InBC announces first investments from $500 million fund
The government-financed organization must consider people, planet, and profit in each deal, says CIO Leah Nguyen.
Leah Nguyen, Chief Investment Officer of InBC (Photo: Telus)
InBC is one of the most extensive investment vehicles the province has seen. Now, more than two years after the B.C. government released details about the $500 million fund, it has announced the first organizations it’s financing.
InBC has invested into three B.C.-based funds: Evok Innovations, Raven Indigenous Capital Partners, and Yaletown Partners. The amount of money for each has yet to be disclosed, although InBC’s Chief Investment Officer Leah Nguyen told the Vancouver Tech Journal that the sum would be between $5 to $10 million, in line with the provincial organization’s investment policy statement.
The first fund to receive InBC’s money, Evok Innovations, invests in technologies that are accelerating the transition to clean energy and movement towards a net-zero future. Headquartered in downtown Vancouver, the organization’s bets include Ekona Power, a company working on industrial-scale hydrogen production; Syzygy Plasmonics, which creates reactors for commodity chemicals; and MineSense, which helps deliver more metals with less environmental impact.
“We are excited to welcome InBC as the newest partner in Evok’s second fund,” said Marty Reed, partner at Evok Innovations. “This partnership will not only support growth companies in British Columbia, it will also help the province meet its goals outlined in the CleanBC Roadmap."
The second fund InBC chose was Raven Indigenous Capital Partners. The only Indigenous-owned and led impact investment firm on Turtle Island (North America), Raven Indigenous Capital Partners says that it invests to revitalize the Indigenous economy. The organization previously announced it was raising for its Fund II, after its first fund closed at $25 million and made 20 investments in 11 companies, including Victoria-based OneFeather, which is in the process of raising a Series B.
InBC’s final organization, Yaletown Partners, is a growth investment firm focusing on Intelligent Industry: a sector that uses data and technologies to digitally transform traditional industries and drive innovation. It has invested in software, data, and device technologies, with a portfolio that includes local standouts like Elasticpath, Redlen Technologies, and Finn AI.
InBC’s criteria for investment
InBC operates with a triple-bottom-line mandate, and must consider people, planet, and profit in each investment. In addition to seeking financial returns, the firm must select organizations that innovate for the future, drive climate action, advance reconciliation, and elevate inclusive communities in B.C. According to Nguyen, who led the decision for these three investments, each fulfills part of that directive.
“There's four key things we look at for every investment,” she tells Vancouver Tech Journal. “One is their connection to B.C. These funds are all based here, are headquartered here, have partners here, and invest here. And they all contribute to building that ecosystem locally. Second is alignment with our four impact objectives. So Evok aligns with our climate action priority, Raven with our reconciliation strategy, and Yaletown with our innovation one [...] The third thing that we look at is around how they embed ESG into and DEI practices in the organization as well as with their portfolio companies – and so we really saw that in getting to know these funds. And finally, [they have] potential for financial return.”
These initial three investments are part of the first step in InBC’s overall strategy. By financing venture capital funds, the organization hopes to effectively reach businesses across different stages of growth. It won’t begin investing directly into companies until the spring of 2023, a tactic that Nguyen says will help InBC focus on its goals.
“Ultimately we want to have more investors in the ecosystem,” she says. “When we think about B.C.-based companies, most of them, on average, receive more funding from the U.S. than they do from Canada. And then when you think about local funds, there's definitely a difference there. And we recognize the big gap [and consider] how we build a bigger base of investors, because our dollars multiply better when we have other [partners] as we invest in funds [...] And I think also the funds and the partners of those funds bring all their expertise to the table, so those are all important parts of the innovation ecosystem.”
When InBC does start investing directly into businesses, however, it will likely focus more on later-stage companies. Seed funding, Nguyen suggests, is still very active in the province, and because startups rely on advice from specialized investors, she says that InBC can best help early-stage companies by financing investment firms rather than injecting the cash first-hand.
“It's those later-stage deals where [companies are] challenged,” Nguyen says. “And I see that's where we play a central role, in terms of providing some of the direct investments at those later stages as well. I think it's a combination that they're trying to raise more capital, [and] there's that downward pressure from the public markets now. So the later-stage companies are going to feel that a bit more if they were maybe pre-IPO.”
What success looks like for InBC
As a well-funded government organization, InBC has the luxury of long-term investing. The fund is patient capital, and has an investment horizon of more than 10 years. Nguyen isn’t ruling out opportunities to finance companies that will offer early returns, but emphasizes that the firm is focused on building businesses that are both profitable and sustainable. As the organization says in its investment policy statement, success for InBC “will only be fully realized over the long term.”
That mentality feeds into the firm’s mandate. Ngyuen highlights six areas in which InBC will judge its accomplishments. Each are weighty goals, and none can be achieved overnight.
“It's things like ensuring that the diversity, equity, and inclusion of our portfolio reflects that of our communities,” she lists. “It's our impacts on Indigenous businesses and communities. It's getting geographic reach across different parts of the province. It’s our ability to contribute to decarbonization. It’s the creation of quality jobs and seeing the levers improve around productivity and economic development. And then, finally, financial returns.
“We are stewards of public funds,” she continues. “And that is a responsibility I take very seriously in terms of ensuring that we're making investment decisions that benefit British Columbians and that have clear processes in terms of how we're making those decisions. And because it's public, there's that accountability to ensure that we're sharing [...] That accountability is not just to your LPs, or to your investors. Our investors are all of our taxpayers.”