White Star Capital says breadth of LPs help give firm advantage

Eric Martineau-Fortin, founder and managing partner of White Star Capital, has said the international firm doesn’t see itself as a traditional venture capital investor, but more like an investment platform for tech.

“We love tech and helping companies scale worldwide, bringing in talent for our portfolio, connecting them with our corporate LPs,” said Martineau-Fortin. “That’s what we hope separate us from others.”

In an era in which more firms seek ways to offer more value to their start-ups to differentiate themselves from the other investors, White Star emphasizes its strategic and worldwide LPs. Backers include institutions, sovereign fund managers, corporates and family offices, with about 48 percent of its backers coming from Europe, 46 percent in North America and the remaining 6 percent from Asia.

LPs include Caisse de dépôt et placement du Québec and Fonds de solidarité FTQ, according to the firm, as well as such corporates as Hanwha, Veolia, Ubisoft, Unisys and Mizuho, among others. The long list of LPs also includes Swen Capital Partners, Business Development Bank of Canada, Entrée Capital and Walter Financial.

Martineau-Fortin said when the firm was starting in 2013, it wasn’t exactly mainstream to have such a mix of LPs while investing internationally. The firm focuses on investing in North America, Europe and Asia, primarily East Asia and South-East Asia.

But he said the international experience of the team helped give it a wide cultural understanding that helped with dealmaking. The firm recently opened a Toronto office, joining the locations in New York, London, Montreal, Paris and Tokyo. Martineau-Fortin said it’s hard to identify where the firm is from: “We have international neutrality.”

Martineau-Fortin said the firm is able to provide international expertise to its start-ups, particularly as they seek to scale worldwide. To be fair, the strategy is similar to what other firms do, such as Cathay Innovation, which also sports a number of brand-name LP partners worldwide that invest in the firm’s portfolio and advise the companies on strategy growth plans.

“We saw the field was evolving and now after seven years we have the platform and have invested in great entrepreneurs everywhere,” he said. “Our first fund and our cross-border thesis proved it can be done.”

Martineau-Fortin wouldn’t discuss performance numbers, but he said the firm returned its first fund.

That was a $70 million vehicle that closed in 2013. White Star raised $180 million for its multi-stage investment approach. The firm invests in enterprise and consumer sectors. It has backed about three dozen companies and its exits include Dollar Shave Club, which Unilver bought for $1 billion four years ago. The current portfolio includes Freshly, which delivers gourmet meals, Parsley Health, which provides personalized medicine, and electric scooter provider TIER Mobility.

A source familiar with the firm said it is likely to raise a larger vehicle for Fund III when it begins marketing, but Martineau-Fortin wouldn’t discuss fundraising.

The firm this past week announced the first close of a new $30 million Digital Asset Fund to invest in the blockchain, a sector which the firm sees as gaining adoption and which features an attractive price point. Martineau-Fortin said the fund will mostly make seed investments from $500,000 to $2 million in initial check sizes, and he expects it to back 15 to 20 companies.

The fund was mostly raised with support from its family office LPs.

Martineau-Fortin points out that blockchain is becoming a more attractive sector for investors as sizable exits in the sector continue to mount. This includes Circle buying US based cryptocurrency exchange Poloniex for $400 million two years ago. And Coinbase is also acquisitive, having bought several start-ups, including digital asset trader Tagomi for about $75 million earlier this year.

To date, White Star Capital has already invested in two blockchain companies with the new fund, including dfuse, a blockchain API company, and Multis, a Y Combinator-backed company that provides business banking accounts.

The Digital Asset Fund, the firm’s first specialty fund, will be run by New York-based general partner Sep Alavi and supported by principals Thomas Klocanas in New York and Sanjay Zimmermann in Toronto.

Martineau-Fortin said the firm’s international footprint should help it source deals in the digital asset sector. He adds that the platform and its connections worldwide “will give us access to exceptional deal flow from various companies across blockchain use cases.”