Ex-Canada Pension Plan Investment Board chief executive Mark Machin and a former senior lieutenant are raising a US$500-million growth capital fund to back artificial intelligence startups in Canada and abroad.
Intrepid Growth Partners is led by Mr. Machin and Mark Shulgan, who worked together at CPPIB when Mr. Shulgan co-founded and led the pension fund’s growth equity unit from 2009 to 2018. Their new fund seeks to invest in fast-growing AI companies that have reached US$10-million in annual sales and are on a path to achieve profitability.
The firm will look to lead investment rounds, committing US$30-million to US$50-million per initial financing per company. The pair have hired principal Grant Wallace, who was previously an associate at Ontario Municipal Employees Retirement System working under Mr. Shulgan, who led the pension fund’s growth equity unit until last April. They plan to name another partner in the near term.
Intrepid is hoping to raise about US$200-million in a “first close” for the fund by mid-year, which would allow it to start deploying capital into deals.
Intrepid’s leaders are betting that AI has reached an inflection point, particularly after the arrival of OpenAI’s ChatGPT in 2022, and will be a hugely disruptive force across the global economy, changing everyday life and business. “Machine learning and AI will be at the core of every industry,” Mr. Machin said in an interview. “It’s going to permeate everything for the next decade or more and it’s something that I’ve been passionate about. And I think there are extraordinary opportunities.”
Mr. Shulgan said: “Investing in AI positions us to partner with the next generation of companies that will transform industries and shape the future.”
Mr. Machin is a prominent name in the investing world who struck out on his own after nine years – the last five as CEO – at CPPIB, Canada’s largest pension fund, which has $576-billion in assets. He previously spent 20 years as an investment banker at Goldman Sachs. The British-born executive resigned from CPPIB in early 2021 after he received a COVID-19 vaccine in the United Arab Emirates before the shots were widely available and was perceived to have travelled to jump the vaccination queue.
Mr. Machin and Palantir Technologies co-founder Joe Lonsdale in 2022 founded Opto Investments Inc. The New York-based startup aims to help registered investment advisers in the United States access private-market and alternative investing assets that make up an increasing share of the portfolios of large pension funds, including CPPIB’s.
Mr. Machin was Opto’s first CEO but has moved to a vice-chair role, clearing his path for the launch of Intrepid. He is also a board adviser to the Government of Singapore Investment Corporation (GIC), which manages Singapore’s sovereign wealth fund.
Mr. Machin has had an interest in AI and neural networks since he studied neuroscience at Oxford University. During his tenure at CPPIB, Mr. Machin, who is now based in New York, pushed the pension giant to invest more in technology and innovation. On his watch, CPPIB opened a San Francisco office, started a venture capital and growth investing program and an innovation lab and joined the Creative Destruction Lab startup accelerator program.
CPPIB invested in Deep Genomics, a University of Toronto spinout that uses AI to discover drugs. It also backed Toronto-based Radical Ventures, Canada’s largest AI-focused venture capital fund.
“You have this extraordinary ecosystem” in Canada, said Mr. Machin, Intrepid’s managing partner. “The thing that I heard many, many times when I was in Canada, and it’s also to some extent the case in Europe, is the lack of growth capital, lack of scale-up capital. And so that’s where we think there continues to be a really interesting opportunity to help Canadian companies grow and thrive.”
Intrepid is coming to market amid a prolonged slump in the technology sector that has seen many young companies slash jobs in an effort to stay alive, while some venture capital firms have struggled to reach their fundraising goals. But the new firm is also targeting one of the hottest sectors in tech, and Radical, for example, had little trouble last year hitting its US$550-million fundraising target for its second AI-focused fund.
There are only a handful of growth capital financiers in Canada, including Georgian Partners, Inovia Capital and Maverix Private Equity, which invest at a later stage than venture capital funds that back startups, but earlier than private equity firms, which typically buy more established companies.