This has been in the works for a while, so I’m delighted to hear that cleantech evangelists Tom Rand and Murray McCaig have formally launched their MaRS Cleantech Fund and, after first close, have secured half of their target of $30 million. I had a chance to chat with Rand in detail about the fund last September. Rand, a lead adviser in the MaRS Cleantech Practice in Toronto, explained that the fund is designed to feed the appetite of early-stage cleantech investors, starting with Toronto-area firms and expanding from there.
“What I’ve seen as a lead in MaRS over the past few years is a pipeline of opportunities that is unparalleled,” Rand told me then. “It’s only by associating yourself with an institute with that kind of pipeline that you can have this kind of seed investment vehicle.” What happened, initially, is that Rand found himself being an individual angel investor to many of the companies passing through MaRS’ halls — Morgan Solar and Hydrostor, among them. He figured, having talked to other angels like himself, that there was a serious appetite in the market for the creation of a seed fund that could take advantage of these more speculative, early-stage investment opportunities. MaRS had this incredible pipeline, he said, “but what we don’t have is risk money in the order of half a million dollars to $2 million that can get these companies to a Round A funding stage. Everyone knows seed funding is the place to be, but it’s difficult to do. We aim to fill that gap.”
Added Rand: “We’re willing to take technology risk when other people aren’t… We’re a filtered deal-flow engine for venture funds and big corporations. We do the triage for them.” He said the private fund — made up of angels and entrepreneurs willing to put their own flesh in the game — will complement some of the early stage funding and grants that, in Ontario, come from agencies such as the Ontario Power Authority and Ontario Centres of Excellence.
This is what Ontario needs, so kudos to Rand and McCaig for taking the bull by the horns and getting this done. Obviously, the idea for them is to make money for fund investors, but it’s an investment vehicle that was desperately needed in Ontario and, by leveraging the pipeline of opportunities provided through MaRS, will hopefully grow. The first two investments made so far are in GreenMantra Technologies, which can turn old plastic bags into lubricants and other useful chemicals, and Smart Energy Instruments, which makes advanced smart sensor devices for smart grid equipment.
Read Rand’s own MaRS blog entry for more details.