“All of a sudden, Canada is really, really hot. One of the great things this year is that, up until a year ago, we were asking what is the next BlackBerry or Nortel. Now, we ask what is the next Shopify.”
John Ruffolo, CEO of OMERS Ventures, summed up the mood of the day at the CIX showcase, a celebration of some of Canada’s most innovative up-and-coming startups. In a packed room, the insights gleaned from the VCs grappling with the changing landscape of doing business — and the startups they fund that are leading the way — revealed the next steps for Canada to stay on track as a leader in the innovation economy.
“What happens around the five-year mark [of startups] is that you start to see growth rates differ between the average US and Canadian startup. The question is, how do we get a lot of these great startups that have been formed in the last five years to really get across the gold line?” said Ruffolo. “The great thing about companies like Shopify is that it’s not an exit. It’s the start of creating a great global business, and going public is still a continuation of growing your business.”
“The great thing about companies like Shopify is that it’s not an exit. It’s the start of creating a great global business.”
Speaking of Shopify, its chief platform officer, Harley Finkelstein, was on hand to accept the CIX Innovator of the Year award for his company. While there are complaints that most Canadian companies do not think about going global when starting their companies, Finkelstein said that Shopify wanted its software to follow its customers’ growth as opposed to focusing on a specific group.
“Over the past decade, our focus has been on SMBS. What happens is that some of these SMBs become really large, and there are companies that have started on Shopify that make $100 million,” said Finkelstein, whose company boasts clients like Tide and Kanye West. “Philosophically, some of them would have to leave Shopify. But we believe that our product is good enough that they don’t have to transition off. In many ways with Shopify Plus, that was us stretching our market.”
Throughout the day, presentations addressed some of the challenges of companies trying to pass that ‘gold line’ Ruffolo referenced earlier. VarageSale and Appdirect — two companies that raised big this year — were part of a panel of the struggle to get from series A to Series B. “It’s fairly straightforward to raise a seed nowadays, but as you move along from Series A to Series B, your investors want to see something tangible,” said Varagesale co-founder and CEO Carl Mercier. “There’s a huge gap between series A and series B in terms of what you need to demonstrate. So it’s important to build your network, and know your investors before you try to make money.”
— Caron Court (@CaronSue) November 17, 2015
David Harris Kolada, VP of Venture Capital at OpenText, reminded startups that they need to show significant traction if they hope to raise the Series B they want. “A B stage company has enough progress, traction, and product-market fit far enough along to say, ‘this is something that I can potentially help them scale’,” said Kolada. “We don’t want to expose thousands of our references around the world and find out that the startup can’t fulfill. At the B round, you can define that place where you’ve got that functionality for a company, and from a risk-return perspective, there’s still value.”
But Intelex Technologies CEO Mark Jaine presented a somewhat different viewpoint on a day with panels mostly focused on raising money and scaling. Jaine said that companies shouldn’t focus so much on raising at all—they should be focused on creating value and revenue. Jaine admitted that for a while, he completely ignored VC firms and focused on building a great product. The latter sentiment echoed statements from Finkelstein, who claimed that revenue follows great products. “Pre-revenue is the hardest part. You have to talk to a few dozen customers about what a good idea is, and then pivot. Get pre-traction, and then scale,” Jaine said.
Explaining that his wife is a Madonna fan, he said that being a CEO of million dollar company should follow the celebrity’s model. “You have to reinvent yourself every year to whatever is trending,” Jaine said. “She’ll go from hip hop, to house music, to pop. Whatever the consumer listens to, she’s doing it. Every year as a CEO, you go from being a marketing expert to a computing expert.”
— Caron Court (@CaronSue) November 17, 2015
Though Canada still has some way to go to reach its full potential as an innovation economy, Razor Suleman, founder of Achievers, explained that his conscious decision to return to Canada after spending five years raising money in the Valley was because of his optimism for the country. “The climate in 2009 or 2010, when we initially moved to the Valley, was so different than it is now,” said Suleman. “There was no CIX, there was no OMERS, and MaRS was in its infancy. The ecosystem was nowhere near where it is today, so I get to see what happened five years later in 2015.”
Out of 27 male speakers and moderators on the main stage throughout the day, there were three women; only one was a panelist.
It’s clear that as the Canadian startup ecosystem grows and changes, the events that support it will have to grow and change as well. After getting flack from the startup community last year for having barely any visible women, CIX promised a concerted effort to do better this year, and did — but not by much.
Other than event MC Amber Kanwar, no woman took the auditorium stage for the first three hours of the day-long event until Venzee CEO Kate Hiscox pitched her company as a CIX Top 20 pick. It would be until 1:30 pm before a woman participated in a panel session: Senia Rapisarda, principal of HarbourVest Canada, acted as a moderator to an all-male panel. Like Kanwar, Rapisarda’s role on stage did not invite opinion the way a speaker position does.
Out of 27 male speakers and moderators on the main stage throughout the day, there were three women, including Kanwar; only one was a panelist. Most of the women participating during CIX were relegated non-auditorium backstage roundtable sessions or panels; out of 44 men that took part in the roundtable discussions, there were 10 women. And out of the 16 expert commentators that grilled startups during the CIX Top 20 Showcase, only one was a woman.
Compiling these statistics while sitting in a sea of predominantly white men throughout the day invites the opinion that the Canadian startup ecosystem is changing quickly in some ways, but not in others.