After five years backing early-stage technology entrepreneurs and connecting them to investors across Western Canada with Startup TNT, Jesse Wiebe left earlier this month to tackle similar challenges on a national scale.
Wiebe said the CSCA “will act as a connective tissue to allow the fragmented early-stage investment landscape to work more collaboratively together.”
Now, the ex-Startup TNT community development lead is ready to share how he plans to do that. Today, Wiebe announced the launch of the Canadian Startup Capital Association (CSCA).
Through the new nonprofit coalition, Wiebe hopes to bolster the country’s early-stage investment ecosystem as it faces significant structural challenges, including emerging manager fundraising struggles and slumping early-stage investment activity as capital has concentrated across fewer funds and companies.
The CSCA aims to support all organizations that invest in domestic tech startups from pre-seed to Series A. As founder and executive director, Wiebe hopes to build the CSCA into a platform that helps a diverse range of early-stage investors share deal flow, coordinate, and present a united voice to Canada’s federal and provincial governments. Its founding members told BetaKit it addresses a clear need.
In an interview with BetaKit, Wiebe said the CSCA “will act as a connective tissue to allow the fragmented early-stage investment landscape to work more collaboratively together. We will also be the advocate and the voice for the early stage, both in Ottawa and in every legislature across the country.”
An absence of connective tissue
A group of early-stage investors have already rallied behind this goal. The CSCA is launching with 19 founding members, including Ag-West Bio, Anges Québec, Antler Canada, Audaxa Ventures, Boreal Ventures, Capital M Ventures, The Firehood, Front Row Ventures, the Indigenous Venture Challenge, Manitoba Innovates, Nadarra Ventures, Propel Impact, Redstick Ventures, the SAIL Initiative, the Southeast Tech Hub, Spring, Startup TNT, Trillick Ventures, and UCeed.
Across its founding and committed member organizations, the CSCA claims to represent more than 3,500 active investors that have collectively invested more than $750 million into tens of thousands of early-stage startup founders from coast to coast.
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“What brought CSCA’s founding members together was that organizations doing this work in different parts of the ecosystem were independently arriving at the same conclusions: the same absence of connective tissue, the same opportunity for an inclusive, interconnected approach to catalysing early-stage capital,” Spring co-CEO Caroline von Hirschberg told BetaKit in an email.
Anges Québec CEO Marc-Antoine Cantin said his organization joined the CSCA in part because it wanted to become better connected with angel groups across the country. “We do not know many of the other angel groups in Canada,” Cantin said in an email. “We should.”
Plugging a leaky bucket
The launch of the CSCA comes as two of Canada’s leading investor advocacy organizations have put forth competing visions for how the federal government ought to support the sector.
As the Government of Canada decides how to deploy the $750 million CAD it pledged towards “early growth-stage funding gaps,” the National Angel Capital Organization (NACO) has called for the money to go to pre-seed and seed investing, while the Canadian Venture Capital & Private Equity Association (CVCA) has argued it should be committed to growth, meaning Series B and beyond.
The CVCA hopes to see this $750 million targeted towards both new and established funds for scaling companies in sectors like AI, quantum, aerospace, defence, life sciences, advanced manufacturing, and cleantech. NACO, meanwhile, has pitched for $500 million to go to an early-stage matching funds program and $250 million to finance early-stage operational infrastructure.
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Wiebe said this conversation, and some of the “misunderstanding” in the ecosystem as to what was actually happening with this envelope, spurred him to connect with the feds directly. “Through those meetings, I got the impression that the government was ready and willing to listen to, especially, the most active startup capital organizations in the country,” he said.
What the CSCA is proposing is a bit of both. “We have such a leaky bucket in Canada right now, I’d rather plug the holes first before we start pouring more water into it,” Wiebe said.
Wiebe and the group he was representing pulled together its own brief, and the feedback it received convinced him to build the CSCA to continue that work.
The CSCA has suggested the feds allocate 10 to 20 percent ($75 million to $150 million) of this envelope towards pre-seed and seed investing and the remainder to growth. It has called for a third of that amount to go to programs that activate more early-stage Canadian capital and help commercialize intellectual property from domestic universities, and the remaining two-thirds to finance emerging managers and micro-funds.
A home for orphan children
Some of the organizations that have joined the CSCA are also members of NACO and the CVCA, and the CSCA’s focus appears to overlap to some degree with both, particularly NACO.
When asked how he sees the CSCA fitting into this landscape, Wiebe argued that angel and venture capital (VC) investors each have unique needs, and noted that the CSCA has defined itself as focusing on “startup capital” as there are multiple pathways a startup can take beyond just VC.
Wiebe said he has also encountered “a pretty wide swath” of early-stage investors, including folks outside of traditional VC, that have “felt [like] the sort of awkward middle child between the CVCA and NACO,” and saw an opportunity to build a group “more focused on that full stack from startup to Series A.”
The CSCA executive director views his new coalition as complementary to NACO and the CVCA, and hopes to work with both organizations to find common ground. “We believe that when government hears it from more voices in unison, they’re more receptive,” he added.
“We welcome the work of the [CSCA] in the angel space,” CVCA CEO Benjamin Bergen told BetaKit over email. “More serious, professional voices making the case for this industry are good for Canada and good for the investors and founders it depends on.”
NACO CEO Claudio Rojas expressed a similar perspective. He told BetaKit over email that he thinks “more voices championing all stages of the capital pipeline will bring greater depth of research, better informed policy, and a more actively engaged ecosystem.”
In the past year, Rojas said there has been “a tremendous amount of policy engagement” across Canadian tech, from groups like Build Canada, the Council of Canadian Innovators, and the CVCA, among others. “Each of these brings a different perspective and approaches policy development in a different way,” he said, adding that this reflects the diversity of Canada and its innovation economy.
Spring is a member of the CSCA, NACO, and the CVCA, and von Hirschberg said it values the support and community that each provides. “CSCA fills a different space,” she said.
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The CSCA is launching with three key priorities: activating more early-stage capital by supporting first-time angels, family offices, and emerging fund managers, building a stronger national network for coinvestment and data-sharing, and lobbying the government for policies to grow the industry.
In the process, Wiebe also aims to ensure more groups see themselves represented in Canada’s early-stage investment ecosystem, from angel groups to syndicates, emerging fund managers, impact investors, venture philanthropic funds, Indigenous investment organizations, investment activation programs, and private debt providers.
“The CSCA is supposed to be home for all of these orphan children that unfortunately didn’t really have a home to date,” he said.
Feature image courtesy Jesse Wiebe.