TandemLaunch secures $27M first close of Fund IV to build more deep-tech startups in Montreal

TandemLaunch secures M first close of Fund IV to build more deep-tech startups in Montreal
TandemLaunch secures M first close of Fund IV to build more deep-tech startups in Montreal

Montréal Venture Studio specializes in commercializing technology developed at universities.

Montreal-based venture studio TandemLaunch has raised C$27 million in the initial close of its fourth fund, which aims to found and support more early-stage, deep-dive technology startups.

TandemLaunch’s Fund IV limited partners (LPs) include leads BDC Capital and Fonds de solidarité FTQ, as well as more than 30 family offices and angels from across Canada and abroad. The business creation and venture capital (VC) firm aims to secure up to $40 million for Fund IV by September, with plans to fuel the launch of more than a dozen new Montréal startups.

“We are kind of a reverse brain drain. We bring talent and (IP) to Montreal and keep it here.”

TandemLaunch builds and supports companies in artificial intelligence, computer vision, the Internet of Things, sustainability, and advanced sensors, specializing in university technology transfer. In an interview with BetaKit, TandemLaunch managing partner and CEO Helge Seetzen noted that it’s “hard—really, really hard” to get companies out of universities.

“There’s no infrastructure, no support, and there are a lot of brilliant researchers doing a lot of really smart things,” he added. “You get this disconnect, where you have deep and incredible technology combined with a really weak method of getting it out of the university.”

Seetzen said he founded TandemLaunch in 2010 “essentially to take advantage of that arbitrage opportunity: finding brilliant intellectual property (IP) that is underutilized and then finding a way to get it into the commercial world.”

Led by Seetzen and longtime managing partner Émilie Boutros, TandemLaunch and its team of around 60 people scout interesting IP at universities, acquire that IP, build a team, and then create and incubate a startup to commercialize it, taking an equity stake in the company. According to Seetzen, the creation process typically costs $1 million per unit, and through its fourth fund, TandemLaunch has the capacity to invest up to $4 million per company.

TandemLaunch claims to have founded over 30 successful companies to date, with a combined value of over $700 million. In total, it employs over 800 tech workers in Québec. Its portfolio includes Sportlogiq, Wrnch, Soundskrit, Mirametrix and HaiLa Technologies.

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For its first fund of $10 million and its second fund of $15 million, TandemLaunch focused exclusively on founding companies, launching about a dozen companies each.

“That’s all we did,” Seetzen said. With Fund III and now Fund IV, TandemLaunch has become “more of a traditional VC on top” with larger follow-on investment reserves. Seetzen further described Fund IV as “an exact carbon copy of Fund III in almost every way.”

In the beginning, Seetzen says, TandemLaunch’s approach required some explanation. “When we started this, the venture studio part, the venture builder part, was completely new,” he said. “And I spent so many years trying to explain to people that this is possible, that this is doable.”

With the venture studio model becoming more common in recent years, Seetzen argued that TandemLaunch’s real differentiator is its international approach to intake and talent. According to Seetzen, TandemLaunch has closed tech acquisition deals with nearly 100 universities and hired talent from all over the world.

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“Most Canadian incubators nurture talent and technology from one university and then before they blink, it goes to San Francisco,” Seetzen said. “We’re kind of a reverse brain drain. We’re bringing talent and (IP) to Montreal and keeping it here.”

TandemLaunch began fundraising for Fund IV in January in a challenging VC environment. Aided by strong support from existing LPs, the first close occurred two weeks ago. Seetzen said TandemLaunch’s early portfolio returns played to its advantage this time around.

Seetzen has experienced a number of market cycles: he launched his first startup just after the bubble burst and founded TandemLaunch after the 2008 financial crisis. These developments have inspired him to start and finance companies during the current recession.

“I’ve been in VC for good times and bad times, and the short answer is if you build good companies, you’ll be fine,” Seetzen said. “I’ve seen this time and time again. It’s the hype that rules.”

Main image courtesy of TandemLaunch.