All 70 partners with Montreal’s BCF Business Law are pooling their money in what is believed to be the first super angel fund created by a law firm in Canada.
Starting June 1, the new BCF Ventures will begin to invest $500,000 a year for the next 10 years in Quebec companies with new technologies in the pre-seed and seed stages of development.
“In this ecosystem, young entrepreneurs need that early support,” says Mario Charpentier, BFC’s managing partner and co-founder. “We hope to play a small but important role with our little fund.”
According to Charpentier, the fund will invest in “about 10” companies a year. The money will come from the firm’s reserve fund, which is made up of a quarter of the partners’ annual profits.
Charpentier, a tax lawyer, says “98 per cent” of the 70 partners in the 170-lawyer firm voted to create the fund earlier this year.
He says investments will be aimed at helping cash-strapped startups get their technologies from concept to market — the so-called “Valley of Death” that kills the vast majority of promising innovations.
“We see so many young entrepreneurs in need of and looking for money and networks to try their new technologies,” says Charpentier. “We are experts in patent, IP [Intellectual property] and commercial law and make sure they bundle together to make strong pillars for these businesses. But this new fund adds a missing element.”
Despite its benevolent ambitions, Charpentier says the fund’s investments will be made with commercial success in mind.
“Of course, there is risk involved,” he says. “I told the partners, ‘Don’t shoot me if it doesn’t work out.’ But, hopefully, it works out.”
Decisions on the companies in which the fund will invest and the amounts of those investments will be made by an advisory committee comprised of about six firm lawyers, local entrepreneurs, an angel investor and venture capitalists.
The latter group includes Mike Cegelski, managing director of the Montreal office of Canada’s Panache Ventures, and Louis Carbonneau, a McGill University-trained lawyer who spent 15 years in Microsoft’s law office and now splits his time between Seattle, where he owns and operates Tangible IP, a patent broker, and Montreal, where he is a venture partner and strategic advisor to Cycle Capital, an early-stage, clean-tech venture capital firm that manages some $300 million in investments.
Though tiny compared to the massive venture funds that provide tens and even hundreds of millions of dollars to help companies get through the later stages of technology development, usually before going public or being acquired, Carbonneau says BFC’s micro-sized fund is geared to provide the all-important $50,000 to $250,000 in seed money needed to help startups grow.
“Lawyers are usually risk averse,” Carbonneau quips during a phone interview from Seattle. “It’s nice to see the partners at BCF putting their money where their mouths are, so to speak.”
Carbonneau adds that while he knows some U.S. lawyers who act as angel investors, the new BCF fund is the first fund he knows of that is being created by a law firm.
The new fund’s CEO, Sergio Escobar, goes a step further, saying he believes it is the only law firm-backed entity among the roughly 500 micro venture funds that exist in Canada and the United States.
“Usually, you see manufacturing firms doing it or business-to-business groups or even banks, like the National Bank here,” says Escobar, whose day job is managing director of the Montreal branch of the Silicon Valley-based Founder Institute, an idea-stage accelerator and startup launch program.
“There is a lot of need out there,” says Escobar, who will be doing the investigative groundwork on companies that apply for funding to the new BCF fund and making recommendations to — and answering questions from — the fund's advisory committee. "The growth of business incubators and accelerators in Quebec has resulted in a near doubling in the number of startups in recent years, but the number of investors has not kept pace. This new fund will be a welcome addition to the investment landscape here.”