And as our startup ecosystem matures, so too do our conversations around the best way to continue supporting entrepreneurs to build and stay in Canada. Founders like Thalmic’s Stephen Lake have spoken about the need to “place bets” on areas that have the most chance of success, and the new federal government has stepped in, showing some commitment to making Canada a cleantech hub. What many of these conversations have in common is the need to support those taking risks.
iNovia Capital is one of those entities looking to support early stage entrepreneurs. The Montreal-based firm recently raised a $175 million fund, overshooting its initial target of $150 million, and, as part of its strategy to support “emerging category-defining platforms,” has expanded its Waterloo office with the hire of Sarah Marion, formerly a senior researcher at the Lazaridis Institute for the Management of Technology Enterprises.
iNovia already has a presence in Waterloo, and is an investor in startups like Vidyard and Clearpath Robotics. However, Chris Arsenault, managing partner at iNovia, said that Marion is joining at just the right time.
“Now we have a critical mass of opportunities and building relationships with players from universities and large companies in the Waterloo tech community,” said Arsenault. “It’s important for us to put feet on the ground to have a constant presence and be part of the flow, not just aware of the flow.”
Marion is joining the team as an analyst. “I look for strong visionaries who are thought-leaders in their industry, with first-hand experience that allows them a distinctive insight into the problems they are solving,” Marion said. “I also look for companies that have a culture of working relentlessly to delight their customers, both creating and capturing value.”
“You’re backing entrepreneurs who not only have a vision, but you have to feel that they can execute on that vision.”
While working as a founding team member of the Lazaridis Institute, Marion interviewed 125 Canadian technology thought leaders — including Arsenault — to analyze key barriers to growth facing Canadian startups. During her research, Marion discovered that one of the biggest barriers facing companies scaling in Canada was a lack of executive talent.
“Canada lacks senior managers who have experience leading a technology company through a phase of rapid, significant growth — which is critical to scaling from a startup to a billion-dollar company. This is largely due to the lack of existing and exited growth firms in our country’s technology sector,” said Marion. “However, it is widely recognized that Waterloo is producing a phenomenal cadre of executive talent stemming from the region’s emerging growth firms, and the Toronto-Waterloo ecosystem is growing the experienced senior managers that Canada needs to build billion-dollar companies.”
To combat the senior talent gap, Arsenault stressed how “critical” it is that over the next decade, communities in Waterloo Region and elsewhere support entrepreneurs as they transition from founders working out of a basement to building the next billion dollar company. At the same time, it will be critical for tech communities across Canada to address how they are building up their executives and attracting others from outside — Arsenault gave the example of BlackBerry, which set the stage for creating opportunities as it attracted outside top-tier talent.
“In building this base of thousands of early-stage tech companies across Canada, now is the time to scale them. When you talk about scale, Canada lacks overall talent that has been there, done that,” said Arsenault. “When you think about big infrastructure and software plays that grow from 0 to $5 million in revenue to $30 million, you have certain challenges. But when you have to convert that into $300 million, you can count on your two hands companies that have done that in the past few years. How are we building our own next generation of executives, and how will we be able to attract executives from the outside to join our own culture and move into our startups?”
Part of the “art” of the venture business is understanding that early stage entrepreneurs only really control 50 percent of what happens to their business — such as attracting talent and building a product roadmap — while the people that back them support them for the things they can’t control, like the time it takes to acquire customers and go through a full sales cycle.
“They’re not mature enough in terms of revenue or DNA, and half of them aren’t even making any revenue, so everything is against them to succeed. You’re backing entrepreneurs who not only have a vision, but you have to feel that they can execute on that vision,” said Arsenault. “You have to not only understand their challenges, you have to accept the risk of failure for that company, and see how through our own network and relationships whether we can reduce that risk.”
“Overall we’re upping Canada’s game; we have to up our performance across the board — be it from a venture perspective from an entrepreneur perspective.”
Many founders say that it’s easier today than five years ago to raise funding; as companies like Allocadia and Lightspeed make headlines and the larger community buys the startup hype, venture capitalists today from smaller firms are feeling better about investing in the Canadian entrepreneurs that, despite lacking experience, make up for it in enthusiasm. iNovia already seems to be applying that viewpoint in its latest hire — Arsenault jokes that Marion, at only 23, made the team feel like she’d been working with them for five years already.
“Overall we’re upping Canada’s game; we have to up our performance across the board, be it from a venture perspective from an entrepreneur perspective. There aren’t any frontiers, therefore you should have offices wherever your talent is, but at the same time we have to focus on where the pools of talent are across Canada, and Waterloo is one of them,” said Arsenault.
“Sarah has the drive and DNA of what we consider to be a part of the iNovia DNA. The whole iNovia team has been founded and is managed by entrepreneurs and operators. Sarah being younger has all of these same attributes — maybe she doesn’t have the number of years of experience in terms of operation, but she has the same drive.”
