Round13 Capital Announces $6.5 Million Acquisition of Startup Lending Platform Timia Group

Toronto-based venture firm Round13 Capital is poised to acquire the venture debt platform TIMIA Group from Vancouver-based alternative lender Montfort Capital for a total of $6.5 million. This transaction, announced recently, comprises a cash payment of $4.5 million and a $2 million debt repayment to Pivot Financial, a creditor associated with TIMIA Capital. As part of the agreement, Montfort will divest all rights and interests in the entities that constitute the TIMIA Capital business unit, which includes its equity stake in the TIMIA Group investment funds. BetaKit has reached out to Montfort Capital to clarify whether the acquisition also extends to TIMIA Group’s employees.

In a statement on LinkedIn regarding the acquisition, Round13 emphasized its intention to provide substantial new liquidity to TIMIA to enhance its lending capabilities. Brahm Klar, managing partner of Round13, expressed confidence that the acquisition will enable the firm to offer a comprehensive range of financing options to support the growth of businesses. He underscored that TIMIA represents an exceptional complement to Round13's core equity funds, reinforcing the significance of venture debt in facilitating the growth of Canadian startups.

TIMIA Group, founded in 2015, specializes in lending to business-to-business (B2B) software companies based in both Canada and the United States. The firm targets businesses that generate annual recurring revenues ranging from $2 million to $50 million, providing loans typically between $500,000 and $10 million. Since its establishment, TIMIA has reported creating $200 million in loan facilities, supporting 80 portfolio companies, and achieving 35 successful early exits to date. The organization is listed on the TSX Venture Exchange, adding to its credibility in the financial market.

Originally named TIMIA Capital, the company underwent a rebranding to Montfort Capital in 2022 to better reflect its expanded focus on private credit solutions. Under this new identity, TIMIA Group became a subsidiary of Montfort, which also encompasses other private credit entities, including asset-backed lender Pivot Financial, residential mortgage-focused Brightpath Capital, and insurance lender Langhaus Financial.

In a noteworthy development earlier this year, TIMIA formed a partnership with Arena Investors, an American institutional asset manager, to establish a joint tech lending venture. This initiative is designed to deploy up to $100 million USD to tech entrepreneurs across North America, particularly in response to the financial challenges faced by startups following the recent collapse of Silicon Valley Bank.

The acquisition of a venture debt platform by a venture capital firm like Round13 is relatively rare in Canada, as most venture firms traditionally focus primarily on equity investments in high-growth startups. This strategic move by Round13 signals a growing recognition of the need for diverse financing options within the Canadian startup ecosystem.

By integrating TIMIA's lending capabilities into its portfolio, Round13 seeks to bolster its support for entrepreneurs as they navigate the complexities of today’s financial landscape. This strategic move is designed to provide startups with the necessary financial resources to thrive in a competitive environment, ultimately contributing to the growth and sustainability of innovative businesses across Canada.

By offering a diverse range of financing options, including venture debt, Round13 aims to empower entrepreneurs with the flexibility they need to scale their operations, invest in new technologies, and respond to market demands effectively. This comprehensive approach not only strengthens Round13's investment strategy but also enhances the overall health of the Canadian startup ecosystem, fostering a more robust environment for innovation and entrepreneurship.