Desmarais-backed venture capital platform closes tech fund
A venture capital platform with the backing of Quebec’s Desmarais family has closed a second fund to finance technology startups primarily in financial services, this time with $55 million to invest.
Francois Lafortune, chief executive of Diagram Ventures, said the first $30-million fund has already invested in or co-founded five companies since it launched in 2017 with a target of seven investments, and the plan is for the second fund to back about a dozen more.
The portfolio companies already up and running have grown to a combined enterprise value of $175 million in less than three years, and have created 250 full-time jobs, Lafortune said, adding that the value is based in part on what third parties have been willing to invest in the companies.
“We’ve proven that this is possible, our model has a place,” he said.
The strategy is to find early-stage technology companies and partner with their management financially, provide support services, and give them access to a network of limited partners and large incumbent players within Power Corp.
Portag3, the venture capital arm of three companies within the Desmarais family’s Power Corp., is the “anchor” investor in both Diagram funds, the second of which salso boasts 75 angel investors.
“They have a global view on the trends in fintech and it helps us be smart when we create companies … to learn what’s happening globally and to create the right type of company,” said Lafortune.
“And also to validate investor appetite early, which we couldn’t do if we were just on our own.”
Paul Desmarais III, Diagram’s cofounder and chairman who is also a senior vice president at Power Corp., said the funds are a “key” component of the family’s strategy of investing in “the next generation of global financial services platforms.”
Millions of dollars in investments have been made through Portag3 already, in companies including robo-advisor Wealthsimple, online lender Borrowell, and Koho, a mobile payments and banking startup.
Francois Lafortune, left, and Paul Desmarais III at Diagram Ventures’ Toronto offices in 2017.