Tencent & Temasek among Asian LPs in Montreal-based Real Ventures’ $140m Fund IV

Temasek brand logo (from its social media page)

Montreal-based Real Ventures has closed its fourth early-stage fund, Real Ventures IV, at a hard cap of C$180 million ($139.7 million).

The new fund, with a focus on artificial intelligence (AI), saw an expanded limited partner (LP) base that includes Chinese technology major Tencent Holdings and Singapore state investor Temasek Holdings.

Incepted in 2007, this is the largest fund that Real Ventures has raised to date and more than twice the size of Fund III, which secured $89 million in 2015. This latest fund translates to the VC firm now managing more than $330 million of capital, with Fund IV counting more than 60 LPs.

This includes several new long-term capital sources that are able to lend the firm “exposure and introductions beyond Canadian borders” in an exchange between a partner at the firm, John Stokes, with PE Hub Canada. 

Other LPs backing the fund include Caisse de dépôt et placement du Québec, Boston-based HarbourVest, as well as returning LPs Teralys Capital, BDC Capital and Investissement Québec.

An example of the AI focus of Real Ventures is its portfolio firm Planora, which used AI to optimize business processes. Its CEO, Jean-François Gagné, joined Real Partner JS Cournoyer in founding Element AI, a developer of AI solutions in partnership with corporations and research bodies at home and abroad.

Element AI recently collaborated with a number of South Korean corporates to launch a $45 million global AI fund. In June, it secured C$137.5 million ($102 million) in Series A funding that was led by DCVC, with backing from Real Ventures, as well as strategic investors that included Microsoft Ventures, Tencent and sovereign wealth funds (SWFs).

According to a Stokes, LPs are also exploring opportunities in blockchain and cryptotech. Fund IV will give recently launched startups access to Real’s owned or affiliated accelerators, FounderFuel and Techstars Toronto. Real Ventures is a prolific deal-maker that had led financings of some 222 companies, with nearly 40 per cent of investments made via FounderFuel.

He adds that Fund IV will also ensure seed-stage enterprises are well-capitalized over longer horizons, given the trend towards costlier ramp-ups. Stokes says, “The bar has been raised since we began investing. A seed fund needs to stay with founders longer to help companies take off. That means getting into more Series A and B rounds.”

Other AI platforms in the portfolio of Real Ventures which were added in 2017 include conversational marketing platform Automat, fintech startup Dream Payments, and AI enterprise software provider Integrate.ai.

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