Canadian-founded Fluent Ventures bets on global startups with $40-million USD early-stage VC program

Fluent Ventures has announced a $40-million USD venture capital (VC) program to invest in early-stage technology startups applying proven business models to new regions and industries.

The Canadian-founded, San-Francisco-based VC firm is betting that the future of innovation lies beyond just Silicon Valley with a strategy that it refers to as “geographic alpha.” Fluent founder and managing partner Alex Lazarow believes that the world’s biggest problems “are best solved by local entrepreneurs applying globally validated models,” including in Canada.

“I have personal reasons that I’m passionate about supporting Canada, and I also think this is really, paradoxically, an opportunity for us.”
Alex Lazarow,
Fluent Ventures

“We try to take a narrow set of business models that are de-risked, that exist somewhere at scale, with good unit economics, and … take an opinionated bet about why they should work in a bunch of different places around the world,” Lazarow told BetaKit in an interview. “We try to meet as many companies that are doing this as possible.”

That $40-million figure, which Fluent closed last summer, includes both the VC firm’s first fund and its structured coinvestment strategy for limited partners (LPs). Lazarow declined to disclose the exact breakdown.

Fluent is focusing on entrepreneurs building FinTech, health, and e-commerce startups around the world between the pre-seed and Series A stages. The VC firm typically invests after some product validation, and seeks to partner with local funds. Fluent can lead, co-lead, or co-invest, writing cheques between $250,000 and $2 million USD, and is over halfway to its goal of making 25 investments through its debut VC program, including via its fund and coinvestments.

Lazarow, who was born in the United States (US) but grew up north of the border, views Canada as “a core geography” for Fluent. He said that Fluent is actively looking to invest in startups that are based in Canada or led by Canadians abroad. While the VC firm does not have any hard geographic limits or requirements, Lazarow expects it to deploy as much as 10 percent of its first fund in Canadian startups.

Lazarow previously invested at eBay founder Pierre Omidyar’s philanthropic investment firm Omidyar Network and global VC platform Cathay Innovation, where he backed companies like neobank Chime, insurtech firms Kin and Sidecar Health, buy now, pay later startup Kueski, and software company ZenBusiness, among others. He also wrote the 2020 book Out-Innovate: How Global Entrepreneurs—from Delhi to Detroit—Are Rewriting the Rules of Silicon Valley.

He claims to have backed seven global unicorns in the past decade, many of whom are now LPs in Fluent. The firm’s LPs include over 75 founders, exited entrepreneurs, tech leaders, VCs, corporates and family offices from around the world, like David Vélez (Nubank), Sean Harper (Kin), Adal Flores (Kueski), and Akshay Garg (Kredivo). Lazarow said that many of Fluent’s investors view its global strategy as a way to diversify their VC portfolios.

Northside Ventures founder and general partner Alex McIsaac told BetaKit that Lazarow “does a great job of creating real value for founders by connecting them to a global network of operators, investors, and peers.”

Fluent’s Canadian LPs include Prax Health co-founder and CEO Meghan Jewitt, Coastline Academy co-founder and CEO Nigel Tunnacliffe, Rackhouse Venture Capital partner Brendan Baker, and Greyhill Capital Partners co-founder and partner Faizal Javer.

Tunnacliffe told BetaKit that part of the reason he decided to invest was Lazarow’s pre-Fluent track record. “I wish I could go back and be an LP in his career of investments, but the next best thing is to back his fund.”

Jewitt told BetaKit that she was attracted to Fluent’s thesis of applying business models that have worked in one region or industry to other areas, noting that many strong companies have been built this way.

Lazarow is known in part for helping to popularize the term “camel startups,” a phrase used to refer to companies outside of Silicon Valley with strong unit economics that manage cash burn well from the outset. He noted that camel startups—a counterpoint to firms that have pursued growth at all costs in the hopes of achieving “unicorn” status and a $1-billion valuation—tend to be common in ecosystems with less capital, including Canada.

“I think this is default mode, certainly for most Canadian founders I meet,” he said.

Fluent has invested in 13 startups, including one undisclosed company founded by a Canadian, and deployed approximately a third of its fund to date. The firm has made investments across North America, Latin America, the Middle East, Africa, Europe, and Asia, supporting startups inspired by North American firms like ZenBusiness, Neo, Ramp, Brex, and Rippling.

Its portfolio includes Sabi, a business-to-business (B2B) marketplace transforming agricultural and industrial inputs in Nigeria, BRKZ, a Saudi Arabia-based construction tech platform founded by Careem’s former COO, and Prima, a Mexican B2B manufacturing platform.

The VC firm has also leveraged some learnings from outside the US to back domestic companies, including New York’s Baton, a marketplace streamlining small business transitions, and Los Angeles-based Iconic, a tech-enabled merger and acquisition advisory firm.

For his part, Lazarow said he is undeterred by the global trade war and current tensions between Canada and the US. “I have personal reasons that I’m passionate about supporting Canada, and I also think this is really, paradoxically, an opportunity for us,” he added.

“Borders around the world—not just the US and Canada … are seemingly going up, but information transfer is more porous than ever,” Lazarow said. “I actually think that’s going to accelerate the opportunity for local entrepreneurs to leverage the models that exist elsewhere.”

Feature image courtesy Fluent Ventures.