossman said the fund has already attracted the attention of several third party investors, whom he declined to name. He said he was confident the fund would increase in size based on investments from outside limited partners.