Key Takeaways
- • University of Waterloo is deploying up to $5 million from its $800 million endowment into Velocity Fund II (VFII), marking the first time the institution has committed endowment capital to a venture capital fund—a Canadian first for post-secondary institutions.
- • Velocity Fund II, led by general partners Ross Robinson and Akash Vaswani, is targeting $25 million USD in total commitments with a planned first close in Q1 2024, and will deploy capital in $25,000 to $500,000 check sizes at pre-seed and early seed stages.
- • The fund spins out of UWaterloo's Velocity incubator, which has incubated over 400 companies that collectively raised $4.5 billion to date, including notable exits like Faire (valued at $12+ billion) and ApplyBoard ($4 billion CAD post-money valuation in 2021).
- • UWaterloo's endowment allocation follows an emerging U.S. trend with institutions like MIT establishing direct venture capital investment vehicles, positioning the university to capture earlier-stage opportunities in its innovation ecosystem.
Summary
The University of Waterloo has approved an endowment investment of up to $5 million into Velocity Fund II, a newly formed for-profit venture capital fund focused on early-stage startups. This marks the first instance of a Canadian post-secondary institution committing endowment capital directly to a venture fund, and represents a strategic pivot in how UWaterloo deploys its $800 million endowment. The initiative was spun out of the university's existing Velocity incubator program and is being led by general partners Ross Robinson and Akash Vaswani.
The fund is targeting $25 million USD in total commitments, with anticipated first close in Q1 2024. Velocity Fund II will focus on pre-seed and early seed stage investments, deploying checks ranging from $25,000 to $500,000. The fund intends to back both companies that have graduated from UWaterloo's Velocity incubator as well as external startups, broadening its investment mandate beyond the university's direct portfolio.
UWaterloo's endowment allocation reflects a broader trend among leading U.S. research institutions, including MIT, establishing direct venture capital arms to capture value from their innovation ecosystems. Adrien Côté, executive director of Velocity, emphasized the strategic rationale: "Attracting financial support early on is the key to long-term success for deep tech startups in particular." Velocity's track record supports this thesis—the 14-year-old incubator has nurtured over 400 companies that have collectively raised $4.5 billion. Notable alumni include Faire, an e-commerce marketplace that achieved a valuation exceeding $12 billion, and ApplyBoard, an education technology platform that raised $375 million CAD in Series D funding at a $4 billion CAD post-money valuation in 2021.
The endowment deployment addresses what UWaterloo frames as Canada's innovation funding gap at the earliest stages of company formation, where capital availability remains constrained. This capital allocation decision signals institutional confidence in the Velocity ecosystem's ability to generate venture-scale returns while simultaneously strengthening the university's position as an anchor investor in Canada's startup infrastructure.
The fund is targeting $25 million USD in total commitments, with anticipated first close in Q1 2024. Velocity Fund II will focus on pre-seed and early seed stage investments, deploying checks ranging from $25,000 to $500,000. The fund intends to back both companies that have graduated from UWaterloo's Velocity incubator as well as external startups, broadening its investment mandate beyond the university's direct portfolio.
UWaterloo's endowment allocation reflects a broader trend among leading U.S. research institutions, including MIT, establishing direct venture capital arms to capture value from their innovation ecosystems. Adrien Côté, executive director of Velocity, emphasized the strategic rationale: "Attracting financial support early on is the key to long-term success for deep tech startups in particular." Velocity's track record supports this thesis—the 14-year-old incubator has nurtured over 400 companies that have collectively raised $4.5 billion. Notable alumni include Faire, an e-commerce marketplace that achieved a valuation exceeding $12 billion, and ApplyBoard, an education technology platform that raised $375 million CAD in Series D funding at a $4 billion CAD post-money valuation in 2021.
The endowment deployment addresses what UWaterloo frames as Canada's innovation funding gap at the earliest stages of company formation, where capital availability remains constrained. This capital allocation decision signals institutional confidence in the Velocity ecosystem's ability to generate venture-scale returns while simultaneously strengthening the university's position as an anchor investor in Canada's startup infrastructure.
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