Weave VC has announced the final closing of its Fund I at $6 million, to support pre-seed founders raising their first round of $500,000 to $1.5 million.

"We launched the fund to provide essential early-stage capital to the most promising founders in our region,” Jeffrey Manner, general partner of Weave VC, told the Vancouver Tech Journal. “Closing Fund I marks a significant milestone in our mission to address the significant risk capital gap existing in the early-stage funding environment."

Weave targets B2B software and deep tech companies. Its focus is B.C., Alberta, and Saskatchewan, however it’s open to opportunities in other provinces. The firm looks for “highly capital-efficient marketplaces that address challenges within traditional and often fragmented industries,” and “businesses tackling complex technical challenges in AI and deep tech, where commercialization may take time but can yield transformative outcomes.”

The outfit intends to invest in six to eight companies over the next 12 months. It’s also aiming for three-to-six percent ownership, with initial cheques ranging from $150,000 to $300,000. So far, it has deployed 50 percent of its capital within nine startups. They span various sectors — AI, fintech, hospitality, HR tech, sportstech, healthcare, and climate — and many have already raised follow-on financing. Notable names include Levr.ai, ResVR, and RetreatsandVenues.

In 2022, Weave started following the team founding Red Thread Ventures — a global investment and advisory firm. It manages two funds: one for pre-seed and seed-stage startups in B.C., and another for follow-on investments across different geographies. Between 2020 and 2022, it committed $1.75 million across 26 companies — two of which have exited.

The decision to start a new fund for pre-seed founders was fueled by the need to fill a critical gap, said the firm. In 2022, venture capital investment in B.C., Alberta, Saskatchewan, and Manitoba was collectively $172 million — over 57 percent less than the combination of Ontario and Quebec during the same period.

Historically, founders within Western Canada have struggled with accessing early-stage capital compared to other regions within the country. With wealth traditionally made through oil and gas, mining, and resources, there have been fewer company exits than in markets which are led by fast-moving tech outfits.

“In Eastern Canada, you have Blackberry and Shopify,” Mark Mitchell, general partner at Weave, shared as examples. “There hasn't been the same recycling of capital here because you really need there to be exits. So that the people who have money in those companies that exit, they can put it into other opportunities — particularly funds like ours.”

Over the past two years, the difficulty of fundraising has worsened. Higher interest rates have resulted in investors being less willing to part with risk capital. And typically, funds pull back from writing smaller cheques since they need to commit larger amounts to make sizeable returns. 

Weave’s long-term goal is to build a platform that creates more opportunities for pre-seed founders. The format they’ve found most promising is a duo who have an intimate understanding of the challenges they’re tackling.

“One of them is extremely technical and understands how to build things,” shared Mitchell. “The other one has a very acute business and finance acumen [...] People who really understand a problem and [have] really good data to back it up. Ideally, the problem is something that they've encountered through talking to a bunch of potential customers.”

Mitchell added: “Maybe they worked in a big company before and encountered a problem and they're like, ‘Oh wow, if we had a solution for this thing that we're dealing with, this company that I'm working at would totally buy that solution.’ [...] You don't want to have a solution that's looking for a problem.”

For startups who are hoping to connect with Weave, Mitchell highlighted that he and his team are active in the local tech communities. He emphasized finding opportunities to meet in person or asking a mutual contact to make a warm intro. Alternatively, Weave offers a form on its website for evaluating new opportunities.

Reflecting on the journey so far, Weave’s fund managers highlighted how rewarding it’s been to bring together a diverse group of family offices and successful entrepreneurs.

"Over the past two years we’ve connected with incredible founders and supported impressive companies,” said Marco Donadeo, general partner at Weave. “This experience has inspired our limited partners about the potential of both our current and future portfolio — fueling our own passion for discovering and supporting these ventures." 

During its fundraising period, Weave engaged over 1,300 prospective investors. Thirty have committed, including family offices YLZ Investments (Vancouver and San Francisco) and Nelson Investments (Vancouver).

"The Western Canada venture capital opportunity set is not only robust but undiscovered,” shared Bryan Johnson, managing partner at Johnson and Company. “A key aspect of becoming a limited partner with Weave has been the commitment to continually bring together the resources and talent to build an ecosystem of like-minded founders and investors with a single focus: creating world-class companies of distinction, longevity, and value — not only within Western Canada, but globally." 

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