Steve Hnatiuk Leaving VC Firm Yaletown Venture Partners

Steve Hnatiuk, a pivotal figure in the growth of the B.C. venture capital scene, is leaving the company he co-founded almost a decade ago. Could a Cascadia venture capital alliance be next? We were keeping this one close to the vest because it hadn’t really played out, but since the word has leaked out of Seattle, we can now reveal that Steve Hnatiuk is leaving the Vancouver venture capital firm, Yaletown Venture Partners.

Steve Hnatiuk Leaving VC Firm Yaletown Venture Partners
Local venture capitalist Steve Hnatiuk is on the hunt for new opportunities.

Steve Hnatiuk, a pivotal figure in the growth of the B.C. venture capital scene, is leaving the company he co-founded almost a decade ago. Could a Cascadia venture capital alliance be next?

We were keeping this one close to the vest because it hadn’t really played out, but since the word has leaked out of Seattle, we can now reveal that Steve Hnatiuk is leaving the Vancouver venture capital firm, Yaletown Venture Partners.

Hnatiuk co-founded the firm with partner Hans Knapp in 2000, and recruited Mike Satterfield and Kirk Washington as partners in 2001 and 2002 respectively.  They raised their first $42 million fund in the midst of the tech crash, closing in early 2003 and attracting international attention for what seemed like an impossible feat at the time.  I had a front row seat,since I helped Hnatiuk and his partners with the launch.

Of course the story at the time was that it was amazing that anyone could raise tech financing in that brutal atmosphere, an atmosphere that has had some improvement but hasn’t exactly been stellar since. To put it politely, venture capital in Canada is not doing that well.  But YVP seems to have done quite well, against the odds.

I always thought YVP had an interesting business model in that it bridged the gap between angels and the larger venture capital companies doing deals in British Columbia. Its funds included a who’s who of private investors, predominantly from Hnatiuk’s industry network, who joined in a kind of angel fund long before those were heard of.  Then YVP attracted tens of millions in institutional investment from major pension funds and financial institutions.

As a hybrid between angels and VCs, it brought the best of both worlds – hands on advice for young tech companies from angels, as well as the VC syndication network and capital reach so many young companies require to achieve serious growth.

The model has evolved and today, YVP manages more than $160 million in committed capital across two funds – Yaletown Ventures I LP and Yaletown Ventures II LP. It also has two US co-investment funds, having attracted – uncommon for a Canadian venture fund – significant US institutional investor support.

Hnatiuk, who has 20 years’ experience in technology, business development and private investment with such companies as Accenture, PricewaterhouseCoopers, and TD Bank, has become a well known expert on BC technology in general, and venture capital in particular, and was very much the public face of YVP. Investments he led include GenoLogics and Mixpo, to which he  brought strong US co-investors from the  Seattle and Silicon Valley venture capital communities.

Sometimes on the cozy west coast, we tend not to wade into the national mix. While Vancouver is far removed from the financial power center of Canada, Hnatiuk emerged as a central figure in negotiating a number of tax changes to eliminate barriers to foreign private investment in Canada (most recently, the much reviled ‘Section 116’ restriction, which forced individual members offoreign investment funds to file taxes on each investment). 

Word is that he has now been asked to Chair the largest private capital conference in the country – the Canadian Venture Capital and Private Equity Industry Association Annual Conference  – which will bring more than 600 private equity and venture capital professionals from across Canada and the US, along with their institutional investors, to Vancouver in spring 2011.

Although he is leaving his general partner role with YVP, it does not appear Hnatiuk is cutting all ties with the firm. He remains as an Executive Limited Partner – part of YVP’s influential network of fund investors. But, while he will be investing more money into YVP’s venture funds, it is clear Hnatiuk will soon be spending the bulk of his time on other opportunities.
 
He won’t reveal his plans, but Hnatiuk did confirm that he intends “to remain active in the private capital industry on the west coast of North America. Having built Yaletown from scratch across a very tough decade in our industry my views have turned to where the most compelling money-making opportunities lie in the decade ahead.  I’m an entrepreneur and an optimist – I thrive on challenge and change – and I have had the good fortune to build deep business relationships with many people in my industry who share those qualities. I’m not content to sit still for very long.”  

While Hnatiuk won’t be more specific about what his future, I suspect it will have something to do with the increasing ties between the BC and U.S. venture capital industries. He’s been a champion of bringing the Canadian and US industries closer together and, over time, the beginnings of a Cascadian venture capital cluster have emerged.

Perhaps, this is the onset of a much stronger alliance.