Panache Ventures acquires SF-based Commonwealth, adds Vancouver partner, and launches Fund II to build Canada’s next billion-dollar venture fund

Entrepreneur and investor Chris Neumann has joined Panache as a partner based in Vancouver and San Francisco.

One of Canada’s most active early-stage technology investors is expanding its presence in British Columbia and Silicon Valley in a quest to build Canada’s next billion-dollar venture fund.

Panache Ventures has acquired San Francisco-based Commonwealth Ventures, the founder-bootcamp founded by Chris Neumann, a Vancouver-based entrepreneur and investor. As part of the deal, Neumann has joined Panache as a partner based in Vancouver and San Francisco.

Following the deal, Commonwealth Ventures’ growth and fundraising programs, which focus on bridging the gap between international startups and Silicon Valley investors, will be rolled out across Panache’s entire portfolio of more than 90 companies.

“Any founder who has taken an investment from Panache, or going forward, any investor, any fund, or any company that joins Panache—they will benefit from all of the programs and offerings and mentorship and things that [Commonwealth] has,” explained Neumann in an interview last week.

The deal is not only meant to support Panache startups, but to elevate the entire Canadian tech ecosystem, according to Lor who spoke to Vancouver Tech Journal over the phone. “What Panache is all about is making sure that we're serving not only our entrepreneurs, but serving an ecosystem of early stage startups. That’s whether we're invested or not. We have a mandate to help every entrepreneur in the ecosystem,” he said.

“And so Chris really fulfills that mission for us. I think what he does in his programming just basically brings a new perspective and helps our companies get to where they need to get to faster.”

The two organizations have collaborated previously, resulting in Vancouver-based Dooly raising a $96.5 million Series B round earlier this year. But the relationship between Lor and Neumann has much deeper roots.

Back to the future for Lor and Neumann

In 2017, after co-founding and selling multiple startups, Neumann was in San Francisco running the data programs for well-known accelerator 500 Startups. At the same time, Lor was founding 500 Startups Canada, a $30 million accelerator program and fund north of the border.

“We have actually invested together in multiple companies going back five years,” Neumann says of him and Lor. In addition, when it comes to the programs and bootcamps that Neumann’s Commonwealth group has been executing, nearly a quarter of the companies that have participated over the years have been Panache startups.

According to Lor, in the past, he and Neumann would spend hours, professionally and socially, talking about growth and accelerators. They’d ask things like, “How do you take all the pain that typical entrepreneurs experience over a 5-10 year period and kind of give new entrepreneurs the lessons in four months, so that they don't have to experience quite as much pain as we did when we were going through it.”

These conversations evolved over the years as the venture capital industry transformed from a place where VCs had all the leverage to one where—due to a staggering increase in funding available—entrepreneurs now have choice when it comes to whose money they want to take.

Through this lens, Panache adding Commonwealth can be viewed as not just the coming together of two old business associates, but a necessary step in the evolution of what it means to be a successful investor. “We understand just from talking to entrepreneurs, every single day, how good you have to be to step up and be a value add to the entrepreneurs,” said Lor.

“I think it's no longer good to carry a bag of money into an angel investor forum or into a demo day and just go, ‘Please take my money.’ Because the entrepreneurs are just getting a lot smarter about that. They're starting to ask the questions, like, ‘Okay, great, Pat. You guys will write me a half million or million dollar cheque. What else can you do for me? Because I've got a lot of other people offering me the same thing.’"

Three months ago, when Lor and Neumann began to talk seriously about joining forces, they had this changing landscape in mind. “We kind of went, ‘Yeah, you know what, this is something we need to do, sooner or later anyways.’ We… came to a mutual agreement that we were all on the same page when it came to this mission.”

Panache also announced the launch of Panache Ventures Fund II, a new, $75 million pre-seed fund targeting at least 75 companies across Canada with initial investments of up to $1 million each. Although the fund is just being announced, Lor said that half of the fund’s total has more-or-less been committed by LPs. To support the growth of its portfolio, Panache has added two senior hires, both based in Montreal: Scott Loong, formerly founder of Covera.ai, an InsurTech startup, and Roxanne Leduc, a former management consultant and marketing director with Bell and Car2Go.

“Panache Ventures Fund II represents the next step in our quest to build Canada’s next billion-dollar venture capital firm,” said Mike Cegelski, another Panache partner.

“We are now the only pre-seed fund with partners in each of Canada’s four largest cities and the first fund with a platform dedicated to helping founders across Canada access investors in Silicon Valley.”

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Bullish on British Columbia

Out of the more than 90 investments Panache has made from its first fund, a dozen of them are in BC, including Beatdapp, Certn, Dooly, FISPAN and Renaissance. “I think BC is so underappreciated from an investment point of view,” Lor shared.

“I think the entrepreneurs are great… the culture attracts a lot of super talented people. I think there are smart people there, but for some reason it hasn't attracted enough money. So I show up. We write a few cheques and all of our Vancouver companies are doing exceptionally well.”

In Neumann, Panache now has someone dedicated to the Vancouver ecosystem. Although Neumann will still spend time in the Valley, he’s decided to sell his home there. “After 20 years in San Francisco,” he shared, “I'm coming back to Vancouver to double down on the Canadian ecosystem.”

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