Where’s IT’s Next Hotspot? Ask DFJ

Draper Fisher Jurvetson is looking north for tomorrow’s IT players.

The Silicon Valley venture capital firm is partnering with Primaxis Technology Ventures to raise a $100 million fund targeting Canadian startups.

“The fund will focus on companies in the areas of physical engineering, IT, communications, advanced materials, and semiconductors,” DFJ partner Clay Pew told internetnews.com.

Managers may also consider companies focused on life science and IT convergence like bio-photonics, micro-fluidics, and bio-chips, Pew added.

An initial seed investment from the fund will be between $1 million and $2 million, with $4 million to $6 million reserved for follow-on rounds.

The fund will be managed by Ilse Treurnicht, of Primaxis, out of Toronto. Treurnicht has been in Canadian venture capital for five years. Her firm has made 16 investments in a range of sectors including semiconductor, photorics, wireless and bio-tech.

Besides needed capital, DFJ-backing will help Canadian companies make valuable U.S. business contacts — key when companies get bigger and need to find partners, custoemrs and additional investors.

Mary Macdonald, CEO of Macdonald & Associates Ltd., which monitors private equity trends in Canada, said DFJ’s announcement comes an a critical time.

“The participation of U.S. investors in the Canadian market has dropped during the past year, but this partnership signals a growing recognition of excellent Canadian investment opportunities coupled with strong venture management teams to exploit them,” Macdonald said.

According to research by Macdonald and the Canadian Ventue Capital Association, VC investments fell in the second quarter. Between April and June, venture dollars flowing into Canadian companies slowed to $212 million, down 33 percent over the first quarter.

The number of companies funded was also down slightly to 179, the CVCA said.

But gradually improving numbers in the United States, combined with DFJ’s commitment, have raised hopes the the health of the VC industry in Canada is improving.

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