New $30M investor fund targets London-area start-ups: 'Expand and grow'

Article content

Small and startup businesses will get $30 million in support from a London investor group bullish on growing the tech sector and agri-food industry in Southwestern Ontario.

519 Growth Fund, an angel investor group that has already given $2.3 million in support to area industry, has launched the more ambitious 519 Growth Fund II. The region is ripe for economic growth, said Nevin McDougall, managing partner with RHA Ventures Inc., the fund that created 519 Growth Fund.

“We see lot of opportunity in early stage companies” in London and region, he said. “More companies are looking for capital for longer-term investing.”

There is a need to support innovation and entrepreneurship among small business in Southwestern Ontario, he said. The area is overlooked by other investor groups, McDougall said, driving the need for local entrepreneurs to step up and offer cash and advice.

“RH Ventures are experienced entrepreneurs and founders,” McDougall said. “This is about having an impact and supporting the next generation. We want to make sure investors get a good return.

“We want to see companies expand and grow here for the long term.”

McDougall said Western University and Fanshawe College are driving innovation in the tech sector and The Grove at Western Fair is supporting start-ups and small businesses in agri-food.

The first version of the growth fund was founded in 2021 and raised $2.3 million early in 2022. It then heard pitches from businesses over six to 12 months and ended up funding 10 companies over 16 months.

On average each company received about $200,000.

“They had to have a well-defined investment plan and produce prototypes,” McDougall said.

Factory Bucket Inc., a software development company in London, was one business to get $200,000 from the first 519 Growth Fund.

The funding was critical to the business’s success, said Jason Bates, one of the company founders.

“The impact has been immeasurable, from the financial support to the expertise, we would not be where we are today without the fund,” he said.

In addition to money, the fund offers mentorship advice on growing business.

“It helped us retain staff, it helped with research and development and it helped us financially. It was great,” Bates said.

The demands for Growth Fund II came from the investment community looking for opportunities to invest in small business, McDougall said.

“It became clear to us there was demand, there was a strong interest in the community to support this eco-system,” he said.

Though large industries have located and grown in the London region in recent years, supporting small start-ups is important to creating a balanced, diverse economy, said Kapil Lakhotia, chief executive of the London Economic Development Corp.

“While we continue to attract international companies, it’s equally important to keep finding ways of supporting local founders for sustainable and diversified growth. RHA helps address key issues facing scaling companies such as growth capital, sectoral expertise and more,” he said.

ndebono@postmedia.com