Social Finance Fund-backed Boann reveals first investments in Canadian impact funds #CanadaFinance

Federal government-backed, Toronto-based fund-of-funds Boann Social Impact has disclosed its first 13 investments in Canadian impact fund managers.

The recipients include nine social and environmental impact-focused funds, most of which focus on investing in technology startups. This group includes Active Impact Investments, BKR Capital, Cycle H2O, InvestEco, Raven Indigenous Outcomes Funds (RIOF), Renewal Funds, Sandpiper Ventures, Spring Impact Capital, and The51.

In an exclusive interview with BetaKit, Boann CEO Derek Ballantyne noted that the firm targets impact funds across Canada tackling affordability, climate, and social challenges.

Boann has now committed nearly $51 million to date across 13 impact funds and one direct investment.

In its push to support the growth of the country’s impact investment ecosystem and draw more private capital into the space, Ballantyne noted that Boann is building a portfolio made up of a mix of first-time, emerging, and established fund managers, with an eye towards underserved regions such as Northern, Atlantic, and Prairie communities.

Boann is one of three fund-of-fund managers chosen by the Government of Canada to deploy the Social Finance Fund (SFF). Boann has now committed nearly $51 million to date across 13 impact funds and one undisclosed direct investment.

The SFF is a long-term, $755-million federal initiative aimed at growing Canada’s social finance market. First announced in the 2018 Fall Economic Statement and launched in mid-2023, SFF is being distributed by Boann, Toronto’s Realize Capital Partners, and Montréal’s CAP Finance.

Born out of Toronto social purpose investment fund manager Encasa Financial, Boann was created as a partnership between the Table of Impact Investment Practitioners, a Canadian network of social finance investors, and Community Impact Investments, the impact investment arm of three affordable housing organizations.

Between 2022 and 2026, Boann is set to receive a total of $154 million in SFF funding. This includes $135 million for impact funds and select direct investments and $19 million to support social finance market-building, including the development and maintenance of an information hub tracking the activities of SFF, its wholesalers, and other social impact investment opportunities.

Boann is also raising another $100 million in private capital for a separate fund, which it will deploy alongside its SFF-backed fund on a “complimentary” basis. According to Ballantyne, Boann’s decision not to blend this private capital with its government funding into the same fund gives it the capacity to assume more risk in certain areas.

Boann and the two other SFF-backed funds-of-funds collaborate with one another. Like Realize, Boann is pan-Canadian, and the two have already co-invested in RIOF and The51 together. Ballantyne noted that the pair largely leave the Québec market to CAP Finance.

Though capital from Boann does not come with a specific matching requirement, Ballantyne noted that the firm expects to see recipients of Boann funding use it to leverage at least an equivalent amount of private capital. So far, he claimed Boann has seen funds leverage it to secure twice to three times as much.

RELATED: Social Finance Fund-backed Realize Capital Partners reveals first nine investments

Boann’s largest investment to date is the $10 million it has allocated to Vancouver-based RIOF’s first fund. Earlier this year, RIOF completed a $20.4-million first close of a $50-million fund targeting climate and health issues in Indigenous communities. Indigenous-led RIOF will invest in community-driven outcomes contracts, which the firm described as employing a financial model that combines private, philanthropic, and public capital to “drive positive, long-term systemic change.”

“Outcomes financing is relatively new to this country and nobody has done it at scale,” Ballantyne claimed, adding that Boann was attracted to RIOF’s focus, the makeup of its management team, and its “really thoughtful approach.”

Boann has also committed funding to a trio of Vancouver-based venture capital (VC) firms geared towards cleantech. This includes $6 million for Active Impact’s third climate tech seed fund, $5 million for Renewal’s fifth sustainability-focused early growth-stage fund, and $2 million for Spring Impact Capital’s first fund, which will target nascent climate and healthtech startups.

Active Impact vice-president of operations Elyse Crowston told BetaKit that her VC firm wanted to express appreciation for Boann and how its team has navigated pent-up demand for SFF capital. “[Active Impact]like so many of our contemporaries, [has] been earmarking getting Social Finance funding since it was announced years ago,” she told BetaKit in an interview.

RELATED: Raven Indigenous Outcomes Funds completes $20.4-million first close

Late last year, Active Impact secured $70 million in initial commitments for its third, $120-million, Boann-backed climate tech seed fund, while Renewal Funds is gearing up to raise its fifth fund as it undergoes a leadership transition, targeting $100 million.

“We like them both because they’re established managers, low risk, [and] our investment catalyzes the next iteration of their funds—and in Renewal’s case, it’s the first next-[generation] fund,” Ballantyne said.

Crowston noted that Active Impact meshes well with Boann’s climate mandate. She argued that Active Impact’s focus on diversity and inclusion at the startups it backs, and its approach to assessing impact across its portfolio, also make the pair a good match.

“In both directions, it made a lot of sense,” she said.

RELATED: Active Impact Investments launches third climate tech seed fund with $70 million in initial commitments

For Renewal, Boann is playing an important role. “Boann has been great in terms of being a partner [and] early anchor to the Renewal V Funds and really supportive of both the impact goals, which are climate and environmental sustainability-driven, and also supporting new and diverse fund manager teams,” Renewal Funds partner Genevieve Pinto told BetaKit in an interview. “So, [we] really appreciate the role they’re playing in the market, and it’s been really meaningful early support in our process.”

For its part, Spring Impact Capital is raising a $20-million fund for early-stage cleantech and healthtech startups. Ballantyne noted that while Spring has been around for a while, this marks its first fund aimed at catalyzing social impact dollars. He said Spring is “as close as you can get in Canada to a [community direct financial institution]-type approach.”

Elsewhere on the cleantech front, Boann has allocated $3 million to Montréal’s Cycle H2O—a joint venture from H2O Innovation and Cycle Capital—for its first fund. Water-tech-focused Cycle H2O held the initial close of its first $30-million fund this summer, securing an undisclosed amount to advance sustainable water solutions.

RELATED: Spring Impact Capital launches $20-million fund to back cleantech, healthtech startups

While Boann has made multiple investments in climate tech, Ballantyne said this was the first fund it has encountered focused exclusively on water. “It’s a new mandate, but framed inside an established fund manager,” he added.

Food and AgTech-focused recipients of Boann funding include Calgary’s The51, a women-led VC firm that is getting $2.5 million for its first fund targeting early-stage food and AgTech startups led by women and other underrepresented entrepreneurs. The51 closed $30 million of its $50-million target for this fund last year. The other is Toronto-based InvestEco, which has secured $4 million from Boann for its fourth sustainable food fund for expansion-stage companies.

“Sustainable agriculture and food systems are important to us,” Ballantyne said. “We think they’re some of the key underpinnings of community well-being.”

Ballantyne noted that Boann was attracted to The51’s gender focus and the strength of its team. As for InvestEco, Ballantyne called them “a tried and tested manager” with a thesis that aligns with Boann’s priorities.

On the social impact side of the equation, Black-led Toronto VC firm BKR Capital is receiving $3.75 million from Boann for its second fund geared towards early-stage Black-led tech startups. “We’re looking at investing in the best founders from the Black community, and we’re looking at showcasing that there is a missed opportunity [here],” BKR Capital co-founder and managing partner Lise Birikundavyi told BetaKit in an interview.

Ballantyne said Boann was attracted to BKR Capital’s management, focus, and the fact that its team now has some experience under their belt following the firm’s first fund, as it gears up to raise $50 million for its second fund.

“We can tell that they are really aligned with us in what it means to intentionally invest to both have social impact and financial returns.”

Lise Birikundavyi, BKR Capital

“We’re definitely grateful to have Boann’s support,” said Birikundavyi. “We can tell that they are really aligned with us in what it means to intentionally invest to both have social impact and financial returns.”

Meanwhile, Halifax-based Sandpiper Ventures has been allocated $4 million for its second fund focused on early-stage startups led by female and non-binary entrepreneurs, for which the woman-led VC firm aims to raise a total of $50 million.

Ballantyne noted, “We like their mission, we like their geographic focus—we don’t have a lot in Atlantic Canada—and we like their thesis.”

The other three recipients Boann has disclosed include Vancouver’s New Market Funds’ second affordable housing fund and revolving loan fund ($7.5 million), Victoria-based social enterprise-focused Thrive Impact Fund’s first fund ($2 million), and Local Investing YYC Cooperative’s third fund ($500,000), in Calgary.

As macroeconomic conditions have deteriorated, with few exceptions, fundraising has become more difficult for tech startups and investors alike, including firms in the impact space.

Ballantyne acknowledged that Boann, the funds it invests alongside, and the managers it backs have been affected. He noted that Boann is seeing many Canadian impact investors take longer to close funds and struggle to hit their targets.

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“I don’t think that’s any different than any other fund in this country right now,” Ballantyne said. “Everybody’s having the same challenge.”

For its part, Boann has slowed its own fundraising timeline for its private capital fund in light of market conditions. Ballantyne noted that Boann would prefer to have had a first close at the end of 2024, but instead, the firm will begin fundraising this fall towards the goal of securing initial commitments around mid-2025.

Despite this challenging environment, Ballantyne said he has seen institutional investor interest in impact funds pick up in certain areas, including gender equality initiatives, funds with climate mandates, and affordable housing-focused vehicles.

“If you can get a viable fund up that has a decent return profile, there are specific thematic cases that we see investor interests coalescing,” he added.

Feature image courtesy Boann Social Impact.