Former Dragons' Den star Bruce Croxon closes first venture fund after difficult start

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When Bruce Croxon launched a venture capital firm in 2012 named after a renowned boxing match, the entrepreneur and TV star had no idea how much of a fight lay ahead.

"I thought it would be a lot easier than it turned out to be" to raise a $100-million venture capital (VC) fund, Mr. Croxon said of his Toronto-based Round 13 Capital, named after the gruelling 13th round of the 1975 "Thrilla in Manila" heavyweight title match in which Muhammad Ali knocked the mouthpiece out of Joe Frazier's head.

First, Alberta Investment Management Corp. backed out of a pledge to invest up to $50-million after chief executive Leo de Bever – the man who'd made the offer – left the institutional giant in 2014. Then, all four "funds of funds" tapped by Ottawa to invest $350-million in Canadian VC took a pass because Round 13 was new and raising money in a crowded market of established Toronto VC firms. It didn't help that Mr. Croxon had to backtrack after telling prospective investors Aimco would anchor the fund. "That was damaging," said one fund-of-funds manager, speaking on condition of anonymity. Some prominent entrepreneurs publicized by Round 13 as initial backers, such as Mike Serbinis, dropped out.

By April, 2016, Round 13 had raised just $25-million. "We could have quit, getting the door closed early as a first-time fund," said Mr. Croxon, founder of online dating website Lavalife Inc. and later a star of Dragons' Den and co-host of BNN's The Disruptors. "We didn't. We hung in there. And it happens to line up with the theme of the fund" to help startups fight their way to success.

Now, five years after launching, Mr. Croxon can finally claim victory. Call it a technical knockout: Today, Round 13 is announcing it has closed its first fund after raising $95-million. That's sizable for a first-time Canadian VC fund, but short of the goal. Round 13's investor ranks lack for institutions other than Labourers' International Union of North America and National Bank of Canada. Rather, Round 13 relied on dozens of entrepreneurs and wealthy individuals, including Clearnet Communications founder Bob Simmonds, Carol Leaman, CEO of Waterloo-based employee training software startup Axonify Inc., and Shopify Inc. co-founder Scott Lake.

"To their credit, they grinded it out and persevered, just like an entrepreneur," said Ms. Leaman, who will also mentor Round 13-backed firms as a member of its "founders board."

"With the passage of time, they invested in a number of good companies and started to build their credibility and track record."

Indeed, Mr. Croxon and his partners – veteran venture capitalists John Eckert and Scott Pelton and management-consultant- turned-entrepreneur Craig Strong – have raised most of their backing in the past year on the strength of early investments in TouchBistro Inc., a point-of-sale technology provider to restaurants, customer-service platform maker Statflo Inc. and document collection and management firm Hubdoc Inc.

"They invested in companies I knew about and had been tracking," said tech entrepreneur George Staikos, who joined Round 13's founders board in April after turning down other VC firms. "I thought, 'These guys are thinking along the same lines.'"

Round 13 is pushing itself as an information technology fund whose principals have built businesses and can offer hands-on advice to entrepreneurs.

The firm is looking to invest up to $5-million apiece in Canadian companies located between Waterloo and Montreal that have gained market traction and are looking to acquire more customers. "I believe that the right expertise, introduced at the right time to the entrepreneur at the right stage, can result in tremendous value-add," said the 56-year-old Mr. Croxon, looking tanned and relaxed and wearing a black t-shirt, jeans and sneakers during an interview at Round 13's offices in Toronto's Riverdale district. He added his expertise is primarily in direct marketing and organizational development.

"They are my first call … whenever we have a critical moment" said Statflo CEO Kevin Gervais, who has raised $2.2-million from Round 13. He said its partners have provided guidance on strategic focus and expanding to new markets and have led half-day sessions with employees on a range of topics. "They've been on the ride [as operators] and been through ups and downs … I've gotten a lot of value from that," he said.