Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Velocity Fund II Secures $10M to Back Early Startups
Venture Capital Fund | May 21, 2025
Image: Velocity Fund II, General Partners, Akash Vaswani and Ross Robinson
University of Waterloo's Velocity Fund II $10M First Close
On May 13, 2025, Velocity Fund II (VFII), an early-stage venture capital fund that spawned from the University of Waterloo's globally renowned Velocity incubator, announced its first close at US$10 million in committed capital. This development comes at a time when Canada's startup landscape's early stage funding is showing signs of strain.
VFII is managed independently by general partners Akash Vaswani and Ross Robinson, targeting investments in deep tech, health tech, and software ventures. The fund is backed by a strong group of limited partners, including Graphite Ventures, the AngelList Systematic Fund of Funds, the University of Waterloo’s endowment, and several wealthy alumni.
Timely Boost in a Slumping VC Market
The University of Waterloo previously made history by becoming the first Canadian post-secondary institution to invest from its endowment into an independent VC fund. VFII has since evolved from that initial concept into a fully operational fund, already investing in five early-stage companies, such as Voltra Energy and Handshake.
See: Equity Crowdfunding Breaks Records in Canada
According to the Canadian Venture Capital and Private Equity Association, Q1 2025 had just $1.26 billion invested across 116 deals, the lowest deal count since 2020. Pre-seed investments plummeted to $12 million, and seed-stage deal counts are at a five-year low.
Kim Furlong, CEO CVCA
"These early investments are the pipeline for future growth. A weakening at the foundation threatens the innovation economy we’ve worked hard to build."
An University Collaborative Venture Funding Model to Watch
VFII aims to be the first investor in new startups and to offer more than just money. The fund helps founders by connecting them with mentors, partners, and other resources in the Velocity community. This is especially important now, when many investors are pulling back from early-stage companies.
The VFII fund's approach spotlights a new model where instead of relying only on private investors, universities and public institutions are starting to play a bigger role. While the University of Waterloo provides funding from its endowment (the endowment in total is approx half a billion in 2023/24), the fund is run independently by experienced venture partners. Further, many of the investors into VFII are wealthy alumni wanting to give back. They are committed and aligned backers and want to help Canada's startup ecosystem grow over the long term, event when market conditions get rough. VFII is a great example of how institutions can step in to support innovation and help promising startups grow.
See: CSA Expands LIFE Exemption to Boost Public Capital Raising
Another example of a VC fund that spun out of a public institution's role is Framework Venture Partners, which was spun out of BDC Capital's IT Venture Fund in 2018. Co-founded by Peter Misek and Andrew Lugsdin (both former partners at BDC), Misek in an interview with Betakit said, "The deal was, if we hit certain benchmarks, we could spin out. We hit those benchmarks far faster than they thought; we ended up hitting them in less than three years, and in 2018, Framework was born.”
Outlook
New early stage funding models are more important than ever, as deal funding is harder to secure from traditional venture capital firms who are growing more selective and risk adverse. Canadian institutions attract a large amount of domestic investment capital, and if other institutions follow Waterloo's lead, it could help restore confidence in the startup pipeline and strengthen the country's longer term innovation capacity.
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