PenderFund Capital Management’s new tech growth fund agreed to make its first investment, a $3 million stake in medical-imaging company Clarius Mobile Health, an executive at the Vancouver firm told Buyouts.
Maria Pacella, senior vice-president of private equity, is co-manager of Pender Technology Inflection Fund, alongside Founder and CEO David Barr. The fund, which held a first close in February, is seeking to raise $50 million, Pacella said, with a final close expected in spring 2019.
Investors so far are high-net-worth individuals and family offices in Canada, but Pender is seeking limited partners outside the country as well.
The fund is targeting “inflection-stage” tech companies, with a focus on the West Coast of Canada and the United States. Pender defines these as businesses that have enough early revenue to give a good indication of product-market fit but still need to scale through hiring, acquisitions and more.
“It’s really execution risk from there, and that’s where our skill set and experience lies,” Pacella said.
The firm believes a disproportionate share of the capital flowing into tech is directed at very early-stage and much later-stage companies, creating an opportunity gap in the middle.
While Pender wants “to capture the companies for the most part before they’re going public, we will do both private and public,” Pacella said. Public targets, “unloved” or “misunderstood by the market,” might be businesses that IPO’d too soon but have now found the right business plan, or micro-cap companies overlooked by larger funds.
“The majority of our other funds are public equities and fixed incomes, but our approach is still a private equity approach to public market investing,” Pacella explained. “So we really seek to understand the underlying business behind the stock or bond and then invest at the appropriate price.”
Pender’s growth investments will range from $500,000 up to $7 million, with the fund looking to do eight to 12 deals.
The investment in Clarius reflects one of the fund’s themes: the convergence of healthcare and tech. Headquartered in Burnaby, British Columbia, Clarius makes handheld scanners that can connect to iOS and Android devices for portable, wireless ultrasound imaging.
Pender’s investment, which represents a significant minority position, will go toward growing operations including sales and marketing, as the company seeks to open up point-of-care markets (private clinics, ambulances, emergency rooms).
Photo of doctor taking ultrasound scanner from pocket courtesy of Clarius Mobile Health
Photo of Maria Pacella courtesy of PenderFund Capital Management