Tuesday, January 06, 2009

Looking South: Status Update on Kodiak Venture Partners

It is more than 8 years since new VC Kodiak Ventures made its name investing in Ottawa based semiconductor plays such as Solidum and Extreme Packets, followed by Tropic Networks, Potentia and BTI Photonics. Since it raised its third fund in 2004, Kodiak has played closer to home, preferring to invest in more companies in Boston (although it has continued to support BTI and had a hand in unsuccessful Simpler Networks up here). With the departure of partner Ilan Carmi a few years ago, there seems to be little interest in continued investment up here. Kodiak is rumoured to be going to market to raise its fourth fund this quarter.

As a hedge against poor market condition, in late November Kodiak let it be known that it has entered into an arrangement with one of its limited partners to provide continued support for some of the older companies in Kodiak's portfolio.

What is a sidecar arangement? In Kodiak's case, partner Tony Volpe told Tech Confidential that some of Kodiak's lps had purchased a small ownership position in a number of portfolio companies as well as put up additional capital for Kodiak to continue to invest in and support those companies.Good news for Ottawa's BTI and Montreal's Airwide Solutions, we can hope.

This kind of sidecar fund is a popular tool that only some local VCs here have been able to secure from their lps. Given that the sale of LP interests in secondary markets reportedly fell to 61% of net asset value in the second half of 2008, let's hope that limited partners find an appetite for further funding.

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