Venture Capital

Osler has a leading venture capital team dedicated to helping investors and emerging and growth stage companies recognize, develop and realize venture capital opportunities. Our team advises both investors and Canadian companies in the information technology, life sciences, biotechnology, CleanTech and alternative energy sectors accessing private capital, on the unique issues involved in venture capital deals. As an active part of Canada’s burgeoning venture capital ecosystem, we have worked on more than 547 VC deals over the past three years, representing more than $6.57 billion of investment in Canadian private companies.

Our venture capital team comprises passionate and experienced individuals who take a holistic view of the strategic priorities of our emerging companies and venture fund clients in order to build and execute on financing strategies that are consistent with these priorities. In addition to traditional venture capital and angel financings, we have worked on numerous SR&ED-based financings and collaborative research arrangements that access alternative funding sources in addition to venture capital.

Venture capital deal flow

Osler has acted on some of the most prominent venture capital financings in Canadian history, including

• Verafin’s $515 million venture funding – the largest venture financing deal in Canadian history
• Clio’s US$250 million Series D financing
• Accel in its US$200M Series A investment in 1Password
• Element AI’s $200 million Series B financing

Cross-border expertise

In addition to working with Canadian funds and emerging companies, we advise many U.S. funds on their Canadian investments and in other matters related to their Canadian portfolio companies. Combining our Canadian and U.S. business law services gives us the know-how and experience to support our clients in cross-border matters and provide them with a significant “one-stop” advantage, eliminating the need to retain both Canadian and U.S. counsel.

U.S. and other foreign investors take equity positions in Canadian companies in ways that satisfy their tax objectives and that also preserve relevant tax attributes of the Canadian business. To accommodate these often complex tax issues, our venture capital team collaborates with lawyers in our Tax Group to make sure all tax considerations of a transaction are taken into account. Osler has pioneered some of Canada’s most innovative structures to accommodate the unique regulatory and tax constraints that affect cross-border investments. As a result, lawyers in our tax practice regularly collaborate with our venture capital team.

Exit transactions

Whether as counsel to a Canadian business or to the investors in Canadian companies, we have played a significant role in many notable M&A transactions involving venture-backed Canadian companies. As the leading M&A law firm in Canada, investors and emerging companies rely on our expertise in structuring and negotiating M&A transactions with strategic and financial buyers and on our ability to manage these transactions in a time- and cost-efficient way.

In addition to M&A transactions, we advise Canadian and U.S. private equity funds as well as emerging companies on other forms of exit transactions such as secondary share sales and capital market transactions.

M&A deal flow

Osler has acted on some of the many notable M&A transactions throughout the years, including

• Intelex in its $570M acquisition by Industrial Scientific
• Wave Financial in its $537M acquisition by H&R Block
• Chefs Plate in its acquisition by HelloFresh
• Hubdoc in its acquisition by Xero

Fund formation

Our venture capital team has worked closely with the managers of leading Canadian-focused funds on their fund formation activities. Our immersion in the venture capital and entrepreneurship ecosystem, combined with our involvement in a significant portion of VC financings in Canada, means that we are always on top of market practice, including issues such as fund structure, manager compensation, governance arrangements for the management/GP entity and the amount and structuring of carried interests.

We understand the key issues and considerations that clients need to address and have solved these issues for a number of fund managers.

Some of the current and most often debated issues affecting fund formation today are as follows:

• General Partner compensation – Many funds are considering a structure involving a General Partner priority distribution instead of only a management fee. We understand the important tax considerations at play.
• Co-investment rights – General Partners are seeking more flexibility with respect to the structuring of co-investments. This requires careful balancing with conflict of interest considerations.
• Successor fund issues – General Partners are paying more attention to the parameters governing successor fund raising from the outset.
• Management fee offset relief – General Partners are exploring alternatives to the traditional 100% offset mechanism for portfolio company fees.

Fund formation

• Radical Ventures in the launch of a new $471M fund

Emerging companies

In addition to our work with established high growth companies, we work closely with emerging companies from incubation throughout their growth cycle to provide practical and cost-effective advice on all aspects of their development and issues that they may face, including corporate and tax structure, financings, IP, employment matters, commercial matters and the preparation for and execution of IPO and M&A transactions.