Portage Ventures is seeking to raise $1 billion for its new fund to invest in late-stage fintech startups

Global venture capital investments in technology startups fell significantly in Q2 investors pull back due to fear of looming recession and global economic downturn. Startup funding reached $120 billion, the lowest amount recorded for a single quarter since the beginning of 2021.

Second-quarter funding also fell 26% quarter over quarter from $162 billion in the first quarter and 27% year over year from $165 billion in the second quarter of 2021, according to data from Crunchbase. Now, one venture capital firm has come to the rescue.

Today, Portage Ventures, the venture capital arm of Sagard, announced it is seeking to raise up to $1 billion for its new fund to invest in late-stage fintech startups. In a press release, the firm said it is raising a structured equity fund that will focus on financing late-stage startups in the financial technology sector that are reluctant to take a hit in their valuation amid the market downturn.

In an interview with Reuters, Portage co-founder and CEO Adam Felesky said the firm plans to raise about $1 billion for the so-called structured equity fund, investing in securities that combine debt and equity features and do not require startups to lock in a valuation as with traditional equity fundraising.

“We’re a liquidity provider in environments that otherwise would be quite difficult,” Felesky said.

Over the years, many tech startups have been reluctant to raise funding through the traditional route during the financial downturn for fear of being forced to accept a lower valuation than their previous funding round.

“We see many great companies that are looking for the right partner. Portage’s expertise and network in fintech and financial services are real differentiators as businesses look to navigate this market. We will deliver more than just capital,” said Devon Kirk.

Daniel Ballen has spent nearly twenty years investing in private equity, structured equity and special situations focused on the financial services, fintech and real estate technology sectors. Prior to Portage, he served as a Portfolio Manager at PIMCO, based in New York, where he led a team focused on structured equity and private equity investments in both North America and Europe for the firm’s alternatives franchise. Daniel has also served on the investment teams of Bain Capital and Pine Brook Partners, partnering with growing businesses across the fintech and financials landscape.

“In this market environment, we’re seeing accelerated demand for flexible capital solutions as entrepreneurs and shareholders look to continue the strong growth trajectory of their business,” said Daniel Ballen.

Portage believes PCS’ strategy is well-positioned to meet the demand for capital across all cycles in both public and private markets, whether for organic growth, M&A, or recapitalizations. PCS will leverage Portage’s existing platform, one of the largest global fintech specialist investment firms with over $3 billion in AUM, and benefit from its deep fintech experience, established sourcing network and proven value-creation expertise.

“Daniel and Devon bring extensive sourcing and transaction execution experience across asset classes,” said Adam Felesky, Co-Founder and CEO of Portage. “Together, we can expand our efforts to partner with later stage visionary fintech entrepreneurs providing both capital and a value creation network that supports them throughout the life of their business.”

“Portage is building a global platform investing in what we view as the top financial services leaders across the globe,” said Paul Desmarais III, Chairman and CEO of Sagard. “With talented professionals such as Daniel and Devon, we are excited to support companies from early-stage to growth.”