Kamal Hassan

As a founder, have you ever been curious about this whole angel investing thing? This week's findfunding.vc spotlight is on an investor who's an expert in it you simply have to know: Matt Wilson, MBA from Allied Venture Partners. He: 🇨🇦 Is Calgary based 😇 Manages one of Canada's largest angle investor syndicates (now at 1,800+ members!) 🏒 Worked as a professional ice hockey referee, which he says shares remarkable similarities with investing Amongst founders, Matt Wilson, is known for bringing empathy and perspective as a former founder himself. Aside from financial support, his goal is to be the 'right' investor - one that aligns with a founder's vision, shares his network, and provides strategic insights when asked. ✉️ Make sure to pitch him, invest, scout, advise and more at https://linktr.ee/alliedvc For more, check out our funder spotlight card below along with Allied Venture Partners' profile on findfunding.vc (link in comments).

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Freeline and Swan to Spur new AAV Development... I couldn't resist. Syncona announced they are combining Freeline and Swan Bio to create Spur Therapeutics to advance the most viable components of the latter two companies' pipelines. That pipeline will be headlined by Freeline's Gaucher program (on the cusp of starting Ph3), and Swan's candidate in adrenomyeloneuropathy. Syncona previously took Freeline private to create new optionality for the company. This was after AAV headwinds had battered the stock and other candidates reached approval first in their prior lead therapies (hemophilia). This shows there's still interest in AAV and its proven delivery capability to diverse tissues and cells. But there is continuing culling in the industry's pipeline. Want to take a look at that pipeline? or think about how it impacts your own prioritization? Reach out and we can discuss! #venturecapital #genetherapy #pharma https://lnkd.in/g8-ZKp4C

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The size of Canada combined with the geographic distribution of health conditions make the country ideal for multi-channel healthcare (e.g., Telehealth). Despite the significant demand for healthcare broadly, those business models haven't been able to achieve exponential growth or ideal unit economics just yet -- they've certainly grown and many are profitable, but millions of Canadians still lack primary care. It's a problem that's on the cusp of being solved (e.g., AI, integrated care) and could unlock significantly more access to care for Canadians. 

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This article misses on a couple of key fronts 1. there has been material liquidity in the Canadian VC market - it’s just that since 2019 more than 70% of it - some $18+B - has been in life sciences 2. Canadian liquidity in Life’s sciences has even been proportionately better that in the US 3. The Florida professor used CVCA data - unfortunately the CVCA grossly under reports liquidity in general and life sciences VC liquidity in particular in part because their data misses post IPO acquisitions and in many cases VCs hold to that event 4. Finally, there is no major global economy where governments aren’t deeply engaged in building there innovation economy. In fact, I would argue that compared to China, singapore, the EU, Isreal, and even the US, government engagement in Canada is tiny and should be meaningfully more given the lack of endowment capital and the lack of engagement of by the majority of domestic pension plans. In the US these are the primary allocators to VC. If we want to grow our economy, increase productivity, and give this generation of Canadians the same opportunities enjoyed by prior generations then more capital and engagement is the answer - not less.

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If you are a #Canadian #startup frustrated by the lack of #investment opportunities and wondering if #SiliconValley is worth the trip ... I wanted to share a few notable comments from #startups that recently participated in our CELS - Canadian Entrepreneurs in Life Science Showcase. To the companies that participated, I won't drop the F bomb and risk being banned from LinkedIn 😆 but feel free to chime in and share, in your own words, why you think your peers need to take a leap ✈️ and visit #SiliconValley. It's really close to 🇨🇦 but in so many ways, a 🌏 apart. ✍️ "A lot of the people we met with will be relevant in the future. CELS made the introduction. We now have to build the relationship." 💰 "Everyone we met with had a friend or a contact that is relevant to us, even if they were not in our space, so basically everyone we met with was relevant!!" 🚀 "The biggest take away was the different mentality. Risk taking is seen positively here! Innovation is seen as a value driver. Investors want to see the BIG idea!" 🎙 "The Showcase format allowed us to have meaningful conversations. There was lots of time for real networking. Everyone asked, 'what is your ask?'. That was so refreshing!" ⏰ "It's just more sophisticated here. Time to market is faster in the US. We didn't have to spend our time explaining the tech and it felt like conversations got progressively better". So the next opportunity to leverage Connection Silicon Valley to build your network here is May 14th to 16th - open to #FemaleFounders. Don't let fear stop you. If you are looking for global capital, #SiliconValley is where you need to be to build the right connections. Register here - https://bit.ly/48SDuzF Or DM me to chat!

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For many startups, the greatest sign of success is an exit strategy that gives shareholders a return on their investment. What many often overlook, however, is the impact of liquidation preferences on shareholder returns. For those unfamiliar, liquidation preference is an important term often found in investment agreements, determining the order in which proceeds are distributed in the event of a sale or liquidation. There are two types of liquidation preferences: 𝟏. 𝐏𝐚𝐫𝐭𝐢𝐜𝐢𝐩𝐚𝐭𝐢𝐧𝐠: In a participating liquidation preference, the preferred stockholders are entitled to receive their initial investment amount back first, and then they also share in the remaining proceeds along with the common stockholders. 𝟐. 𝐍𝐨𝐧-𝐏𝐚𝐫𝐭𝐢𝐜𝐢𝐩𝐚𝐭𝐢𝐧𝐠: In contrast, with a non-participating liquidation preference, preferred stockholders must choose between receiving either their original investment amount or converting their preferred shares into common shares and participating pro-rata in the distribution of remaining proceeds. For a simple example, let’s say a VC invests $30 million in a startup for 30% equity at a valuation of $100 million. A few years later, that company is acquired for $150 million. If the VC has a non-participating preference, they can choose between either taking back their initial investment of $30 million OR converting their preferred shares and participating pro-rata in the distribution of the remaining proceeds. In this case that would be $45 million (30% * $150 million), the obvious choice. In contrast, let's say the VC has a participating preference. The VC gets both their initial investment of $30 million, AND a share of the remaining proceeds based on their ownership stake. In this case, they would receive an additional $36 million (30% of $120 million). So, in total, they would receive $66 million ($30 million initial investment + $36 million from the remaining proceeds). To summarize, non-participating liquidation preferences are advantageous to the founders, because they maximize their share of the proceeds, and increase their incentive to sell the company at a higher price. Participating liquidation preferences are disadvantageous to founders and employees because they dilute the share of proceeds for common shareholders. This is why it’s extremely important for founders and management teams to fully understand the implications of their capitalization strategy. If the startup in the example above used debt financing instead, they would have only had to pay back the principal amount of $30 million + interest (and likely a small percentage of equity < 2% in warrants). This would have resulted in a much more favorable outcome for founders, management and employees. 

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The AI hype bubble is almost over. When investors refused to fund new AI startups because they know they’re going to fail, then the AI hype bubble is starting to fail. Even the most clueless, Investors now know that this is a bubble waiting to burst like the metaverse bubble and the dotcom bubble. And nobody wants to be left, holding the back on this bubble. The era of free money iis over with interest rates sky high. When big tech companies are losing money on AI and the bigger AI startups are demonstrating that they are all dead and struggling to even have revenue, then no one is interested in funding, smaller AI startups that they don’t believe will be profitable anytime soon. People aren’t waiting for an AI unicorn to break out. They are waiting for Microsoft, Google, Amazon, and similar to start buying distressed AI startups. Collapsing companies and minimal paths to profitability doesn’t help a space that was already overhyped. Don’t forget in all this mess that the unfortunate reality is that engagement and retention don’t match installs and downloads. What I mean by this is the most basic of mobile tracking were ignored. You don’t judge success in the mobile market based on downloads or installs, but rather based on retention and engagement. What this means is, it’s not actually impressive for OpenAI to get to 100 million users quickly if 2% of them retain. The question is not how many people signed up for a free account. The question is how many monthly active users and daily active users do AI startups like OpenAI, Anthropic, Perplexity, Stability, and others have. And how many are paying customers? And what we are finding is that retention is in low single digits. The reality is that AI startups are getting users the way that mobile free to play did. And they haven’t found a way to actually make money on that. Don’t ask an AI startup how many users signed up. Ask them how many DAUs and MAUs they have. Ask them what their ARPDAU is. What you will find is that every number is low. AI startups have no idea how to do monetization, and they don’t have regular active users in any volume. What this points to is that they’re all going to fold or get bought.

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Allocate just released an analysis on a dataset of 253 venture funds, with only pre-2019 vintage years being included. The analysis shows a clear negative correlation between high risk / high reward investment profiles and size of venture fund, i.e. the smaller the funds, the higher the performance, but also the higher the risk. Two ways that LPs can mitigate the higher risk of smaller funds: 1. Diversify across more emerging managers, and 2. Invest across vintages with said managers. Here are the details: Small Funds (0-100MM): Mean TVPI: 4.3 Standard Deviation: 2.4 Median Portfolio Companies: 26 Mid-Sized Funds (100-250MM): Mean TVPI: 3.6 Standard Deviation: 2.0 Median Portfolio Companies: 24 Mid-Large (250-500MM): MeanTVPI: 3.0 Standard Deviation: 1.2 Median Portfolio Companies: 35 Large (500MM+): Mean TVPI: 2.7 Standard Deviation: 0.9 Median Portfolio Companies: 43

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Next one up, Glide! In an attempt to demystify some of the non-obvious elements we found when we first met the founders of our fastest growing portfolio companies at 186 Ventures, here is the third edition of the "idiosyncratic phenomenon". This highlight will be on Gautam A., Sameer Kapur, and Vishnu Chakroborty and their journey building Glide to bring world class, unparalleled enterprise grade infrastructure to the much overlooked market of credit unions and community banks-- some of the most important financial institutions across virtually every community in the US. Since we invested in their Winter, 2021 seed round, the company has built an incredible technology stack and has outpaced revenue projections by multiple orders of magnitude. This story is a *fantastic* reminder that it takes time to build incredible product and technology; the Glide story is a quintessential example of this startup proverb, in almost every regard. https://lnkd.in/e8b32CR2

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I loved this conversation with Scott Duke from OpnRoad Mergers & Acquisitions and Josh Levine from Private Market Labs! Bottom line? Canadian search IS different than other geographical reasons. Some of the topics we covered: 💵 Bank financing - deal structure looks much different based on funding models. 🇨🇦 Approach - Be warm, friendly and polite. Canadian business is very community centric and showing up in this manner is key. 📖 Education - search is a newer idea in Canada. Take the time to ensure your owner conversations include the What and How and not just the Why of the acquisition. ☝ One thing that doesn't change no matter where you are searching? Personalization. Show the owners you know them and have taken the time to understand them and their business. #regenerativeleadership #canadiansmb #eta

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Here’s a question investors are often asked: When evaluating early stage companies, how much time do you spend on due diligence around future exits? It’s not surprising we hear this question a lot. Also not surprising: it’s got a wide range of answers depending on the firm. Some don’t spend much time here at all. Others make it a point to put meaningful time in as part of their process. Our current thinking: take the time to do the work on public market comps. At Alpaca VC, we spend significant time understanding how public market investors will  realistically value a business based on margin profile, product, business model & TAM. In short, we want to know: how will this company be valued at scale when we get taken out? Yes, we can acknowledge that the journey toward exit is a windy road and that there may be pivots along the way, but there are still public market companies that have a business model similar to the early stage company you're evaluating. And you can always look at gross profit multiples if you think the margin profile will change over time. So we still do the work on the comps. Quantitative metrics we look at when making the comparison to public market comps include EBITDA multiple, revenue multiple, Gross Profit multiple or all of the above. As part of this process, it’s also important to factor in the public market company’s year-over-year revenue growth as this will also significantly impact the multiple it trades at. Simple example: if you have two public market companies with similar business models and similar margin profiles, but one's growing 100% year over year, and one's growing 50% year over year, then obviously the DCF (discounted cash flow) analysis is going to spit out a very different valuation for the one that's growing faster. Why this matters: When you take all of that information into account as you evaluate an early stage business, you can begin to create a realistic picture of how this company will be valued in the public markets at exit - or how an acquirer will value the company for an acquisition. Strategic acquirers may, of course, pay a premium, but we won’t underwrite for that. This allows us, for example, to form conviction around valuation based on revenue and gross profit predictions. If we think they can do $100M of revenue five years from now, we use this diligence process to form a thesis about whether the characteristics above (product, margin, business model, etc.) will cause the company to be valued at $200M vs. $500M vs. $1B at exit. Curious how other early stage investors think about underwriting an exit and how much time they’re spending on public market comps even though these companies are in their infancy.

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Yesterday I joined the AI Powering the New Energy Era summit, which was dedicated to exploring the impact of artificial intelligence on the energy sector. It was a true honor to share the stage with industry veterans Edwina Kelly of CPP Investments | Investissements RPC, Raymond Wood of Bank of America Merrill Lynch, and Emily Sanford Fisher of Edison Electric Institute, on a panel hosted by Brian Boland of BrightNight. How is AI impacting the energy space? There are two major trends emerging: 1. The use of AI is very energy intensive, creating an unexpected surge in power demand, just at the time when we need to decrease emissions from electric power, and when power demand is also growing from sources like electric vehicles. 2. Technology enabled by AI can also help make the electric power system far more efficient, and help manage the transition to a grid dominated by renewables and other zero-emissions sources. The first trend represents a big challenge, and the second represents a big opportunity. As the panel went on, it became clear that large institutions in the energy sector have a real interest in the new innovation that we support at MUUS Climate Partners. If that innovation can scale, it could provide solutions to some of the greatest challenges in energy today, such as growing power demand from data centers, and the expanding share of intermittent renewable generation. We talked about companies such as Harvest, 3E Nano Inc, and BrightNight. The talk can be viewed here: https://lnkd.in/eEa8ERxa

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Some investors we talk to are treating the AI hype wave with a “wait and see” attitude. They feel that if they missed out on the handful of LLM core model companies, they should sit tight and see the hype wave break before they get in the game.     We get it, but what sounds like sensible caution is predicated on two things: product delivery cycles and market adoption lag.    Product Delivery: It may seem hard to stay on top of the claims founders make on their AI products. But, what we can tell you is that we see impressive demos all the time. AI founders are getting deals with enterprise clients and delivering real results, already.    If products are already able to deliver high-trust outcomes, then the only thing that stands between hype and valuation gold is market adoption lag.    It’s easy to look at past adoption curves and think that we have plenty of time before the markets for these AI productivity solutions get big.      The problem with comparing past tech adoption curves is that the value of past technologies was never THIS obvious to buyers THIS EARLY.     🛒 Ecommerce:  While we love Amazon now, it took a while to feel like the selection and convenience trumped a loss of “try-before-you-buy."  ☁️ Cloud:   Sure it’s scalable and there are fewer headaches, but it took a while for IT leaders to give up the safety of “on-prem.”  📱 Mobile:   It took a while for the value of apps to compound to the point that everyone has a $1K computer in their pocket.    The difference: All these technologies started as solutions looking for problems!    AI is totally different. It starts with the exact thing that buyers want—productive outputs delivered within your workflows and contexts—and gives you that thing. At a massive discount!    Sure, there are AI founders building products that are harder to adopt. But structurally, we see AI application adoption accelerating much much faster than what we’ve seen before.     If ever there was a time for FOMO, it’s now.      That’s our take at VantagePoint. What do you think?  

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❤️ this from Mattias Ljungman - thanks for expanding on my Inception stage investing framework, no pun intended, with what comes after Inception with "Seed Expansion". Yes, seed is so confusing as everyone from pre-seed firms to multi-stage firms are writing checks. Hopefully founders can get some clarity with Mattias' post below on where to go for their early rounds. Also check out my initial post on what's happening in the venture market, The Race to Be First and What is Inception Investing? https://lnkd.in/eJhEsZ4s

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Abundance AND impact? Yes, please! 🌳 Merging historical IRRs of 35% with social impact investing, our search fund is a creative, emergent and exciting way to shape the future of Canadian small business. The New York Times did a great piece on traditional search funds and the opportunities in this space. #regenerativeleadership #canadiansearch #canadiansmb #eta #impactinvesting

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🚨 Special News Rundown 🚨 Federal Budget Review now live with John Ruffolo and myself discussing how the new capital gains taxes are sending a clear message to entrepreneurs and investors: “We Don’t Want You!” Check out the full episode below ⬇️

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If you're a Canadian entrepreneur, investor, or founder then this past week has made it painfully clear that when it comes to innovation and economic recovery the calvary won't be coming and is in fact running in the opposite direction. The federal government and associated regional innovation support agencies (ie Invest Ottawa) are failing to look at solutions aimed at effectively addressing an overall decrease in entrepreneurship and economic activity across the nation and it is now on us, as resilient Canadian entrepreneurs, to empower those who can bring the most value to the table if we are to strive for the quickest path forward towards economic recovery and helping the average Canadian family better their quality of life. I am proud to announce that RHA Ventures Inc. has answered that call 👏 In the face of rising costs for domestic businesses in Canada and competition from abroad, RHA Ventures, an Ontario-based venture capital firm specializing in cutting-edge technologies, announced today its investment in Real Life Robotics, a Waterloo-based company designing real robots for real businesses. This investment marks a significant milestone in the development of Real Life Robotics and underscores RHA Ventures' commitment to supporting true, tried, and tested founders and Ontario’s growing startup ecosystem despite an overall decrease in entrepreneurship across the rest of Canada. “Real robots, real people, and real-world challenges are what differentiate RLR as a technology company. We could not be more thrilled to have RHA Ventures, a group of experienced founders and problem solvers, on board as strategic advisors and investors as we help elevate Ontario globally as a home for first-in-class robotics and automation technology - empowering businesses with transformative robotics solutions that unlock new levels of efficiency, reliability, and scalability,” - Cameron Waite, CEO of Real Life Robotics. The numbers clearly show that the cost of getting involved in a business or launching a new product is too high for the average inexperienced Canadian and our economy has slowed in growth accordingly. On a macro level, we are placing too high an importance on new founders in a down market when we should be rewarding and doubling down on our true, tried and tested investors, founders and legacy businesses who have shown they are willing to take the risk. Thank you, Brian Foster and the rest of the team at RHA Ventures Inc. for taking this first step of the journey with us 🙏 https://lnkd.in/gSr5TP48

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Data siloes stemming from incompatible ERPs prevent the real-time visibility and controls companies require to optimize production across multiple locations and departments. As industry migrates towards more data-driven decisions, finance departments are now being asked to reconcile data-informed operational decisions with financial outcomes tied to the entire product life cycle. Maxa solves this acute pain point by effortlessly blending multiple data systems as one, enabling automated, enterprise-wide, insight generation for decision-makers. Raphael Steinman and Alexis C. Steinman are building a world-class team and roster of partners. BDC Capital’s Industrial Innovation Venture Fund is thrilled to support Maxa towards their goal of becoming a global leader in ERP insights automation. Onwards! 🚀 Aditya A., Joseph Regan, Jim Texier

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