When Katherine Homuth started pitching the idea of a “founder constitution,” she expected every investor in the room to roll their eyes.
The Oomira CEO has argued that a standard employment agreement would give founders more control over their deal terms and working conditions versus having them dictated by VCs. Informed by her experience as founder of SRTX—which she recently departed in a deal to secure the company necessary funding—Homuth said at Startupfest: “An investment document is 100 percent red flags.”
VCs I spoke with said such an agreement might be a tough sell, but concurred that founders shouldn’t get financially pummelled if their startup fails.
Nine out of 10 startups are expected to fail. But some claim the price of failure in Canada is so destructive that it disincentivizes entrepreneurship altogether.
Virgile Ollivier has interviewed more than 150 entrepreneurs for a new founder support platform called Chapter. He said the average personal cost of startup bankruptcy is $347,000, and estimates that half of the entrepreneurs he spoke with won’t start another company.
Homuth’s suggested founder constitution could help, but deal terms are often dictated by the amount of leverage one has to negotiate.
In the US, founder-friendly SAFE agreements are the norm for early-stage fundraising deals. With a lot more private capital to deploy, the intense competition for deals tilts the scales in favour of founders, said entrepreneur and VC Bertrand Nepveu.
Canada’s early-stage fundraising landscape is currently bleak. Founders often face limited equity and debt options with unfavourable deal terms, particularly from banks and large institutions, VCs told me. Even programs meant to boost entrepreneurship rates, such as BDC’s Business Loan Accelerator Program, require a personal guarantee.
Canadian entrepreneurs need more capital options and deal terms that protect them when things go wrong. It’s unlikely that one will happen without the other.
Madison McLauchlan
Reporter
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Tailscale CEO Avery Pennarun says pressure to adopt AI has created a “Wild West” for corporate cybersecurity
Many companies are facing pressure to quickly adopt AI, including agentic solutions. In an interview with BetaKit, Tailscale co-founder and CEO Avery Pennarun claimed that this rush has created a chaotic new “Wild West” for corporate cybersecurity.
In allowing easier access to their systems for large language model and AI agents, Pennarun said some firms have been skipping over some necessary security and privacy checks and simply putting their own private API servers on the public internet—big missteps that open them up to a world of risk, according to the CEO.
Longtime 1Password CEO Jeff Shiner moves to executive chair, cedes reins to David Faugno
After 13 years at the helm of 1Password, Jeff Shiner has moved from co-CEO to executive chair of the Toronto-based password management company’s board of directors. David Faugno, who became co-CEO of 1Password alongside Shiner last November, will continue to lead the firm going forward as its sole CEO. Faugno has also joined the board.
In a LinkedIn post announcing the transition, Shiner wrote that this move has been in the works for over a year.
BDC adds RBC as lending partner as it plans to guarantee $800 million in loans to entrepreneurs
The Business Development Bank of Canada is adding the Royal Bank of Canada to its roster of financial institution partners as it seeks to provide commercial loans to more historically underserved entrepreneurs.
The Crown corporation also revealed that it plans to guarantee a minimum of $800 million in loans for small and medium-sized business owners in Canada, and hopes to eventually grow that number.
Moonvalley raises additional $84 million USD to meet demand for its Hollywood-friendly AI video generator
Toronto-based Moonvalley, an AI research company developing foundational AI video models designed for filmmakers with cinematography in mind, has raised an $84-million USD seed extension round as it looks to scale up for demand.
Moonvalley said the funding reflects an industry shift to prioritize AI that “respects intellectual property.” Last week, the company announced the general availability of Marey, its foundational AI video model trained only on licensed, high-resolution footage.
BC shuffles cabinet, moving Rick Glumac to AI and Ravi Kahlon back to jobs
British Columbia Premier David Eby has shuffled his cabinet as part of a “strategic shift.”
After just eight months as BC’s minister of jobs, economic development, and innovation, Diana Gibson has been moved to minister of citizens’ services. In Gibson’s stead, Ravi Kahlon has been appointed to the rebranded role of minister of jobs and economic growth. Eby also named Rick Glumac as BC’s minister of state for AI and new technologies.
At the moment, it is unclear which minister will oversee the governing New Democratic Party’s innovation portfolio in Eby’s third cabinet. BetaKit has reached out to the Government of BC for comment.
GreenSky closes $23.5-million sixth fund with help from new managing partner Jeff Brunet
Toronto-based GreenSky Ventures has closed its sixth fund after raising $23.5 million CAD to invest in early-stage Canadian B2B deep tech and enterprise software startups.
In an exclusive interview with BetaKit, managing partner Jeff Brunet said he hopes to leverage his expertise as a five-time founder and long-time angel, with multiple tech exits under his belt, to help GreenSky-backed startups navigate both “the good and bad times.”
Canadian co-founded Substack raises $100-million USD Series C to grow tools for independent creators
Leading newsletter platform Substack, co-founded by Waterloo alumni Chris Best and Jairaj Sethi, alongside former journalist Hamish McKenzie, has raised a $100-million USD Series C funding round as it looks to better support independent creators using its service.
Both Best and Sethi were also senior leaders at Canadian messaging app Kik.
Sleep tech startup Smart Nora files for bankruptcy after tariffs derail product launch and fundraising attempts
Toronto-based sleep tech company Smart Nora, which produces a device to help reduce snoring, has filed for bankruptcy.
Co-founder and CEO Behrouz Hariri told BetaKit in an email statement that Smart Nora was in the process of raising capital to invest in growth for the launch of its next-generation product when “the sharp and unexpected increase in tariffs” negatively affected investor sentiment.
“Unfortunately, this delay created a funding gap that we couldn’t bridge in time,” Behrouz said, adding that the volatility of the tariffs made it especially difficult to plan shipment to the US—Smart Nora’s largest market.
Canadian drone maker ZenaTech expands US presence “earlier than expected” in response to Trump policies
Toronto drone manufacturer ZenaTech plans to triple the square footage of its facilities in Phoenix, Ariz., and grow its team in the area from seven employees to as many as 30 over the next six to 12 months.
ZenaTech said the expansion comes “earlier than expected” as recent US policy has made it “dramatically easier and faster” for American drone companies to sell directly to the military, scale production, and avoid defence procurement bottlenecks.
“Together, they signal a clear national priority: build drones in America, field them fast, and outpace adversaries,” the company said in its statement.
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“The current government is really plugged into what’s needed.”
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Take The BetaKit Quiz – This week: Cohere’s got Seoul, Brim nets a former czar, and Zuck gets bumped
Think you’re on top of Canadian tech and innovation news? Time to prove it. Test your knowledge of Canadian tech news with The BetaKit Quiz for July 18, 2025.
Feature image courtesy Matt Tibbo Photography for BetaKit.