Canada is moving away from the nascent startup ecosystem it was even five years ago and getting noticed on a global scale. Venture capitalists are eagerly raising funds as the number of our revenue-generating companies grows, and even Silicon Valley-bred investors like Paul Singh are rightly noticing that Canadian entrepreneurs are just as strong as their American counterparts.
Another thing that’s true, though, is that Canadian companies aren’t the greatest at thinking beyond our borders; according to a report from CIBC, only 10 percent of small and medium-sized enterprises are exporting their services globally, and a Compass report identifying Waterloo as the most startup-dense startup ecosystem after Silicon Valley noted as a barrier.
“We have so much to be proud of and so much to talk about, and we actually need to tell our story better.”
However, this is appearing to change, both on the funding side and the startup side. Leaders Fund, a $100 million enterprise SaaS-focused fund established by a team including Rypple founder David Stein and former OMERS investor Gideon Hayden, was among participants of an $8 million USD funding round for Boston-based Zaius, a platform for B2C marketers keep track of all customer interaction data on a single platform.
The funding was led by Underscore.vc, with participation from Matrix Partners and Leaders. Through the Zaius B2C CRM, marketers can reach customers in a personalized way, based on examining factors like customer behaviour in real-time, omni-channel cart abandonment, and identifying at-risk customers. Speaking with BetaKit, Hayden said that Leaders Fund — which maintains a SaaS focus due to a recent boom of AI and machine learning and their potential to disrupt “archaic enterprise systems” — saw strength in the team that is working to remove the silos in marketing.
Mark Gally, CEO of Zaius, said that marketers are now realizing the value of increasing customer lifetime value rather than new customer acquisition.
“More than ever, consumers expect an experience that is contextually-relevant. For years, personalization engines have been able to deliver product recommendations, but they stop there. The next step in personalization is to communicate with customers based on where they are in their lifecycle and what channel they are most likely to respond to,” said Gally. “A loyal customer should be treated differently than a customer with one purchase; an engaged customer differently than a disengaged customer; and a customer that is more likely to respond on a mobile app differently than a customer that is more likely to respond to an email.”
Hayden said that while we often hear about American investors taking notice of Canadian companies and investing, we don’t hear really hear about the reverse happening.
“The border is becoming less and less of an issue — it’s almost disappearing — and so there certainly wasn’t any apprehension of us doing a US deal,” said Hayden. “The border has broken down and capital is flowing pretty freely between the two ecosystems. There’s a lot more money coming into the Canadian ecosystem right now and a lot more folks trying to find places to put it.”
Hayden said that there weren’t any challenges in investing in Zaius, which will use the funding to invest in sales and marketing efforts and expand partnerships — and, with the help of those at Leaders Fund, expand services into Canada.
At the same time, startups should expect more cross-border deals in the future as more American VCs become aware of strong Canadian companies, and Canadian companies learn to sell themselves as well as their American counterparts. “The best entrepreneurs in the US are incredible promoters of what they’re doing, selling the vision, and getting people behind that vision.”
If Canadian entrepreneurs hope to grow billion-dollar companies, more needs to be done to build senior talent required to take companies to the next level, whether that’s attracting outside senior talent or seasoned entrepreneurs at home supporting the next generation of founders.
“We have so much to be proud of and so much to talk about, and we actually need to tell our story better. It’s not about the US or Canada, it’s about the fact that we have world-class companies here and it’s about telling stories on a global scale,” said Hayden. “The fact of the matter is it’s rare — not saying it’s impossible — but it’s rare that a Canadian company can become a big relevant company serving only Canadian clients. We have 35 million people in our country, and our corporates are not notorious for being the first movers on technology. By definition, we need to go outside of borders to be relevant.”
