The fifth fund is closing after nearly two years of increases that failed to meet its “ambitious” initial target.
Vancouver The rise of Wistar has closed its fifth private credit fund at US$321 million (C$450 million), ending a nearly two-year fundraising process and allowing the firm to focus its efforts solely on backing mid- and late-stage technology companies.
While Vistara has not reached its original value, “quite ambitious» US$386 million ($540 million CAD), the raise still gives the firm a Fund V that is 66 percent larger than its predecessor at $193 million ($270 million CAD).
“What we saw in [fundraising process] was that storytelling is so important.”
In an exclusive interview with BetaKit, Vistara Growth founder and managing partner Randy Garg and partner Noah Shipman praised the efficiency, consistency and existing limited partners (LPs) that helped it reach this milestone in challenging market conditions.
“We’re very happy with where we are,” Garg said. “We think this is a testament to our track record, capabilities, [and] constant support for our records.”
Vistara said the vast majority of its limited partners (LPs) from Fund IV have returned and collectively contributed even more capital to the fifth fund. This group includes the Beedie family office, other undisclosed family offices, private foundations and successful entrepreneurs from fields such as technology, real estate and hospitality.
Vistara has made 42 investments across its five funds to date. The company exited 23 of them without incurring any losses and generating a net annual internal rate of return of just over 15 percent. Vistara's current portfolio includes Brim Financial, D3 SecurityAnd The same. It matters Alida, Hammer, Mobilize, ReAhAnd Heat among his exits.
Last year, a market research company Preqing ranked Vistara's second and third funds among the top 10 global funds in their asset class based on age and size. Vistara claims to have already returned 88 percent of its fourth fund to LPs. Since mid-2022, Vistara says it has distributed more than US$230 million across 12 exits to its investors, despite “turbulent” market conditions that were characterized by low venture capital (VC) liquidity due to fewer exits.
Garg credits the firm's success on this front to the strength of its 15-member team, the quality of its underwriting and due diligence, and its active involvement in the companies it backs.
“What we saw in [fundraising process] “Investors are really focused on tangible results and how much money was returned, frankly… I think we've done really well on that basis.”
With Fund V finally closing, Vistara has raised US$700 million (C$980 million) since 2015. This amount came predominantly through non-institutional limited partnerships, with the majority coming from investors in British Columbia, despite recent inroads into Alberta and Ontario.
“This is maximizing friends, but we are running out of friends,” Garg said, adding that he expects Vistara to return to the market to raise a larger, sixth fund at the end of 2026. While its investment strategy for Fund VI will remain the same, Vistara is hoping to rally a few institutional LPs around it and exit the so-called category “teenagers”.
Vistara serves mid- to late-stage private technology companies across North America with annual recurring revenue of C$10 million to C$100 million, including in the fintech, artificial intelligence (AI) and medtech sectors.
CONNECTED: Government software provider Clariti Cloud receives C$24.6 million from Vistara Growth
While the investment firm typically invests in venture capital-backed technology companies at the Series B stage and beyond, it also funds established businesses. Vistara creates customized investment vehicles consisting of debt, equity or a combination of both by providing credit to these businesses as well as receiving equity sweeteners such as warrants to purchase their shares in the future or convertible debt.
Recipients typically use this capital to fund organic growth, mergers and acquisitions (M&A) or shareholder liquidity initiatives without diluting ownership, and these equity sweeteners could help Vistara boost its earnings if clients close equity financing or sell at a higher valuation.
“This is not just short-term bridge financing,” Garg said. “It's a three- to five-year solution. Many of our companies call it lease capital.”
Garg and Shipman noted that some clients have turned to Vistara as a means to expand their runway without valuing their equity capital during a difficult period to raise venture capital funding on favorable terms, including for valuations beyond AI.
Other entrepreneurs, they said, have turned to the firm for help in buying out early investors, co-founders or employees to ease the pressure to sell too early and own most of their business before exiting at a later date.
Vistara has already made eight of its planned 15 to 18 investments through Fund V, backing companies such as the Vancouver-based government technology provider. Clarity CloudFlorida software firm DataCore, Columbus-based insurtech Matic and Philadelphia health technology company Tendo. The firm plans to build a Fund V portfolio with a 70 to 30 percent allocation between the U.S. and Canada, where Garg said he would like to do more deals.
Image courtesy of Vistara Growth.
