This article is part of our special report on venture capital and family offices.
Family office investors can play important roles in the venture capital space, from entrepreneurial families identifying with startup founders to those backing contestants in the high-stakes race from concept to commercialization.
Today the intersection of VC and family office investors in Canada is focused on a range of sectors, with families looking to put their money where it can do good, and even form partnerships.
“Because family offices are private-equity ownership-led, impact is a very important part of what they do,” says Neeraj Gupta, an angel investor in Calgary who invests in early-stage companies through his single-family office, Chapter.AI.
Born in India and with long experience as a serial entrepreneur and investor around the world, Gupta made the decision to settle in Canada in 2018, because “I wanted to be in an ecosystem which is high on innovation, centrally located and low on valuation.” He serves as chief advisor for technology and innovation at Invest Alberta, an economic development agency working to bring good companies to the province and assist its transformation beyond oil and gas.
He says Canadian family offices “tend toward impact” compared with those in the United States, which in contrast can be “very transactional” and focused on the bottom line. When Gupta is asked by VCs how to raise money from family-office investors, he advises: “Talk about impact first.”
Colin Keddy, director of TAAG Family Office, a multi-family office in Ottawa, notes that family offices are increasingly presented with VC opportunities by groups versed in assessing and underwriting startups and looking to put together syndicates to invest in them.
We have an opportunity to water our own garden and help the Canadian economy.
Sharif Virani, CEO of Spur Innovation Centre
“They’re reaching out to family offices at a greater degree than they ever have been,” he says, for example organizing forums and creating partnerships. “Who’s got the skill set within a family office to underwrite an advanced manufacturing tech deal?” Keddy says, a situation that could make potential investors shy away from opportunities.
“If you’ve got trusted relationships with a VC, you can come alongside and work with [them]; that’s certainly a far better model than going in alone,” he adds.
Sharif Virani, a Canadian entrepreneur and CEO of Spur Innovation Centre, a venture studio in Toronto that helps founders build their businesses, also serves as chief of staff to the Judge family office, a first-generation Indo-Canadian family office rooted in commercial real estate in the Kitchener-Waterloo-Cambridge region.
Virani has formed a link between the two by helping the family convert underutilized industrial spaces into data centre infrastructure. It then invests some of the money it makes through Spur, which is focused on building and scaling companies on top of domestic computing infrastructure, with a goal to increase the number of successful founders in Canada.
“We need to make some bold bets on bold founders here in Canada if we want bold results,” says Virani. He’s especially concerned about first-generation Canadian founders leaving Canada with their intellectual property to build businesses elsewhere, and he’d like to see investors step forward to make a difference.
“We have an opportunity to water our own garden and help the Canadian economy,” he adds.
Gupta says that high-net-worth VC investors typically invest in applied technology companies in a variety of industries.
“Gone are the days when you had a very refined tech platform and because of that you would have a valuation,” he says, noting that artificial intelligence (AI) and other technology “is not the niche, it’s the industry where you apply it.”
Canadian Family Offices spoke with these experts about VC sectors that are drawing interest from family-office investors in Canada today, why they’re promising and any challenges that exist.
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Defence industries
Canada is ramping up defence spending to levels not seen in decades to address sovereignty and security concerns.
The federal government has committed to earmarking funds to drive research and innovation in the defence sector, and if a product or technology presents the opportunity of “dual use,” it can be scaled for commercial customers, bringing new opportunities to invest in Canada, Keddy says.
The promise of government backing “is always interesting, and certainly there’s a nice security aspect from a family-office perspective,” he comments, although procurement in Canada can be slow. Research-and-development-based opportunities are likely to see a return faster than the manufacture of tanks and submarines. “You’ve got a longer time horizon on anything that you’re trying to manufacture, versus something that’s pure-tech driven,” Keddy says, and it’s also helpful if there’s a civilian application.
Gupta agrees that for family offices, investing in dual-use technologies should have a faster payoff, noting that defence investment has typically been private-equity led and infrastructure-heavy, with large companies needing to address procurement compliances.
Such areas include defence and manufacturing, defence and apparel or defence and cybersecurity, Gupta explains. “Dual use is anything civil that can be used in defence, so it could be a heated vest, for that matter.”
Quantum computing
Quantum science has long held the promise of exponential speed and power, manipulating the properties of particles at the smallest scale to perform tasks in computing, sensing and network communications.
“In Canada we have a great potential for quantum,” says Virani, with the country’s access to energy, talent and infrastructure making it well positioned for quantum development. “But do we have a commercial use case for quantum? No, because it’s led by R&D people who have never done business before. We need to bring them along.”
Quantum remains at a research stage, Gupta agrees, and at this point large companies are still working out how to build and use quantum infrastructure.
At the same time, Keddy says, “all industries are going to be affected by security around quantum computing. It’s going to be huge.” Experts predict that there won’t be hundreds of companies rising to the top of the sector. “You’re going to have small groups of people who will be leaders,” he says.
“If you can find the right company, it could certainly be a home run.”
AI and large language models (LLMs)
Virani says that Canada has “a huge ability” in AI, with its access to energy, land and infrastructure that support competitive AI deployment favouring data centres here. “We have a statistic that we’ve been pushing internally at Spur that I call ‘domestic compute intensity’—measuring how effectively domestic compute infrastructure translates into real economic output and GDP growth,” he says. “It’s a very big opportunity to lean on.”
Keddy sees applications in AI and LLMs “as something where we can probably see return almost immediately.” There are already go-to-market strategies for AI products in sectors such as hospitality, for example, which bring opportunities for VC investors.
“These businesses are getting out there and making money, so you’re likely to see exits sooner with things connected in that space,” he says.
While AI is at the applied stage, Gupta notes that one problem still needs to be addressed: the sources of data.
All industries are going to be affected by security around quantum computing. It’s going to be huge.
Colin Keddy, director of TAAG Family Office
“AI feeds on data, and we do not have data governance rules,” he cautions, noting that governments and regulatory bodies at this point don’t know how to share data. “AI has already surpassed our expectation by 10 years, but it will surpass our expectation by 30 years the moment governments start understanding how data compliances will work.”
Gupta sees exponential opportunities in AI on the horizon.
“This is extremely exciting. I feel that 50 to 60 per cent of traditional businesses will be transformed,” he says, for example in fields such as educational and legal technologies. “But you have to have the right kind of data.”
Advanced manufacturing technologies
Canada’s backbone is supply-chain logistics, Gupta says, and with AI, “Internet of things” and automation, manufacturing can become more localized. This means industrial plants can be built farther from cities where real estate prices are cheaper and the work force is not an issue, because operations can be run more efficiently.
Virani, a three-time company founder focused on robotics, AI and real-world deployment, says advanced manufacturing tech will especially help Canada deal with the declining industrial work force.
“Automation is inherently deflationary, and we need that right now,” he says, adding that the question of whether robots are taking peoples’ jobs is increasingly irrelevant. “It’s still a human world; robots just work in it, and the reality is that we don’t have anyone to do the jobs.”
We need to make some bold bets on bold founders here in Canada if we want bold results.
Sharif Virani, CEO of Spur Innovation Centre
Keddy says that manufacturing industries have already used automation for quite some time, “so we know the opportunity is there. As that automation expands, it can be capital-intensive, which tends to mean lower margins for investors.”
At the same time, advanced manufacturing tech is “solving real problems for industries that are constantly looking at upgrading,” he says. “If things were a little more autonomous, there’s a lot of benefit.”
Fintech
Keddy notes that there’s also immediate opportunity to address efficiency in financial technologies.
“You’ve got banks looking for how to improve financial systems,” he says, noting that the “Big Five” Canadian financial institutions represent a major percentage of our economy. “So if you can capture Canadian banks—and if it works here, scale internationally—that’s huge.”
Fintech is already well developed, notes Gupta, but with the addition of AI, banks have the ability to develop technologies such as mortgage predictability calculators for prospective clients and payroll systems with expanded accounting and auditing elements.
“Finance jobs are 70-per-cent task oriented, and AI will remove tasks,” he says, allowing banks to “leapfrog” their earlier automation efforts.
Virani says fintech companies are increasingly being pushed toward sovereign Canadian AI infrastructure, due to data residency, security and regulatory considerations.
“It’s highly sensitive data that increasingly needs to remain within Canadian jurisdictions,” he says, adding that Canadian companies in the sector, such as Wealthsimple, backed by angel investor Joe Canavan, make Canada a powerhouse in the sector. “We’ve been doing some great work.”
Cleantech
As an environmental scientist who used to work with biofuels, Virani says cleantech is a critical sector for Canadian investment. Many cleantech-adjacent initiatives can benefit from VC support, such as robot delivery, he notes.
Keddy says that governments in Canada are “highly motivated for cleantech,” given the need to reduce carbon emissions. The sector includes a range of opportunities, from manufacturing to mining. “You’ve got energy, transportation, agriculture, industry—everybody is looking to get rid of emissions, and governments are mandated for it,” which bring opportunities for investors, he says.
Cleantech is also an interesting area for family-office investors given their environmental, social and governance (ESG) guidelines, Gupta adds. “Because of that, cleantech is growing,” he says, although it is an infrastructure-heavy sector, and so it is very much private-equity led.
Mary Gooderham is a writer, editor and communication advisor based in Ottawa. She leads Cohen Gooderham Communications and has worked as a journalist for more than 40 years at The Globe and Mail, as a recording officer at the International Monetary Fund and as a custom content creator for online and print media. She’s been a contributing writer at Canadian Family Offices for four years, focusing on investment strategy, trusts, philanthropy, women in finance and estate planning.
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