In January of this year, I sat down with Katherine Homuth, founder and CEO of the material innovation and textile manufacturing startup SRTX.
The company not only uses futuristic materials to make incredibly strong clothing but is modernizing Western manufacturing to do this from its home base in Montréal. As I said in January, Katherine Homuth wants to solve for everything.
“This is worth the pain of attempting to figure out how to do it. But attempting to figure out how to do it required us to basically rethink everything about that traditional outsourcing model.”
Katherine Homuth
SRTX might still achieve these lofty goals, but it won’t be with Homuth as its leader.
When we spoke to Homuth in January, she was on a ticking clock to raise additional financing to satisfy the company’s 2025 purchase orders and get SRTX to profitability. The episode was recorded on the day of US President Donald Trump’s inauguration. Weeks later, the company furloughed 40 percent of its 350-person staff in anticipation of Trump’s tariffs and the elimination of the de minimis exemption, which Homuth said would impose a 41-percent duty on products it ships to the US, where SRTX does the vast majority of its business.
In March, BetaKit reported that Homuth would step down as SRTX’s CEO as part of a deal to help the company secure necessary funding. At time of recording, the deal isn’t done, but The Globe and Mail got ahold of the term sheet showing that the $40 million financing would be led by past investors H&M, Export Development Canada, Business Development Bank of Canada (BDC), and Investissement Québec (IQ).
According to the Globe, the term sheet would slash the company’s valuation in half and cram down investors who don’t commit to invest all of their allotted pro rata amount of stock by 90 percent. This is a lot of venture jargon, so consider it on simpler terms as a pay-to-play deal: if past investors don’t continue to invest, their equity stake in the company is nearly wiped out.
The deal is also contingent on Homuth leaving the company and signing a communications and social media policy.
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BetaKit continues to report on the deal, so expect more to come, but for now, please note that I recently spoke to a Canadian tech founder whose company shuttered a few years back. Like SRTX, the company had BDC and IQ as investors. Like SRTX, the company needed additional funding to survive and faced similar deal terms. One big difference: this founder, who was male, was asked to step down as CEO, but was never asked to stay silent.
So I think it’s worth revisiting this conversation with a repeat founder who was trying to do very ambitious things in Canada when it would be easier to do them anywhere else. A founder who notes in this interview that North American investors don’t understand her industry. A founder who once felt as though they had “lost their voice” online, and then started building in public and educating the market on the challenges and opportunities behind the problems her company was trying to solve.
A founder who is now being told to remain silent.
Here’s my January conversation with Katherine Homuth. Let’s dig in.
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The BetaKit Podcast is edited by Darian MacDonald. Recorded at the AmberMac Media studio.