5 Questions: Pender Ventures exec Maria Pacella talks investing in inflection-stage tech companies

Credit: PenderFund Capital Management

Maria Pacella (middle) is managing partner of the newly created Pender Ventures

The venture capitalist is on the lookout for innovators in health tech and the digital transformation of traditional industries

Earlier this month, Vancouver’s PenderFund Capital Management announced the creation of Pender Ventures, an investment group centred on disruptive technology companies in B.C. and across Canada.

With $25 million from institutional investors Export Development Canada and Vancity, among others, and led by PenderFund senior vice-president, private equity, Maria Pacella, Pender Ventures and its Pender Technology Inflection Fund I are off to a quick start. The firm has already invested in four B.C.-based companies—Clarius, Copperleaf, Jane Software and Checkfront, as well as Winnipeg’s Librestream.

Pacella formerly served as an executive for investment outfits Shoreline Venture Management and Beedie Capital Partners, as well as acting CFO for sustainable agriculture cleantech biz Terramera. We got the details on her latest venture. 

1. Why was this fund created?

PenderFund Capital is a large, diversified asset manager; we have everything from public equities to credit to private equities. On the private side, a very small part of Pender, even though the roots of it were venture capital, had moved into public markets. Technology was always a core competency and a big investment area, but with so few companies going public over the last 10 to 15 years and fewer on the technology side as well, the ones that were public got bought up so quickly.

So Pender really thought it was time to reinvest back in its roots of technology, which we think is a core competency in Canada. And technology is driving everything.

2. What kinds of companies will you be looking to invest in with Pender Ventures?

As the name of the new fund says, we really look for companies in the inflection stage, between product market fit and scalability. The company would have already launched a version of the product and had early customer or partner revenue or traction. It’s about the quality of the early revenue—asking if the tech works and whether there is a market today.

3. And what does that relationship look like as you move forward? 

The risk going forward is on whether the team can execute—that’s how we figure it out, scale the business, whether it’s the marketing people, extending the product line, et cetera. That’s where we feel we have the most experience and can help them with the next stage of growth. For the most part, we look for companies that are B2B, that are solutions that are really helping their customers drive better decisions about their business. It’s usually about increasing revenue, decreasing costs or both.

4. What industries are you focused on? 

We’re interested in a couple of key themes, namely health tech and digital industrial transformation, digitizing traditional industries. We had those themes before COVID, and we’re doing pretty well with it, have five companies in the portfolio already [B.C.-based Clarius, Copperleaf, Jane Software and Librestream, along with Winnipeg’s Checkfront].

The convergence of health and technology is a trend that’s been happening for a long time, and certainly has been an area of interest for me for a long time. We’re hoping to force a lot of change to an industry that’s been very conservative in adopting new technology and in sharing and using the data they do have. And COVID certainly highlighted a lot of tough problems to solve within their systems. There’s no reason for B.C. not using more telehealth before COVID. Whether it’s having more insight about our data, being more preventative about infectious diseases, having more imaging systems, systems of insight, all of that is sped up thanks to COVID. Approvals are faster, and bureaucracy is somewhat less—hospitals are having to adopt and make changes to their systems.

5. How has COVID changed the venture capital industry?

Right when the pandemic happened, investors like ourselves focused on making sure all of our portfolio companies had good COVID plans in place and were well financed. I think we were quite lucky in Canada in that we had government support through EDC and BDC, and the wage subsidies, et cetera. There was a nice soft landing for our company and good support.

It is harder to do new investments. We like to get to know the management teams quite a bit before we invest; I think most firms are like that. So it’s about matching the investor dollars to opportunities. That will still happen, but at a slower pace; it’s harder to do over Zoom. But we’re excited. When there’s crisis and bubbles bursting, like with the financial crisis, that’s when some of the best companies get built. And there’s still capital out there for entrepreneurs. It’s a matter of having some patience and finding each other. But I think we’re going to see some more opportunities, especially as we’re locked down and forced to be creative. COVID has created a lot of problems people didn’t know they had, so they’ve had to come up with some creative solutions, right?