Blog Post

BlackBerry Fund Consolidates; Plans Silicon Valley Office And New Fund

The BlackBerry Partners Fund today is restructuring the way it operates in order to focus exclusively on mobile investments. In addition, it said today that it will expand beyond its headquarters in Canada, by opening new offices around the world starting with Silicon Valley. The new structure will include folding in its $100 million fund that was initially earmarked for China to be invested anywhere, and raising fresh capital.

BlackBerry Partners Fund co-managing partner Kevin Talbot told us that its current $150 million BlackBerry Fund is about one-third committed with 12 investments, and has room for about three to four new startups. The separate $100 million fund in China will be folded into that. “We opened an affiliate fund in China in May, and in that process, we came to the realization that it was not going to yield the results that we wanted,” he said. “Geography is meaningless in mobile. You need to be dominant in a specific sector. While we are remain focused on investing in China, there’s other markets we need to have a presence in. We are reinventing our strategy to make more use of our resources.”

The weakest link it felt it clearly had was in Silicon Valley, where mobile startups are a dime a dozen. It plans to open a new office there during the first quarter, and then will expand internationally to other countries, where mobile is quickly being adopted by consumers. They declined to discuss locations, but said interesting regions include: India, China, Brazil, UK, Germany, Russia and the Middle East.

To fuel its expansion plans, the entity will soon be required to raise new funds. Talbot said they plan to announce a new fund soon. “We are raising a second fund, but we are not announcing it today….We are in discussions with our limited partners and we expect to announce it in near future. We can’t commit on the date, but we are in the process right now in putting it together.”

As part of these new goals, the original $150-million BlackBerry Partners Fund founded in 2008 will be restructured. The fund originally was being managed by partners from JLA Ventures and RBC Venture Partners, but going forward it will consolidate responsibilities. Talbot explains how inefficient the process was before: “We had two offices and two teams, and we are both in the same city. There are operational efficiencies and cost savings. It allows John [John Albright, co-managing Partner, BlackBerry Partners Fund] and I to have singular focus on mobile investing going forward.” BlackBerry Fund’s limited partners include Research In Motion, Thomson Reuters (NYSE: TRI) and RBC.

Before today’s consolidation, Albright was also charged with managing digital media investments for JLA, and Talbot was having to manage financial services for RBC — all while they were both investing on behalf of BlackBerry Partners Fund. In this new structure, the funds at JLA and RBC will essentially go dark with the partners will only have to manage the current portfolio, but no new investments. Together, those two funds have 22 investments, and BlackBerry Partners Fund consists of another 12. The consolidation will translate to an overall expansion for the fund, spanning from raising more money to more hiring more managers in more cities.

Talbot summarized the firms observations of the mobile industry since the fund was created: “When we first started two and a half years ago, we described services around your smartphone — it’s your wallet, it’s your entertainment device and it’s your computer. Our view has evolved as the industry has evolved. Now it’s the internet that’s mobile; it’s social media; it’s the cloud; it’s commerce — those four things are the four legs of the table. That’s how broadly we focus now when we talk about mobile. We are a platform agnostic fund. Although we have a close relationship to BlackBerry, we are free to decide on investments. From a device perspective, we have a very broad view of smartphones, tablets and other connected devices.”