White Star Capital, a global venture-capital fund with deep Canadian roots, has raised US$180-million for its second fund after scoring big returns on two U.S. investments.
The firm, co-founded by long-time friends and Montreal natives Eric Martineau-Fortin and Jean-François Marcoux, as well as former Facebook executive Christian Hernandez Gallardo, secured funding from investors split between North America, Europe and Asia. They include the Caisse de dépôt et placement du Québec and Quebec’s FTQ Solidarity Fund, the Business Development Bank of Canada, Korea Venture Investment Corp., Corporate Groupe ADP, Ubisoft, Unisys Corp.’s Canal Ventures, French banking group Crédit Mutuel Arkéa and Mizuho Securities.
White Star operates out of Montreal, New York, London, Paris and Tokyo, and three of the five partners – including Lylan Masterman in New York – are Canadian. “We can wave the flag on that, but we don’t portray ourselves as a Canadian fund,” Mr. Martineau-Fortin said. “We’re a global fund.”
The Channel Islands-domiciled firm says it won’t invest more than 35 per cent of its capital in any one country, and so far has done 26 deals spread between Canada, the northeastern United States and Europe, focused on data-driven firms in three categories: sensors and algorithms, disruptive commerce and fintech. It has invested in eight Canadian firms, including telemedicine provider Dialogue Technologies, industrial equipment e-commerce firm Vention Inc. and fintech Borrowell.
White Star made 11 times its early investment on Dollar Shave Club when the razor e-commerce upstart sold out to Unilever NV for US$1-billion in 2016. But its biggest win on paper so far is Freshly Inc. White Star participated in three venture financings for the New York meal-kit delivery firm, including last year’s US$77-million funding led by Nestlé, and the value of White Star’s stake “could be worth close to the size” of its US$70-million first fund, Mr. Martineau-Fortin said.
One area where White Star avoids investing is Silicon Valley: “We’re not opposed to the Valley, but we think we can create great companies without being in the Valley,” Mr. Martineau-Fortin said. “There’s talent in the regions, in Canada and Europe and the northeast [U.S.]. There are less funds looking in these markets, so we put ourselves in a very favourable position to do a positive arbitrage on the return front by funding businesses where there is less [competition for deals].”
The White Star principals pride themselves on the international diversity of the team, noting their staff hail from 13 countries. However, none of the partners are women – sadly typical for many venture-capital firms – and only one staff member is female. That is set to change, as Mr. Martineau-Fortin says the company’s incoming chief financial officer and another recruit will be women. “We’re very keen to improve” the firm’s gender balance, he said. “This is for sure something that is on our minds.”
Mr. Martineau-Fortin, a veteran transatlantic mergers and acquisitions banker, started White Star 11 years ago as a private investment vehicle while working in New York for a boutique investment-banking firm founded by former Vivendi boss Jean-Marie Messier.
Drawing on his connections, Mr. Martineau-Fortin led syndicated angel deals backed by Mr. Messier, the family office of France’s ultrawealthy Pinault clan and others. His first investment was in Ludia, a Montreal mobile-game firm co-founded by Mr. Marcoux, which grew rapidly and globally by developing games licensed from popular entertainment brands, including Jurassic Park. Ludia was sold to European media conglomerate RTL Group in 2010, at which point Mr. Marcoux began co-investing in White Star deals.
The two men then decided to turn White Star into a proper venture fund with Mr. Gallardo to help entrepreneurs “replicate the success of Ludia,” Mr. Martineau-Fortin said.
“They bring international connectivity, which we think is important,” said Karl Reckziegel, vice-president, funds and co-investments with BDC, which anchored the first fund with a US$10-million investment. He added White Star’s principals have been helpful to the Canadian tech sector, not just by investing in startups, but also by supporting Canadian startup platforms such as s-diverse-canadian-startup-scene/article28761571/" title="" class="selected-link">Brandproject, and Montreal incubator Execution Labs. “They have a knack for developing good and deep relationships,” Mr. Reckziegel said.
Sean Silcoff