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This is the third feature in our Hard Knocks series, presented by Mantle, which shares insights, war stories, and lessons learned from key players behind the scenes in Canadian tech: the ecosystem builder, the advisor, the investor, and the founder.
It’s fitting that Michelle McBane’s first foray into venture capital was a bet that paid off.
Her journey in the space began as a short term assignment, when she was seconded by her employer to Primaxis Technology Ventures, one of its early-stage investments.
“If I’ve learned anything over my years of investing, it is patience.”
Back then, McBane said she was just learning what venture capital was all about. But she found herself working at a fund focused on pre-seed, deeptech companies, including a University of Toronto spin-off commercializing diagnostic testing.
Despite her newness to the field, McBane’s work with the company impressed a follow-on investor in a portfolio company, who invited her to join their investment team.
It was during these years that McBane discovered her interest in seed-stage investing, where there’s less focus on high revenues and more focus on the potential of the founders, theteam, and the market opportunity.
“As far as the idea that you put $1 in here and you’re going to get $2 back out, these companies aren’t at that point at all, and I like that early-stage gray area,” she said.
The only women at the table
Today, McBane is still making big bets on potential. In 2017, she launched StandUp Ventures with a simple premise: there is an untapped competitive advantage in backing women-founded and women-led companies.
“The concept of StandUp was to show that you can get better rates of return investing with a gender lens, because you’re just getting a diverse population to the table,” she said. “There’s not enough capital going to women-led ventures, which is fundamentally an issue, but also we believe that diverse leadership will build more diverse teams.”
The push to bring more capital to women-led companies is still frustratingly in its seed stage, despite the efforts of McBane and others like her.
Women are not only underrepresented in the senior ranks of Canadian startups, but also in the funds that invest in them.
Almost half of Canadian venture firms are entirely male owned, while only two percent are entirely woman or Indigenous owned.
That statistic was top of mind for McBane when she was approached by the BDC Capital Fund of Fund team, who shared the idea for StandUp Ventures with the aim of giving women in tech a much-needed boost.
McBane said that she probably would have launched her own venture earlier had there been more women in the industry showing the way. But she credits StandUp’s achievements to the support of women like Whitney Rockley of McRock Capital, as well as Ilse Treurnicht, Neha Khera and Kerri Golden of Information Venture Partners.
The challenge now is to help this virtuous cycle continue by bringing more varied voices to every table, from the boardroom table to the cap table.
“I see it as passing the baton,” she said.
Embracing the gray area
McBane’s ability to spot long term potential has already helped produce outsized returns.
StandUp has raised two funds and invested in 26 women-led companies, including pharma tech company ODAIA and Arteria AI—which had two of Canada’s largest Series B raises in the last year.
Her portfolio companies include Coconut Software, Bridgit, Max Retail, TealBook, Indiegraf, Sampler and Disco, and support more than 700 jobs.
With early-stage investing, McBane says the focus isn’t on a finished product—especially in tech, where there’s often just a rough idea and little data. Some teams barely have a minimal viable product.
Instead, she said, investors need to support founders who can attract top talent, customers, and other investors.
Staying focused on this potential isn’t easy, she admits. Startups need time to grow and innovate, and rushing them down their growth path can lead to missed opportunities.
“In this environment, where it’s taking longer to pull rounds together, we as investors need to make sure that we’re doing the best we can with the cash that we have on hand,” she said.
This is especially essential during market contractions, she added, because venture provides the capital that keeps businesses afloat when other funding sources disappear.
The key, she said, is to help companies stay focused on achieving their potential, and not get thrown off by challenges along the way.
“With venture capital, it’s always going to take longer,” she said. “If I’ve learned anything over my years of investing, it is patience.”
Feature Image provided by Michelle McBane.
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