The principals of Round13 Capital believe so much in the companies they partner with, they even share corporate office space with one of them. On any given day there could be two golden retrievers and a golden doodle roaming about the office thanks to Toronto-based pet health platform Juno Veterinary, a growth-stage company Round13 Capital invested in last year.
“We definitely have a very dog-friendly office,” says Brahm Klar, managing partner of Round13 Capital.
Round13 Capital is a venture and growth equity investment company based in Toronto, with approximately $700 million in assets under management. The firm invests in high-potential companies across a range of sectors, with a focus on supporting their growth and development over the long term, specializing in three sectors: software, tech-enabled services and digital transformation (investing in legacy businesses and deploying technology to drive growth and efficiency).
“As a general rule, Round13 tends to focus on developing investment themes, and then conducting detailed bottoms-up due diligence, as opposed to chasing macro trends,” Brahm explains.
As an example, the firm has spent time on healthcare in Canada over the last year, looking for businesses with exceptional products, durable moats, and attractive risk-reward dynamics, which will benefit from increasing demand for healthcare services and information. This resulted in Round13 leading PocketHealth’s $45 million Series B fundraise in early March. PocketHealth gives patients access, control, and a deeper understanding of their health records while streamlining the way healthcare providers share medical imaging.
Although 2023 was a slow year for the venture growth industry, it was an exciting period for Round13.
“We closed $300 million in new funds to deploy across Canada. We completed our first two investments in exciting businesses and amazing teams — Juno Vet and PocketHealth — and added two exceptional investment professionals to our team,” says Brahm. “Sometimes the market can be slow overall, but it was still a good time to be building our business at Round13.”
Juno Vet is a chain of veterinary clinics in Toronto that was founded in 2022 and aims to provide a different kind of pet-care experience to clients with a membership-based service which includes 24/7 virtual care, transparent pricing and state-of-the-art facilities.
“Juno Vet allows vets and their support staff to focus on providing great care for the animals and a great environment to work. There are three clinics opened now with two more coming in Toronto and the first in Vancouver later this year,” he says.
Round13 has seen more activity in the early part of 2024, with more companies coming to market to raise capital.
“Bid-ask spreads are narrowing (a combination of reduced valuation expectations, and an improvement in metrics over the last year). Overall, we expect 2024 to be busier year than 2023, although the spectrum of deals will cover a wide range from the hottest AI opportunities to distressed deals,” says Brahm. “Businesses now generally appreciate that we are not going back to the pricing dynamics of a few years ago. I think you’re going to see more meeting in the middle on deals in the next little while.”
Working with Osler’s Emerging and High Growth Companies team
Brahm’s experiences with Osler began long before he started with the venture capital company.
“Round13 has a long history with Osler. Personally, my first interaction with Osler goes back a decade as an analyst in the M&A group at RBC Capital Markets working on the $13 billion sale of Tim Hortons to Burger King,” says Brahm.
More recently, Round13 developed a relationship with another Osler partner.
“Our close connection is with Chima Ubani who has been a wonderful partner and who does all our fund formation work. We’ve worked with Osler on many growth investments, and it’s always been a great experience,” says Brahm. “You need to find a person that fits with your style and values. My advice to founders is find the person you can build a long-term, trusted relationship with.”
Advice for founders — focus on the next business milestone
When sharing his wisdom with founders, Brahm says the focus should be on building the business and less so on where the next raise will come from.
“We start by acknowledging the incredible fortitude required to be an entrepreneur — every day brings new challenges and starting a business is a laudable undertaking. Specifically, we have been spending time lately talking with founders about maximizing the odds of success as opposed to the speed of success. The growth-at-all-costs era seems to be behind us, and frankly never really made much sense to Round13. Our view is getting to the next business milestone matters a lot more than getting to the next fundraising milestone,” he says.
