CIBC’s tech-lending arm ramps up cross-border strategy with new hires, deals

Mark McQueen, president and executive managing director, CIBC Innovation Banking, photo courtesy of the firm

CIBC Innovation Banking, the tech-lending arm of CIBC, is pursuing a bold North American scaling strategy, boosting in-house resources and accelerating its deal pace.

The activity includes a batch of senior hires.

Since launching earlier this year, the group has recruited no fewer than six managing directors, most of them from rivals in the debt space.

They include Robert Rosen, who joined in February. Rosen was previously a Comerica senior vice president and regional managing director in Canada, serving tech entrepreneurs.

In May, the CIBC group also hired Julia Kassam, who previously held roles at Aequitas NEO Exchange, including head of listings.

It also brought on Joe Timlin, a 20-year veteran of Canada’s venture industry, most recently as vice president, investments at GrowthWorks.

Two more signed on in August. One was Paul Gibson, whose tech-financing career includes senior positions at U.S.-based Hercules Technology Growth Capital, Bridge Bank and Square 1 Bank.

The other was Éric Laflamme, who spent 15 years at National Bank of Canada, most recently as a senior manager and team leader in the tech-lending division.

And in September, the group recruited Charlie Kelly. Kelly served for more than a decade with Silicon Valley Bank, most recently as managing director of its Colorado tech office.

Mark McQueen, president and executive managing director, says the hires bring fresh talent to CIBC’s tech-lending arm, and extend its market reach.

Gibson and Kelly respectively lead recently opened offices in Reston, Virginia, and Denver. Laflamme and Timlin are doing the same at new venues in Montréal and Vancouver.

As a result, McQueen’s team totals 30 across seven offices, including the Toronto headquarters and locations in Menlo Park and New York.

The expansion is part of a plan to introduce CIBC Innovation Banking’s offering to more early- and late-stage companies in tech hubs across North America, McQueen said.

CIBC, one of Canada’s top banks with $565 billion in assets, established the group in January.

Photo courtesy of Reuters/Chris Wattie

This was achieved to a significant extent by acquiring the assets of specialty finance firm Wellington Financial and its $300 million fifth fund.

Founded in 2000 by McQueen and Clairvest Group, Wellington provided term, venture and amortizing loans of up to $40 million to Canadian and U.S. tech companies.

Over time, the firm completed 120 financings. It also earned an unlevered net return of more than 11 percent, making Wellington a top performer in its market segment.

“We’re proud of our 18 consecutive years of distributions to limited partners,” McQueen said.

CIBC acquired Wellington’s assets to gain a window on the tech ecosystem as well as a “capacity to invest in companies in burn mode,” McQueen said.

Taking the step helped CIBC leap ahead of its peers as a lender to the innovation economy, he said. Meeting that goal would have been much slower if the bank had instead tried to develop expertise and networks organically, he added.

CIBC Innovation Banking has a lifecycle focus, targeting a range of debt-financing opportunities over a tech company’s journey from startup to IPO and beyond. As such, it builds on Wellington’s prior growth-stage emphasis.

It also invests from the bank’s balance sheet, enabling bigger deals than Wellington was able to undertake via third-party funds.

Rapid dealmaking, more to come

This investment scope was on display over the past seven months, as the CIBC group deployed or committed more than $200 million to 14 companies, many of them venture-backed.

Its inaugural deal was especially large. In March, the group struck a credit agreement of up to $65 million with Vancouver tech darling Hootsuite, a social-media-management platform.

Subsequent deals involved San Francisco expense-management-reporting tool Expensify, which in June raised US$11 million, Montréal data-visualization platform Plotly, which in July secured an undisclosed sum, and Toronto medical-device maker Profound Medical, which in the same month took $18.75 million.

Additionally, the group in August invested in Chatkit, a Toronto conversational marketing platform.

And in September, US$22.5 million was put to work in TigerConnect, a  Santa Monica, California, clinical communication solutions provider.

McQueen says CIBC’s tech-lending arm will further intensify investing with the help of more resources. He is already scouting out potential hires and offices in Austin, Boston, Ottawa and Waterloo.

The group will also enhance its offering to entrepreneurs. McQueen expects it to eventually lead loan syndicates in excess of $100 million, giving tech companies access to debt pools of unprecedented size.

It will be assisted along the way by other CIBC affiliates, among them CIBC Bank USA, previously PrivateBancorp, which the bank acquired last year for US$5 billion.

This story originally appeared in Venture Capital Journal, published by Buyouts Insider. Subscribers can read the full story by clicking here. To subscribe to Venture Capital Journal, click here.