Toronto-based early-stage venture firm Ripple Ventures is setting up shop in Vancouver as it eyes the final close of its third venture fund later this year.
Dominic Lau, who was promoted from principal to partner at Ripple Ventures last year, will become the firm’s first team member based in Vancouver. Moving from Toronto, Lau will take up a private office in November at Pavilion Cowork in the Mount Pleasant neighbourhood. Lau said the firm may hire additional team members in Vancouver.
“You invest predominantly where you’re located because that’s where you have roots. What we want to do is build that out in Vancouver.”
The move out west is a strategic one for Ripple Ventures, and comes as the firm is raising its third venture fund, which recently received a $7.5-million investment from the federal government’s renewed Venture Capital Catalyst Initiative (VCCI). Lau said Ripple Ventures is looking to take a more coast-to-coast approach with Fund III, which presumably starts with building out a physical presence in Western Canada.
“You invest predominantly where you’re located because that’s where you have roots. You have the ecosystem, you have the network,” Lau told BetaKit. “What we want to do is build that out in Vancouver.”
While Lau remains tight-lipped about Fund III’s target size, Ripple Ventures has recently revealed a few key details about the fund, including that RBCx will be its lead anchor limited partner (LP). In a recent interview with BetaKit, Lau discussed the recent VCCI injection, his plans for Vancouver, and his coast-to-coast vision for Fund III.
Since its founding in 2018 by managing partner Matt Cohen, Ripple Ventures has had a predominantly Eastern Canadian focus, and while it has made a handful of investments in the United States, Lau noted the firm’s focus has mostly been on East Coast cities like New York or Boston. That’s not to say Ripple Ventures has ignored the West Coast—the firm has made investments in companies like Zenhub, and more recently, Artemis and Asepha, but the heavy East Coast presence is something Lau is looking to change with Fund III.
Since 2021, Lau has split more of his time between Toronto and Vancouver. By running various events in Vancouver with organizations like AWS Startups, Boast AI, and BC Jobs, he said Ripple Ventures was looking to validate the local founder network and assess the demand for a more inclusive and active startup community.
“What we wanted to prove out was that: one, there are companies that fit our thesis out on the west coast; two, there’s a big enough founder community; and three, that there are high-quality co-investors and companies that we could work with on the west coast,” Lau said.
In terms of what Ripple Ventures’ presence in Vancouver will mean for local stakeholders, Lau plans to host a series of events in the city, including weekly founder and investor co-working sessions, networking events, educational workshops for angel investors and family offices, and a weekly tech basketball run.
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Lau added that the new events don’t signify a huge change of pace for the team, thanks to Ripple’s activity in Toronto. “We have event-running down to a science now,” he added.
Proximity to the Bay Area is another strategic reason behind the firm’s West Coast expansion, according to Lau. “We’re able to work with a lot of the other co-investors much deeper, as well as get more exposure to the West Coast deals on that front, and all the corporates that are located in San Francisco that [could be] eventual partners, acquirers, and investors into our portfolio companies,” he said.
Aiding Ripple Ventures’ push to a final close of Fund III is a $7.5-million injection from VCCI’s Inclusive Growth stream. Ripple Ventures was among five Canadian venture firms named to receive a collective $25 million from the federal program last week. Lau noted that Ripple’s West Coast expansion was not a requirement for Ripple’s funding eligibility for VCCI and was, rather, a strategic decision on the firm’s part.
“The big gap, especially in Canada, is for that earliest-stage, pre-seed, or angel-stage company.”
Lau said the VCCI Inclusive Growth funding will be key in supporting two of Ripple Ventures’ existing initiatives, which Lau described as “core pillars” earmarked under Fund III: the RippleX Fellowship Program, a 12-week, remote program Lau founded that teaches underrepresented students about startup-building and investing fundamentals; and the Fellow Fund, which invests up to $75,000 into student founders and first-time founders.
“I wanted to create a program that was very educational and network- and opportunity-focused, and not just leveraging students as deal sourcing analysts,” Lau said. “We’re focused on empowering founders and aspiring VCs to learn the true tangible skills to get equal access to funding and job opportunities.”
According to Ripple Ventures, after 15 cohorts over the last five years, RippleX has helped over 75 underrepresented students access VC employment opportunities and founders raise a combined $60 million in VC funding. Over 2,000 students across 30 countries have enrolled in the program, four of whom have been directly recruited to the Ripple Ventures team.
“[It’s a] very tangible impact that we’ve had from dollars raised, job opportunities created, and also just creating more democratized access to education in this very opaque industry,” he added.
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According to Ripple Ventures, its Fellow Fund is “poised to back more than 20 companies led by underrepresented founding teams” through Fund III. The firm said the VCCI funding will help broaden the reach of its online course “to every university and college campus across the nation.”
One of the key supporters of RippleX has been RBCx, the tech investment arm of the Royal Bank of Canada, which Lau said is also Fund III’s lead anchor LP. Lau said the federal government, through VCCI, is Fund III’s second anchor LP.
Ripple Ventures has already begun deploying from Fund III. According to Lau, the fund is currently invested in eight startups: Centro Commerce, DataFacade, Sabba Health, Artemis, WaiveTheWait, Scalestack, Asepha, and NetNow.
Beyond Fund III’s coast-to-coast lens, Lau said the investment thesis for Fund III will focus on early-stage companies (including pre-revenue and even pre-product companies) operating in B2B SaaS, developer software, climate software and artificial intelligence (Ripple was the first investor in AI startup VoiceFlow, which recently raised $15 million USD).
While the geographical focus of Ripple Ventures may be changing, Lau said Ripple Ventures is still fundamentally committed to bridging the funding gap for early-stage startups from ideation all the way to signing a first customer.
“The big gap, especially in Canada, is for that earliest-stage, pre-seed, or angel-stage company, because investors are too risk-averse to be able to take that on,” Lau said. “What we want to do is fill that gap.”