Rhiza Capital: Coast Venture Root Three (CVR3)

Offering Description

Rhiza Capital (Rhiza) invests in direct response to the challenge of financing the UN Sustainable Development Goals (SDGs). We build Positive Impact financial portfolios, programs, and partnerships that localize the SDGs and connect community to opportunity. 
 
Coast Venture Root 3 (CVR3) is a balanced fund targeting a market rate or better return alongside meaningful environmental and social impact. The fund will make seed, early, and follow on investments in private companies in diverse sectors, all with alignment to the SDGs. 
 

Rhiza, the fund manager, has been building impactful portfolios since 2015 and operates two venture funds with positions in growing companies. Rhiza is a proud Certified B Corporation.

Rhiza Capital has formed out of a collaborative venture between Community Futures Development Corp of the Sunshine Coast, the Sunshine Coast Credit Union and the Powell River Community Investment Corporation. The joint partnership gives Rhiza a solid operational and administrative foundation, as well as an experienced and diverse Board of Directors and Advisors. 

Investment Highlights

Investment Offering: 
$25,000,000 raise (minimum investment via SVX C$5,000).

Structure: 
This security is structured as Class B Voting Shares, at $25 per share. All, including retail investors, are permitted to participate via an Offering Memorandum (OM) exemption. 

The OM exemption prohibits Rhiza from stating future return targets; however, the 8-year fund seeks to deliver a market rate or better return to investors. Rhiza’s two previous funds are also tracking positive returns. 

Use of Proceeds: 
CVR3 will make seed, early-stage, and follow-on investments in private companies that have a demonstrable social and/or environmental impact in alignment with the UN Sustainable Development Goals, as well as a strong likelihood of financial success. 

The fund will be diversified across sectors and stages, so as to offer investors an optimal mix with minimized risk. CVR3 has made 2 portfolio investments to date: Ethelo and New/Mode.

Target Close: 
Rhiza Capital aims to raise a maximum of $25 million from 2019 through to the end of 2021. 
 

Coast Venture Root Three

CVR3 is a balanced fund that will deliver strong financial returns alongside environmental and social impact. The fund portfolio will consider all SDGs when making investments; however, we are focusing on the following SDGs as particularly high priority and high opportunity:
 

SDG 2, 3, 4, 5, 8, 9, 11      

Each company will be evaluated for its impact business model, as well as its potential for strong growth. The intent of CVR3 is to deliver meaningful returns in capital while maintaining a positive impact screen. 

The fund is a registered Venture Capital Corporation (VCC) in British Columbia. The fund will invest in Eligible Business Corporations (EBCs) that have a permanent facility in BC and a 75% BC workforce. The VCC designation provides BC resident investors with the incentive of a 30% refundable tax credit. 
 

Deployment Strategy & Target Portfolio:

CVR3 has an eight to ten year arc and will deploy capital into:

  • ~30 seed stage investments in early stage companies
  • ~20 investments in companies demonstrating the growth and traction characteristics consistent with a Series A funding round
  • ~10 follow-on investments in a select subgroup of the initial companies

In each case, the investee must represent a compelling opportunity to satisfy CVR3’s goals of impact generation and risk-adjusted financial returns. Monitoring and support of each investee will continue throughout, until such time as CVR3 has successfully divested itself of its holding in the investee. 

Between 2027 and 2031, we aim to have completely liquidated the CVR3 portfolio. Following portfolio liquidation, capital and ROI will be returned to investors.
 

Impact

B Corp Score:

93, Certified 

Impact Goals and Strategy:

1. Localizing the UN Sustainable Development Goals

Rhiza delivers capital to underserved, high-potential, impactful social purpose organizations that are otherwise overlooked by traditional financiers and venture investors. To do this, Rhiza develops financial products that address gaps in the rural, as well as urban, and remote, social finance ecosystem

Rhiza’s Positive Impact funds and partnerships catalyze the localization of the SDGs for a just economic transition concurrent with climate resilience. 

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Rhiza is also a strong supporter of the B Corp movement, using the B Impact Assessment in the due diligence and impact reporting process. 

2. Increase accessibility to and ‘democratize’ impact finance

Rhiza affirms that it is critical to create opportunities for a greater number of individuals and institutions to align their finances with their values. Typical impact venture funds are open to accredited investors only and entry is at a significant, often prohibitively high minimum investment. 

CVR3 is open to all retail investors via an Offering Memorandum, with entry at an approachable $5000 minimum via SVX. The fund is also registered as a Venture Capital Corporation in British Columbia, offering BC residents a 30% refundable tax credit incentive. 

Traction on Impact: 

Rhiza’s present portfolios span across multiple SDGs, and at varying scale from rural/local, provincial, national, to international.

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Rhiza Capital and CVR3 have created a number of innovative impact finance products that allow a diverse array of individuals to participate. Namely, the founding investment in CVR3 came from the Sunshine Coast Credit Union via the Impactful Term Deposit, a guaranteed investment product that allocates a portion of deposit capital into impact businesses.

Risks

All private securities listed through online investment platforms and Exempt Market Dealers (EMDs) like SVX are likely to carry more risk than those available on the public markets. Our goal is to make you aware of those risks before making an investment. For further details on the risks in the private markets, refer to the SVX Risks section. Some of the offering specific risks are identified below:

Investment Risk 
The initial offering price of each common share has been set arbitrarily. Resale of these securities is also restricted by the terms of CVR3’s Shareholder Agreement, Subscription Agreement, Articles and Bylaws.  

Liquidity Risk 
This investment is a private, illiquid investment with an eight-year exit opportunity. Investors will not be able to receive any forms of distributions in principal until the eight-year maturity date has passed, calculated commencing from the date of final close (December 2021).  

Manager Performance Risk 
A fund exit will depend wholly on the Manager’s ability to divest from portfolio companies. The Fund Manager is experienced in deploying capital under the Venture Capital Corporation (VCC) structure, however it has not demonstrated any examples of investment exit within its existing SCVP and CVR2 portfolios.  

Geographic Risk 
CVR3 intends to invest in companies headquartered in British Columbia with at least a 75% BC workforce. If negative macroeconomic events occur in the region and/or province, the Fund will not be well-diversified.

Industry Risk 
Impact investing is, like all private equity investing activity, inherently risky and depends on the competence of Management, portfolio strength, stable market dynamics, and that of the underlying portfolio companies. It is assumed that the demand for impact-focused investments will continue to increase.

Conflicts of Interest
Adam Spence, CEO of SVX is an advisor to Rhiza Capital. 

Further risk factors are outlined in the Offering Memorandum.

Management Team

Brian  Smith

Brian Smith

Co-Founder, CEO

Brian is an accomplished entrepreneur, investor and creative organizer for sustainable business and impactful economic development. He has led and helped deploy private equity placements and institutional investments that have derived impressive returns and demonstrable impact. Having founded and led successful non-profits, for-profits, and co-ops, Brian is uniquely skillful in a variety of models that have a positive impact. 

Brian co-founded and is the Chair of the Board of Persephone Brewing Company - “The Beer Farm”. Persephone is renowned for both award winning beer, the early adoption of ecologically positive systems and community impact, and is the only Certified B Corp brewery in Western Canada. Brian holds a BA in Economics from Simon Fraser University, an MA in Planning from the University of British Columbia (UBC), and a Professional Certificate from the UBC Sauder School of Business. Brian and his social ventures have received a number of awards including: Top 100 Impact Companies in North America (2019), Canadian Social Enterprise of the Year (2017), Widening our World Award (2016), Land Award (2016), Celebration of Excellence Award (2014), and Top 40 Under 40 Business People in Vancouver (2009). 

Sean Melrose

Sean Melrose

Co-Founder, CIO [Edmonton]

Sean is a meticulous asset manager and experienced financial professional. Sean leads Rhiza’s investment strategy and portfolio management. He has a robust and multi-disciplinary knowledge base, with a proven track record in angel and institutional investing, scaling ventures and delivering strong returns for shareholders. 

Sean has over 20 years’ experience in private equity and venture capital, governance and administrative law, financial engineering and portfolio management. He was an early proponent of values-based investing, working with HNW families to integrate purpose into their portfolios in his early career. He later founded BC’s first Community Investment Corporation, engineering an innovative and risk-managed approach to place-based investment in the process. This set the stage for the formation of Rhiza Capital, where Sean has curated and managed Rhiza’s fund family since inception, active as a board member and advisor for several Rhiza portfolio companies. 

In the community, Sean has held governance leadership roles with the United Way, Rotary International, Better Business Bureau, Edmonton’s Assessment Review Board and Inclusion Powell River (where he led this $10MM/annum organization in its first series of for-profit enterprise and investment acquisitions). Sean holds a BA in Mathematics and Philosophy from the University of Winnipeg. 

Elyse Crowston

Elyse Crowston

Director of (Impact) Investor Relations [Vancouver]

Elyse is an enthusiastic convenor, connector and passionate advocate for solutions for a sustainable future. As Director of (Impact) Investor Relations, Elyse ensures that the Rhiza community of investors is growing, informed, and impactful. Elyse safeguards the critical relationship between fund and partner, and cultivates a culture of trust that is critical to our success.

For the past four years, Elyse has worked with Renewal Funds, Canada’s largest and pioneer mission venture capital firm. As is the case for many in the impact space, Elyse has worn many hats at Renewal – and was largely responsible for keeping a diverse and engaged group of investors connected to the fund mission, and amplifying their success in service of growing the impact investment sector. Elyse continues to support Renewal in a consulting role. Before Renewal Funds, Elyse led the Donor Relations department of Ecojustice, Canada’s largest, non-profit environmental law firm. Elyse holds a BA in Environmental Geography and Policy from the University of British Columbia, with a minor in Mandarin. Elyse serves on the Board of Vancouver B Corps (B Local) and is the Chair of Western Canada B Corp Leadership Development (BLD) conference. Elyse is a 2020 Canada Clean50 Emerging Leader honoree. 

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Kim Nguyen

(Impact) Investment Associate [Toronto]

Kim is an experienced financial analyst with an uncommon aptitude for both quantitative inquiry and visual design. Based in Toronto, Kim illuminates the story out of the details in order to grow the Rhiza community across Canada. 

Kim is practised in fund operations, due diligence, risk assessment, valuation, and financial modelling - with a natural ability to curate effective visual communications. Kim comes to Rhiza from Bentall Kennedy and Colliers International and is enthusiastically making her foray into the impact space. Kim holds a Bachelor of Commerce from the University of British Columbia. 

$905,000.00

Rraised Of $25,000,000.00 Goal

Days Remaining 747
Hours 21
Mins 55
$905,000.00
 
Common Shares Offer. Structure