A MODEST CANADIAN VC HAS AN HISTORIC EXIT WHILE NO ONE’S WATCHING

Just before a long weekend at the very height of summer, an unassuming VC in Toronto quietly finalized one of the biggest exits in the software category by a Canadian VC. Most people missed it, but there’s little doubt the US$1.55 billion acquisition of financial modelling SaaS startup Adaptive Insights by cloud-based platform Workday earned Information Venture Partners the attention of the venture capital community. “Our phones kind of blew up for a couple hours, from both the US and Canada,” says Rob Antoniades, cofounder and general partner of Information Venture Partners, one of the early investors in Adaptive Insights.

“We got a great response from the VC community. Lots of congratulatory emails, messages, and tweets,” he recalls. The lack of broader coverage is not surprising, given it was announced in peak summer season, but we think it’s worth highlighting. It’s rare that a Canadian VC headquartered in Toronto — not in the Valley, where both Adaptive Insights and Workday are based — completes an exit of that magnitude. “We’re happy for the Adaptive Insights team, but we can’t take credit for their success,” says Antoniades. “They had the right team, the right product-market fit and they worked hard to get it right. It’s really their win.”

And what an impressive win. Workday agreed to pay Palo Alto-based Adaptive Insights over US$1.5 billion to add Adaptive’s Business Planning Cloud software to its portfolio. The combination will enhance Workday’s suite of enterprise SaaS (Software as a Service) products for financial and human capital management. With the addition of Adaptive Insights’ business-planning software, Workday hopes to “fast track [its] financial planning roadmap by more than two years, delivering customers new, advanced modeling capabilities.”

The VC firm’s relationship with Adaptive Insights goes back more than a decade. In 2007, it caught the attention of Information Venture Partners cofounders Rob Antoniades and Dave Unsworth when Adaptive’s founder Rob Hull devised a way to alleviate a key pain point for CFOs — the dreaded planning season. It was the start of the cloud revolution, and Hull had developed an on-demand, cloud-based financial management and business planning tool with real potential. This was soon after Antoniades and Unsworth joined forces at RBC Venture Partners, the in-house VC arm of RBC Royal Bank. The two intrapreneurs spun it out in 2014, brought on Kerri Golden as CFO, and raised their second fund, worth $106 million, in 2016.

How did this little-known firm pull off one of the biggest software exits by a Canadian VC in history? According to our calculations using data from PitchBook, the private market data provider, the Adaptive deal is the third-largest software exit led by a Canadian VC. Ultimately it comes down to focus, says Antoniades.

The firm’s approach is built on four pillars, community, vision, FinTech and SaaS, and the latter two are key. It only invests in business-to-business FinTech and enterprise SaaS companies that offer specialized services to financial institutions. That focus helps Information Venture Partners sharpen its knowledge and understanding of what CFOs need and how FinTech startups can help. Serving finance teams is a complex business. Working with financial institutions and meeting regulatory requirements can take years. At the time of the investment, Adaptive’s annual revenue was $1 million. Last winter, it reached $100 million in ARR (annual recurring revenue), a milestone few SaaS companies reach.

It’s also easier to focus if you take the lead — which is Information Venture Partners’ modus operandi. The VC has a strong preference for getting in early, taking the lead and staying for the long haul. “We will typically lead or co-lead rounds of financing, usually Series A,” says Antoniades. They cast themselves as active partners who aren’t afraid to get their hands dirty. They get involved in their portfolio companies and they like to be invested in a company for a long time.

Community is another key pillar, and their approach to community means casting the net wider than most. Yes, Adaptive Insights is based in Silicon Valley, but many of Information Venture Partners’ newer portfolio companies are in markets you might not expect. “We’re not afraid to go into secondary markets in our quest for innovative tech companies that may escape the attention of other VCs,” says Antoniades. “We like to be active in the market, talk to people on the ground, and go where other investors wouldn’t even try.”

Among their successful exits: Igloo, a digital workplace solutions provider in Kitchener, Ontario, and eSentire, a cyberthreat detection and response platform in nearby Cambridge. And in their current portfolio? There’s Verafin, a fraud detection and anti-money laundering software provider in St. John’s, Newfoundland, and Coconut Software, an enterprise appointment-scheduling platform in Saskatoon. And in Toronto and San Francisco, there’s Flybits, an AI-based platform that creates micro-personalized customer experiences.

Given the firm’s track record, these newer additions to the Information Venture Partners portfolio suggest they’re companies to watch — just in case the modest-but-mighty Canadian VC pulls off another quiet success story while no one is watching.

RBC and Espresso Partner to help Canadian Tech Entrepreneurs to Scale and Grow

TORONTO, August 2, 2018 – Royal Bank of Canada (RBC) and Espresso Capital are pleased to announce the launch of a new national partnership to meet the unique banking and financing needs of Canada’s fast growing technology sector.

The partnership combines the capabilities of RBC, Canada’s leading technology bank, and Espresso Capital, the country’s most active and entrepreneurial venture debt firm, to provide best-in-class capital and banking solutions coupled with industry expertise to support Canadian technology entrepreneurs at every stage of their growth journey.

“Building on RBC’s leadership position in the technology and knowledge-based industries, the partnership with Espresso Capital will help Canadian technology entrepreneurs accelerate their growth and bring their innovations to the world stage” said Niranjan Vivekanandan, Vice President, Strategy, Commercial Banking , RBC. “We have the scale and breadth of experience to support tech companies looking to expand their operations and this partnership represents another way that we are delivering differentiated solutions that meet the needs of the Canadian technology sector.”

“Espresso is excited to launch this unique partnership with RBC,” said Alkarim Jivraj, CEO of Espresso Capital. “This partnership will improve access to capital and innovative business solutions for fast growing technology companies across Canada. Working together, we will provide tech entrepreneurs with industry leading debt financing solutions. RBC and Espresso have been working closely since 2009 and this partnership builds on our shared mission to help entrepreneurs achieve their goals.”

RBC’s Knowledge-Based Industries group is the largest technology focused commercial banking team in Canada, with over 25 years of experience supporting innovative entrepreneurs with tailored advice and services to manage and grow their businesses into successful companies that create real impact.

Headquartered in Toronto with offices in Montreal and Vancouver, Espresso has financed over 230 companies since 2009 and was ranked the most active Canadian venture debt firm in 2017 by the Canadian Venture Capital and Private Equity Association.

About RBC

Royal Bank of Canada is a global financial institution with a purpose-driven, principles-led approach to delivering leading performance. Our success comes from the 81,000+ employees who bring our vision, values and strategy to life so we can help our clients thrive and communities prosper. As Canada’s biggest bank, and one of the largest in the world based on market capitalization, we have a diversified business model with a focus on innovation and providing exceptional experiences to our 16 million clients in Canada, the U.S. and 34 other countries. Learn more at www.rbc.com.

About Espresso Capital

Since 2009, Espresso Capital has provided over 230 early and growth stage technology companies with founder friendly capital. We offer lines of credit and term loans to enable entrepreneurs to grow their businesses without dilution, board seats, or personal guarantees. Our mission is to keep founders in control with fast, fair, and flexible capital. Learn more at www.espressocapital.com.

Contact Information

Royal Bank
Jeff Lanthier
jeff.lanthier@rbc.com
416-903-7388

Espresso Capital
Corey Goldman
Goldman Communications
corey@goldman-communications.com
416-322-2863

Espresso Launches New Industry Leading SaaS Lending Program

Espresso Capital has launched a first-of-its-kind lending program for SaaS companies seeking to raise their Series A or B financing or supplement their existing debt financing arrangements.

Unique in Canada, the new SaaS lending program will provide top-performing SaaS companies with up to 24x MRR in growth financing. Offering loans up to $10 million, the new lending program raises the bar for non-equity funding options for SaaS companies.

“With this new lending program we want to offer a truly differentiated funding alternative for fast growing SaaS companies,” said Espresso CEO Alkarim Jivraj.

The new 24x MRR lending program leverages the insights Espresso has gained over the past five years providing loans to fast growing SaaS companies. Specifically, Espresso has identified an opportunity to better serve top-performing companies with a lending solution that better matches their value creation trajectory.

Espresso is Canada’s leading venture debt provider, with more than 230 companies funded since 2009. The company was ranked most active venture debt firm in 2017 by the Canadian Venture Capital and Private Equity Association.

“Venture debt offers a great value proposition for both founders and their investors” said Will Hutchins, Espresso Managing Director. “Companies that use venture debt as a core part of their financing strategy can materially reduce dilution and their founders retain majority control longer.”

Why Venture Debt, and Why Now?

Interview with Alkarim Jivraj, Espresso CEO featured in the TakeOver Magazine. Republished with edits.

The technology sector continues to be one of the main drivers of economic growth – globally, and certainly within Canada. Indeed, tech companies, specifically those focused on the SaaS market, continue to churn out amazing new products and services that are changing the world as we know it.

That effort requires money, and lots of it. Traditionally, that funding has come from venture capital and other private equity sources, who see promise in a technology or product and invest in it – in exchange for equity. This gives the founders cash, but it also gives them less control, as it dilutes their ownership.

If founders lose control too early, before they have enshrined their vision, set the future direction of the company, and instilled the right corporate culture, the result can be a loss of entrepreneurial energy and a sub-optimal exit.

Venture debt is a less-known and less-utilized way to raise cash. Popular in the U.S. but still catching on here in Canada, venture debt has proven to be one of the key tools to support the growth of tech companies – by providing financing that not only allows founders to retain control longer, but also creates greater net worth for themselves, their employees and their early investors including VCs.

TakeOver Magazine asked Espresso Capital Founder and CEO Alkarim Jivraj about some of the questions – and misperceptions – he and his team encounter when talking to tech companies and their founders about choosing the venture debt path.

What exactly is venture debt?

Venture debt is what it sounds like: a term loan or line of credit used by technology companies to fund growth investments. “Unlike traditional bank lending, venture debt is available to start-up companies that do not have positive cash flow or significant assets to use as collateral.” (Erhart et al., Smart Financing: The Value of Venture Debt Explained. (Trinity Capital Investment, 2016) 2.)

Why is it a good capital-raising option?

Venture debt allows founders to retain both economic and strategic control over their company longer than if they were to fund with equity alone. Using the most recent data from Pitchbook, we estimate that if a company funded each of its seed, A and B rounds using one-third debt and two-thirds equity, the pre-seed would retain 52% ownership versus 40% if the funding was comprised of equity alone.

Founders and pre-seed investors are not the only beneficiaries of using venture debt. The equity investors in the seed and A rounds also benefit from preserving greater dry powder to maintain their pro-rata ownership in later rounds. Additionally, venture debt can improve the prior round investors’ IRR if they can use the investment to create greater company value in advance of the next round.

What are the other benefits?

For one, it’s efficient. There is a lot less paperwork than equity financing, and founders usually get money much faster, sometimes in as little as a couple of weeks. An additional benefit specific to Espresso is our understanding of the “founder’s mentality” – we are entrepreneurs, so we understand entrepreneurs. When founders have the ability to shape and control their destiny, they generally do better. We allow entrepreneurs to retain this control and to grow their businesses without dilution, board seats or personal guarantees.

How is the capital used?

When companies think of debt financing it is often in the context of needing a bridge or funding extension. Obviously, this is a very good use for debt, but its impact can be much more profound if incorporated into a long-term funding strategy. A long-term venture debt partner can be a very valuable ally in helping to ensure the business has access to quick and timely funding to take advantage of growth opportunities as they arise. For companies growing very rapidly, deferring an equity round for 12 or 18 months can have a huge wealth impact for the founders and their existing investors. When equity markets slow or shut down, venture debt can help companies continue to make hay while their competitors are in hold-mode. And for companies going through growing pains, venture debt can help provide the extra runway to get things back on track.

What are the common misperceptions associated with venture debt?

Many first-time entrepreneurs’ perceptions of venture debt are informed by views about personal debt generally. They look at interest rates on credit card debt and equate venture debt as the equivalent to credit card debt – essentially living beyond your means. The same entrepreneurs happily use mortgage debt to finance their home purchases because they realize that homeownership is one of the core strategies for building long term personal wealth. The important nuance that is missed is that cost of capital for a given type of financing is related to underlying risk of the asset being financed. Clearly debt financing for a fast-growing technology company inherently exposes the investor to greater risk than mortgage financing for residential real estate. Venture debt priced in the mid-teens, or if combined with senior debt with a blended cost in high single digits, is essentially a replacement for equity which typically costs two or three times as much. Using venture debt to reduce equity dilution and total weighted average cost of capital for growing companies is not the same as living beyond your means by racking up personal credit card debt. Certainly, the track record of companies in Espresso’s portfolio proves this critical point.

Tell us more about Espresso’s track record.

Espresso has been providing venture debt financing for over eight years – during this period we have funded over 225 companies and 700 loan advances. We’re exceptionally good at what we do, mainly because we have deep expertise in tech investing and have also invested in applying data science to help our team objectively and consistently measure the risk inherent in each new loan. Our team includes former VCs, bankers, CFOs and technology company executives. Our track record of success speaks for itself, and should provide comfort to our borrowers knowing that they have an expert funding partner that understands the ups and down of the growth journey.

How does Espresso size up risk?

Understanding and predicting risk in every deal is critical to venture debt underwriting. To size up the risk of a potential borrower, we have developed the Espresso Credit Score, which is an Artificial Intelligence-powered risk-scoring model that helps us objectively measure the risk inherent in every loan relative to our database of 700-plus loan outcomes.

We have also built a software platform that enables us to ingest lots of financial, operational and market data to make better predictions regarding a borrower’s future performance, helping us make smarter lending decisions. Ultimately, we plan to push all of these insights back to our customers to help them optimize their financial planning and analysis, and help inform their investment decisions.

A Real-Life Example:

Toronto-based Strongpoint, founded in 2013, bootstrapped its growth until Nov. 2016 when it secured sales expansion financing from Espresso, now totaling $5 million. Strongpoint used the funding to triple headcount and quintuple revenues in the 18-month period following funding. According to Mark Walker, Strongpoint founder, “Espresso’s non-dilutive funding was the right solution for the company. We explored venture capital but ultimately decided to partner with Espresso at this stage of our growth because it represented the most compelling economic outcome for our founding team.”

Sharing the upside: How Q4 Inc. found a unique way to give back

Darrell Heaps is both a serial entrepreneur and a serious cyclist. Q4, a leading provider of cloud-based investor relations and capital markets solutions, is the third company he’s founded. And his passion for cycling helps explain the 20 bicycle racks that dominate the lobby of Q4’s global headquarters on Toronto’s trendy King Street West. The tagline above the racks reads: “Eat. Sleep. Ride. Repeat,” and on the opposite wall, the life-sized mural of a nearby streetscape is emblazoned with the caption, “Enjoy the ride.”

 

It’s a great metaphor — and not just for cyclists. Heaps routinely logs 150-250 kilometres a week on his bike, and Q4 Inc. actively encourages its 124 employees worldwide to attend to their health and wellness as they work hard to maintain Q4’s growth. “Hustle. Grind. Win. Live,” are the company’s core values, and Q4 hosts a quarterly employee appreciation week to help employees refocus on the ‘live’ part. Despite having big goals and aggressive growth targets, both Heaps and Q4 still find time to enjoy the ride and give back to community.

 

“When you start a business, you’re very inward focused: you have objectives and targets, you’re raising money, you’re growing rapidly, and you’re trying to hit your targets. Your world can become very myopic,” says Heaps. “But as your company grows, and it gets to a certain point in its growth, you realize that it has a broader impact in the world. A company is much more than its P&L,” he observes. So Heaps embarked on a broad initiative toward greater community involvement and employee engagement. As part of that, Q4 pledged a small share of the company to the Upside Foundation in spring 2017.

 

Why would a company donate to the Upside Foundation, instead of donating directly to charity? Because privately held companies like Q4 have limited liquidity. There’s a perception that fast-growing tech companies are flush with cash due to high valuations and multi-million-dollar funding rounds — but in fact they’re pretty cash poor. “In the early days, you’re just hustling and trying to build a sustainable business. How can you donate when you’re perpetually burning money,” asks Heaps. The answer? Donate options instead of cash — which is where the Upside Foundation comes in.

 

“Upside offers a rare model that allows you to be a good corporate citizen and give back to your community without expending a lot of equity or cash,” says Heaps. You can take what’s most valuable in an early-stage company — not its cash flow, but its promising future — and set aside some of the upside. “Typically early stage companies can’t donate stock options, but the Upside Foundation gives startups a mechanism to do that,” says Jennifer Couldrey, the Executive Director of Upside. The Upside Foundation offers early-stage, high-growth companies a way to share their future financial upside.

 

How does it work? Companies pledge to donate stock options or warrants to a charity of their choice, and when they have a successful liquidity event like an acquisition or an IPO, it’s converted to a cash donation. To date, over 200 companies have signed on, including some recognizable names in Canadian tech, such as Weatlhsimple, Wattpad, Hopper and Espresso Capital. Q4 jumped onboard at a pivotal moment, making their commitment on June 30, 2017. In the process, they helped the Foundation achieve its 150×150 goal: to have 150 companies make a philanthropic commitment in time for Canada’s 150th birthday.

 

Aside from the patriotic timing, Heaps says Q4 was inspired to get involved by the company’s client base. “All of our clients are large publicly traded companies. We saw that corporate social responsibility was becoming a consistent theme among them, and we began thinking about how we could do it,” says Heaps. “It’s important to give back. We all spend a tremendous amount of time working, so our work should have a bigger impact than just a paycheque,” he observes. “Enjoy your life, enjoy your work, contribute to your community, and give back.” Like the mural says: “Enjoy the ride.”

Calling all AI Companies: Win $1 Million Investment

Espresso is very excited to be an investment partner of ElevateR Pitch: AI Edition, an investment competition that will give 16 promising Canadian AI companies the chance to pitch for up to $1 million in investment from Espresso Capital, ScaleUP Ventures and other participating VCs (soon to be announced). The investment will be a mix of venture capital and venture debt.

Applications to be selected as one of 16 finalists are now open. Deadline is July 31, 2018. Interested companies should apply online. The 16 finalists will present to a panel of judges including Al Gore on the Elevate Tech Fest Main Stage on September 25, 2018.

To qualify, startups must be AI-related, have less than $10 million in revenue or funding, and be incorporated in Canada.

Elevate Tech Fest is a four day tech and innovation festival taking place between September 24 – 27, 2018 in Toronto. Over 10,000 guests will experience 300 inspiring speakers, curated networking opportunities and 12 public and private content tracks.

Espresso will be hosting, for the second year in a row, one of the content tracks – Elevate SaaS on September 27 – led by some of the leading SaaS executives in North America. Save the date and stay tuned for the speaker and master classes line-up to be announced in August.

 

MEET JEAN-MICHEL DOMARD, ESPRESSO CAPITAL’S DIRECTOR OF EASTERN CANADA

Home to C2, StartupFest, FounderFuel, and a thriving tech ecosystem, Montreal is quickly becoming a prime destination for investors from around the world. Espresso Capital is very excited to announce that it has opened a Montreal office, led by Jean-Michel Domard, who was previously a member of BDC’s Montreal technology lending team. Below is an interview Katie Paterson conducted with Jean-Michel.

 

KP: Why did you decide to join Espresso Capital?

JM: I felt really passionate about Espresso’s mission, which is to provide founders with alternatives to traditional bank debt and venture capital. I think that the Canadian market is not very creative when it comes to financing solutions for technology companies, and founders don’t know all the options that are available to them. It’s a shame because I see many talented entrepreneurs giving up way too much equity to finance their next step. Espresso offers companies a great, non-dilutive growth financing alternative. As a bonus, founders do not have to give up board seats or personal guarantees, nor do they have to sign into a long list of irrelevant covenants.

Also, having worked in a large financial institution for four years, I was really excited to join a smaller team with the agility necessary to complete more complex transactions. I hope that we can show founders the diversity of financing options out there – it’s a really interesting challenge.

 

KP: What are your short-term goals and priorities?

JM: Venture debt is not very well-known in Quebec so I am primarily focusing on educating the market. I intend on demonstrating how venture debt can be a great complement to both VCs and traditional banks, as well as developing a brand awareness of Espresso Capital in general.

I think that there’s tremendous potential in Quebec: the ecosystem has been growing a lot in the past few years and is one of the most active in Canada, and I definitely think that Espresso can play a great part in its continued development.

 

KP: How do you see technology market changing in the Quebec region?

JM: When I started my career financing companies six years ago, the tech scene in Quebec was in its infancy but everything changed in the last few years. Companies are exiting and we are seeing more 2nd and 3rd time entrepreneurs. But compared to Toronto, Boston or Silicon Valley, there’s clearly still a lot to do. Our community is great at backing seed companies but Quebec definitely lacks growth capital. In terms of the network, entrepreneurs need to focus more on helping each other and creating a community. This extends to intermediaries, banks, and investors as well. It really takes a village to bring a company from seed to IPO.

 

KP: Tell us about your experience prior to Espresso Capital.

JM: I grew up in France and had my first North American experience in 2003. I was 18 and volunteered in a Summer Camp near Boston. I enjoyed the North American way of life so much that I came back to Canada in 2005 to study Entrepreneurship and Management at the University of Montreal.

I started my career in 2013 at PME-MTL, a non-profit organization supported by the City of Montreal that offers support and financing to startups, with a focus on young tech companies.

I joined BDC’s Technologies Group in 2014, where I worked on offering term debt and mezzanine financing to fast growing venture backed IT businesses ranging from $1-10M.

 

KP: What do you think is the most exciting technology trend in happening in Canada?

JM: I think AI is going to change the world, if it hasn’t already… for better or worse. I have an AI assistant named Amy who books my meetings. I wish she could bring me coffee but that has yet to happen. She still makes a ton of errors but I like her the way she is. (@ Amy: please don’t kill me when the bots take over!).

 

———-

Accueillant C2, le StartupFest, FounderFuel et un écosystème technologique florissant, Montréal est en train de devenir une destination de choix pour les investisseurs du monde entier. Espresso Capital est très heureuse d’annoncer qu’elle a ouvert un bureau à Montréal, dirigé par Jean-Michel Domard, qui était auparavant membre du Groupe Technologies de BDC à Montréal. Voici une interview que Katie Paterson a conduit avec Jean-Michel.

KP: Pourquoi as-tu décidé de rejoindre Espresso Capital?

JM: Je me suis senti vraiment passionné par la mission d’Espresso, qui est de fournir aux fondateurs des alternatives à la dette bancaire traditionnelle et au capital-risque. Je pense que le marché canadien n’est pas très créatif lorsqu’il s’agit de financer les entreprises technologiques, et les fondateurs ne connaissent pas toutes les options qui s’offrent à eux. C’est dommage parce que je vois beaucoup d’entrepreneurs talentueux qui laissent aller beaucoup trop d’équité pour financer la croissance de leur compagnie. Espresso offre aux entreprises une excellente alternative de financement de croissance non dilutive. En prime, les fondateurs ne sont pas obligés de donner des sièges sur leur conseil d’administration, des garanties personnelles, ni-même de signer une longue liste de clauses restrictives non pertinentes.

De plus, ayant travaillé dans une grande institution financière pendant quatre ans, j’étais vraiment excité de rejoindre une petite équipe avec l’agilité nécessaire pour effectuer des transactions plus complexes. J’espère que nous pourrons montrer aux fondateurs la diversité des options de financement – c’est un défi vraiment passionnant!

 

KP: Quels sont tes objectifs et priorités à court terme?

JM: La “Venture debt” n’est pas très connue au Québec (et pour preuve le terme n’existe même pas en Français!), donc je me concentre principalement sur l’éducation du marché. J’ai l’intention de démontrer comment ce type de financement peut être un excellent complément aux Fonds de capital-risque et aux banques à charte traditionnelles, ainsi que pour développer la notoriété de la marque Espresso Capital en général.

Je pense qu’il y a un énorme potentiel au Québec: l’écosystème a beaucoup grandi au cours des dernières années et est l’un des plus actifs au Canada, et je pense vraiment qu’ Espresso peut jouer un rôle important dans son développement continu.

 

KP: Comment vois-tu le marché de la technologie changer dans la région du Québec?

Lorsque j’ai commencé ma carrière en financement il y a six ans, la scène technologique ici en était à ses balbutiements. Les choses ont rapidement évoluées ces dernières années avec l’émergence de plusieurs succès québécois. Nous voyons à chaque année de plus en plus d’entrepreneurs qui en sont à leur  2ème voir même leur 3ème startup.

Mais lorsqu’on regarde des marchés comme Toronto, Boston ou encore la Silicon Valley, il reste encore beaucoup à faire. Notre communauté est très forte à soutenir les jeunes entreprises, mais le Québec manque définitivement de capital de croissance. En termes de réseau, les entrepreneurs devraient s’entraider davantage et se concentrer à la  création d’une communauté plus riche et mieux structurée. Cette remarque s’étend également aux intermédiaires, aux banques et aux investisseurs. Il faut vraiment un village pour amener une entreprise de la startup à son introduction en bourse.

 

KP: Parles-nous de ton expérience avant Espresso Capital.

J’ai grandi dans le Sud de la France et j’ai eu ma première expérience en Amérique du Nord en 2003. J’avais 18 ans et j’étais bénévole dans un camp d’été près de Boston. J’ai tellement aimé le mode de vie nord-américain que je suis revenu au Canada en 2005 pour étudier l’entrepreneuriat et la gestion à l’Université de Montréal.

J’ai débuté ma carrière en 2013 à PME-MTL, un organisme sans but lucratif soutenu par la Ville de Montréal qui offre du soutien et du financement aux startups, notamment pour les jeunes pousses technologiques.

J’ai ensuite rejoint le groupe Technologies à la BDC en 2014, où j’ai travaillé 4 ans à titre de directeur principal. Mon rôle à BDC consistait à offrir des prêts à terme et des financements mezzanine à des entreprises technologiques en forte croissance, supportées par du capital de risque, et dont le chiffre d’affaires allait de 1 à 10 millions de dollars.

Selon toi, quelle est la tendance technologique la plus excitante au Canada?

Je pense que l’IA va changer le monde, si ce n’est déjà fait … pour le meilleur ou pour le pire. J’ai une assistante virtuelle nommée Amy qui organise mes rendez-vous- J’aimerais qu’elle m’apporte du café mais cela n’a pas encore été fait ;). Elle fait encore beaucoup d’erreurs mais je l’aime comme elle est. (@ Amy: s’il te plaît ne me tue pas lorsque les robots nous envahiront!).

Brice Scheschuk: Investing in People

As a champion of Canadian technology and an active venture investor, Brice Scheschuk looks for three key traits in any startup: Talent, Team, and Culture. Only when he’s sure a company has what it takes to succeed does he shift focus to the organization’s product and its path to commercialization. Without the right people, he says, even the best product or service will fall flat.

Scheschuk comes by these instincts naturally. As CEO of Globalive Capital, he’s been part of a tight team that redefined business communications, and then launched Canada’s fourth national wireless carrier, Wind Mobile. Tony Lacavera, Globalive’s highly visible and visionary leader, admits he couldn’t have succeeded without Scheschuk’s finance and strategy skills, and the regulatory savvy of chief legal officer Simon Lockie, now chief corporate officer of the company’s new spinoff, Globalive Technology Partners.

The team built Wind Mobile to 940,000 customers before accepting a $1.6 -billion acquisition bid from Shaw Communications in 2016. While many teams break up after a successful exit, Globalive’s leaders stayed put. Redeploying a chunk of the proceeds (Scheschuk will only say it’s north of $100 million), they repositioned Globalive as a diversified investment firm with a commitment to accelerate early-stage businesses in sectors as diverse as media, healthcare, e-commerce, and AI. Its 100 or so investments include Flexiti Financial, TimePlay, and TouchBistro.

After 15 years together, what makes Globalive’s team work? “We have figured out everyone’s strengths and weaknesses,” says Scheschuk. “Tony is the big thinker. He loves risk, and he’s a master of networking. Simon does legal, and I’m a finance/operations, people and culture guy. We defer to each other’s strengths. We know better than to step on each other’s shoes.”

Scheschuk currently splits his time between Globalive Capital and Globalive Technology Partners, which will take a more hands-on, operational role with promising tech firms, helping them build new software based on machine learning and blockchain.

If you’re an entrepreneur looking for investor attention, get thee to an accelerator. The days of Globalive finding its investments through random networking and coffee meetings are over. Scheschuk says Globalive’s relationships with programs such as Toronto’s DMZ, Creative Destruction Lab, and Next Canada lead to the best deals: “These are great harvesting grounds for guys like us.” He says the best accelerators put entrepreneurs “through a rigorous program with super-smart mentors around the table. You get to see these entrepreneurs in action, and then you see who [among the mentors] writes cheques for them.”

Scheschuk pauses thoughtfully when asked for his best advice to startups. “The best entrepreneurs are strategic thinkers about their capital stack,” he says at last. Whether you’re working on a seed round or series B raise, he says, “you have to be thinking two or three levels ahead.” Growth is a journey, not an event: “The people who are the most successful are the ones who understand this early.”

When asked to cite the most common mistakes that entrepreneurs make, Scheschuk offered three:

  • Raising too little capital or too much. You don’t want to give up too much of your company to early-stage investors, but you never want to run out of money before you’ve hit your milestones.
  • Not creating the right team culture. Scheschuk looks for real rigour in your team-formation decisions. Not only do you need all the right skills around the table, but everyone must have similar values and keep their egos in check.
  • Placing too much emphasis on your product. “I value marketing over product,” he says. In today’s Cloud era, with the latest development tools, it’s easier than ever to create a product. “But the ability to get traction and differentiate yourself is much, much harder.”

Above all, Scheschuk says, when assessing founders to invest in, “I do my best to suss out character.” He looks for humility, self-awareness, willingness to lead from the front – and ability to learn. “Pre-learn as much as humanly possible about what you’re likely to go through,” he warns. “You have to know where the pitfalls are.”

For Amar Varma, the Relationship is Job One

On March 27th, Amar Varma, Co-founder & COO of Autonomic, was Guest of Honour at the Espresso’s Founders’ Dinner. Our community enjoyed hearing about his view on long-term relationships in business. Here’s what you should know about our successful honouree.

Image result for amar varma autonomic

Amar Varma has done it all. In a career spanning two decades he’s been a chip fabricator, software developer, marketer, entrepreneur, angel investor, venture capitalist – and now, auto executive. But in any journey, it’s not the mileage that counts: it’s the people you meet along the way.

In January, the mobility startup he co-founded in late 2016, Autonomic.ai, was acquired by his longtime client Ford – making Varma and his partners true players in shaping the future of transportation. Their cloud-based platform connects and empowers the fleets of tomorrow: autonomous, electrically powered, and on-demand. While Ford was Autonomic’s first client, Varma’s vision extends much further. “We want this to be the platform of the entire transportation industry.”

VC’s typically urge entrepreneurs to earn revenue as fast as possible. True to its founders’ roots, Autonomic began collecting customer revenues three months after its October 2016 start. “If you’ve been building a platform for more than a quarter, and there’s nobody on it, you don’t know what you have,” says Varma. “You have to be able to test it.”

But it’s not just cutting-edge sensors, lasers and robotics that power Varma’s world; personal relationships fueled his success. Varma has nurtured them since he studied electrical engineering at the University of Waterloo (and he’s still in touch with most of his classmates). He worked for all-star employers such as ATI, Newbridge Networks and Silicon Valley-based Cypress Semiconductor before joining VenGrowth, a prominent Toronto-based private-equity firm. 

In 2008 he founded Extreme Ventures Partners, which provided early-stage capital to Canadian startups – and scored with successful exits such as Bumptop, Rypple, and Well.ca. If it was not enough to run an investment firm, Varma and his Extreme co-founder, former Cisco engineer Sundeep Madra, also launched Xtreme Labs, a mobile-app development firm that attracted blue-chip clients such as Facebook, Twitter, J.P. Morgan Chase, and the NFL. Xtreme grew to employ 300+ people by 2013, when it was acquired by San Francisco cloud-software company Pivotal Software. The two founders stayed on for another three years, working closely with Ford on its FordPass “connected car” initiative, before leaving Pivotal along with a small group of Xtreme colleagues to build Autonomic.

Demonstrating the power of relationships, Varma says several clients have followed him and Madra from Xtreme to Pivotal to Autonomic. Only by connecting with clients and identifying with their problems can you build a relationship, he says. “If you just view your customers as customers, people see through that. If you see it as a genuine partnership, people will come back to you again because they trust you. You can end up with a life-long series of opportunities.”

In fact, Varma sees this as a golden age for collaboration between startups and corporations. Given the changes overtaking all industries, he says, “You’re going to see more and more entrepreneurs becoming influential at Fortune 500 companies. Their mindset is changing; it’s all about disruption. The only way to get on top of that is to have an agile platform for making fast decisions – and that’s what entrepreneurs do.”

But building better relationships doesn’t just apply to clients. Varma would like to see more Canadian founders building peer relationships the Valley way, meeting regularly one-on-one to tell stories, compare notes and share support and advice. “If we want to be a big player in tech, we have to get better at collaborating,” he says. “We have a solid tech community, but we fall short in terms of getting together as individuals to move our thought processes forward. We can’t build great technology by playing our cards close to our chests. It’s all about putting your cards on the table and talking to people.”

About the Author 

Rick Spence is a Canadian journalist, speaker, and consultant on business growth, entrepreneurship, and opportunity. He is currently a director at Startup Canada and President of CanEntrepreneur Communications.

About Espresso Capital

Espresso provides founder friendly venture debt to technology companies across Canada. Espresso is funded by founders, high network families, and retail investors. Espresso funds are available for purchase through approved investment dealers. Contact us for more details.

 

Espresso Capital Recognized as Canada’s Most Active Venture Debt Firm in 2017

TORONTO, ONTARIO — (March 23, 2018)  — Espresso Capital is pleased to announce that it has been named the most active Canadian venture debt firm for 2017 by the Canadian Venture Capital & Private Equity Association (CVCA).

With 84 loan advances totalling $51 million during the year, Espresso grew its portfolio 110% year-over-year.

According to the CVCA report, venture capital activity increased by 11% during the year. With 592 deals worth a total of $3.5 billion transacted during 2017, the Canadian venture capital landscape has doubled in the last five years alone.

“It was a banner year for Canadian venture all around,” said Espresso Capital CEO Alkarim Jivraj. “We’re proud to be playing a role in helping great Canadian founders build great companies and expand Canada’s economic footprint.”

Espresso Capital’s growth can be attributed to the strength of the SaaS market, which accounted for 73% of the firm’s activities in 2017. Espresso was active across Canada, with Ontario representing 60% of loan volume, followed by British Columbia at 23% and Quebec at 10%.

 

About Espresso Capital

Since 2009, Espresso Capital has provided over 230 early and growth stage technology companies with founder friendly capital. We offer lines of credit and term loans to enable entrepreneurs to grow their businesses without dilution, board seats, or personal guarantees. Our mission is to enable founders to control their destiny with fast, fair, and flexible capital.

For more information, please visit www.espressocapital.com.

 

Contact Information

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