DMZ Ventures launches new fund for early-stage startups

The for-profit arm of Toronto-based incubator DMZ has unveiled a new fund for early-stage startups as well as its first investments.

DMZ Ventures is initially committing up to $5 million CAD for the fund. However, a DMZ spokesperson told BetaKit this amount could increase in the future. The fund plans to make up to 10 investments per year, ranging from $100,000 to $250,000 CAD, and will specifically invest in pre-seed and seed-stage startups from both inside and outside of DMZ’s portfolio.

“Each startup we back undergoes rigorous vetting and earns DMZ’s stamp of approval, which is why we’re not just backing startups, but winners.”

According to the spokesperson, the fund hopes to fill a critical financing gap at the pre-seed and seed stages. According to a report from Torys, early and mid-stage financings were down 37 percent in 2023. Abdullah Snobar, executive director of DMZ and CEO of DMZ Ventures, believes that DMZ’s proximity to early-stage startups will serve the fund well.

“No other investors understand their startups as deeply as we do,” Snobar said in a statement.

“Each startup we back undergoes rigorous vetting and earns DMZ’s stamp of approval, which is why we’re not just backing startups, but winners—founders and ideas that we truly believe in,” Snobar added.

The fund, which DMZ’s spokesperson said will follow a corporate venture structure rather than a general or limited partnership, is made up of “recycled revenue” from DMZ’s consulting arm and portfolio exits from alumni. The fund, with an anticipated lifetime of five years, will lead, co-lead, and provide follow-on investments.

The fund has already invested in four startups, including three announced today at the incubator’s Insiders event in Toronto. Leasey.AI, a platform that aims to streamline and automate the leasing process, took home the largest investment at DMZ Insiders, securing $100,000 CAD.

Two additional investments were made at the event into Flowjin, which offers a tool that turns long-form video and audio content into short-form clips for social media, which was awarded $75,000 CAD, and Talin, which has developed an AI-powered talent acquisition and sales platform for staffing and recruiting, which was also awarded $75,000 CAD.

The fund’s first investment was in Toronto-based Softdrive, which has developed a virtual computer service designed to deliver high computing power to a local computer, and is an alumnus of DMZ’s incubator program. DMZ declined to disclose how much it invested.

Founded in 2010, DMZ is the startup incubator of Toronto Metropolitan University, formerly known as Ryerson University. The organization offers startups mentorship, coaching, legal support, and assistance with global expansion. In a statement released today, DMZ claimed it has helped more than 830 startups raise $2.69 billion in cumulative capital to date.

The incubator’s for-profit arm was previously known as Ryerson Futures Inc. and made investments into seed-stage companies that participated in its accelerator program, which is no longer operating. Ryerson Futures was consolidated into DMZ in spring 2020 and renamed DMZ Ventures.

DMZ Ventures’ fund will primarily invest in companies within DMZ’s portfolio, but unlike its predecessor, it will also consider companies outside of the incubator’s network, according to DMZ’s spokesperson. DMZ Ventures is also making larger bets on companies with this fund compared to the roughly-$50,000 cheques Ryerson Futures previously cut to companies.

Also this week, DMZ partnered with proptech investor GroundBreak Ventures to provide custom scaling support to eight companies that are all offering tech solutions to address Canada’s housing crisis.

Photo by Natalia Dolan, courtesy of DMZ.