Venture capitalist rode Canada’s first tech wave and never looked back

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Investing was core to Maria Pacella’s upbringing. Today she is managing partner of Pender Ventures, the tech-firm investing arm of PenderFund Capital Management in Vancouver. But even at age 12 she had a solid understanding of pensions and RRSPs.

When she was starting university her uncle gave her $3,000 and introduced her to a female stockbroker. It was the early 1990s, and people were just getting the internet and email. “There were lots of great options to invest in Canadian tech companies at the time,” she says.

In 2001, Pacella joined GrowthWorks Capital, one of the largest managers of retail venture capital funds in Canada at the time. She stayed for 11 years and then took on other start-up roles before joining Pender seven years ago.

Pender focuses on Canadian innovation and technology, and Pacella knew they were open to new and bold ideas. She had always wanted to build a team and manage her own venture fund.

Fun fact: Pacella has a 1,000-square-foot communal plot where she grows vegetables and flowers. She loves to see things grow and enjoys the fruits of her labour.

Where were you born and where did you grow up?

My parents were Italian immigrants. I was born in Vancouver but grew up in the tiny village of Tahsis, B.C., which is so small that the signs say “population more or less…” and upon exiting “last one to leave shut the lights.”

My dad and uncle were both entrepreneurs: Dad owned a laundromat and my uncle had a hotel business. When I was growing up they talked to me a lot about money and the basics of investing in GICs and mutual funds. At age 12 I had a solid understanding of pensions and RRSPs. Today I realize this was a bit unusual when I talk with my peers.

I lived in Tahsis until I went to Simon Fraser University in Vancouver. I was the first in the family to go to university. I decided to study finance because I always loved the concept of making money on your money. When I moved to Vancouver my parents set aside a sum of $50,000 for me and told me not to spend the principal. At the time, interest rates were around 8 per cent, so I put together a small portfolio of laddered GICs.

My uncle gave me $3,000 and introduced me to a female stockbroker. He said, “You need to understand what you are investing in.” It was the early 1990s and the first tech wave, and there were lots of great options to invest in Canadian tech companies. I invested all of the money in individual technology names such as Nortel and Newbridge.

How did you get to where you are now?

When I graduated many of my peers went into accounting or investment banking, but accounting just seemed too boring to me. I chose to take a job as an analyst on the M&A team for global investment bank Deutsche Morgan Grenfell (now Deutsche Bank). This was a great introduction to the world of finance.

While I was working I continued to do my own investing, and I came to realize that I loved to understand the underlying businesses more than I loved the transactions. I was most interested in the psychological motivation of the founders and the management team.

In 2001, I joined GrowthWorks, which was one of the largest managers of retail venture capital funds. There, I invested in multiple early-stage ventures and served on a variety of boards, mostly in the areas of enterprise software, e-commerce and health-tech. I stayed there for 11 years and then took on some other start-up roles before joining Pender seven years ago.

I had always wanted to build a team and manage my own funds, and Pender has platforms that allow that to happen. If you invest in technology you need access to private markets, and I was tasked with building that platform.

What are your top tips for scaling a business?

On the venture side of Pender, Pender Ventures, we have a Head of People Strategy to help entrepreneurs with their road map. A road map is crucial – this needs to always be at the forefront otherwise you might miss something obvious along the way. And a road map needs to be reviewed and updated every year because things change and you change.

It is important to step back from the day to day and take the time to think three years out. What is possible for your business? What is going on in the market in which you operate? Couple this line of thinking with what do you want to do as an entrepreneur. What do you need from a resource standpoint? What kind of people do you need to be a successful organization? Go out and find people with high EQ and who are self-reflective.

How are you investing for your clients today?

Our clients on the private side range from accredited high-net-worth private investors to institutional investors. Our focus is on Canadian innovation and technology, and specifically where tech applies to more traditional industries such as health, our biggest vertical.

I’m very interested in the cross section of tech and life sciences, where key technical developments in areas like sequencing, genetic testing, imaging, etc., are creating massive amounts of data – but how can we use the data being generated? How can we allow doctors and clinicians to improve patient outcomes?

If you had $1 million to invest right now, what would you do?

As a CFA Charterholder I need to preface this by saying that of course this depends on an individual’s risk tolerance and need for capital among a myriad of other considerations.

But all else being equal, I would place one-third in “ready cash” (money market instruments or GICs), one-third in private equity and one-third in North American public equities (U.S. tech and large caps, and the rest in sectors that are strong to Canada such as financials, energy and materials).

What gets you fired up these days?

Canada has suffered a major decline in productivity. In fact, we might be negative if we didn’t have immigration. We can speculate about the various reasons for this – is it work from home or a lack of entrepreneurial mindset, or are we just lazy?

We have a solid education system, good immigration policies and at the end of the day we have lots of innovation. What are we doing to commercialize and protect it? We need to think very carefully about whether we are investing in the right areas to become global leaders. Some of the early innovators in AI are Canadian – it would be nice to see more of that develop right here at home.

What do you think the markets will do for the balance of this year?

We will continue to be in a volatile situation given wars and uncertainty around interest rates. Consumer spending is back to pre-COVID levels, and we are seeing continued polarization across the globe in geopolitics.

The market has priced in some interest rate cuts and a soft economic landing, but the Fed and the Bank of Canada will wait for more data and then make decisions … as should we. Valuations are not cheap and capital scarcity is not consistent – good companies don’t all have access to capital. There is a lot of cash on the sidelines, so it is important to watch fund flows in both the public and private markets.

In the U.S., I’m going to be watching what the “Swifties” are doing. Why? Taylor Swift has 275 million Instagram followers and solid views on things. Her music is good, but she is even more impressive as a business person. She could definitely sway things – 275 million is a lot of people listening to her!

What do you do for fun?

I love to travel, and I ski in the winter and garden in the summer. I have access to a 1,000-square-foot communal plot on which I built a greenhouse pergola to grow vegetables and flowers. Gardening is a humbling experience for me. I love to see things grow and enjoy the fruits of my labour.

Responses have been lightly edited for clarity and length.

Writer Barbara Stewart is a Chartered Financial Analyst (CFA) with 30 years of investment industry experience. She spent five years as a foreign currency trader, more than two decades as a portfolio manager for high-net-worth entrepreneurs, and for the past six years she has been performing interview-driven research for financial institutions around the world.  Barbara is a keynote speaker for CFA Societies, banks, stock exchanges and industry conferences globally, and she is a columnist for CFA Institute and Canadian Money Saver magazine. She is on the advisory board of Kensington Capital Partners and also is the Ambassador for the Kensington Women’s Forum. In addition, 13 years ago Barbara saw a need to challenge outdated financial industry stereotypes and share positive messages about women and money. Today, Barbara is recognized worldwide as one of the leading researchers in women and finance. Her Rich Thinking® global research papers quote smart women and men of all ages, professions and countries and are released annually on International Women’s Day, March 8. To find out more about Barbara’s research, visit www.barbarastewart.ca.

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