Craig Elias

Another great #investcanada2024 conference last week. Congrats Canadian Venture Capital & Private Equity Association (CVCA) again and fantastic collaboration with Réseau Capital for curating + delivering such an important ecosystem event that brings together the who’s who in Canadian investing. It’s an interesting macro environment for both founders and emerging VC funds in 2024. The bar for fundraising is higher and the process is more difficult, but it’s an amazing time to build and fund startups. Over the years I’ve been asked what’s made me a successful investor given the number of exits & investor returns delivered. Beyond it being a full-time obsession for decades, one needs to constantly find ways to evolve to founder needs and deliver differentiated value. Earning the right to back and support the best founders is what delivers outsized investor returns. This is easy to say for many investors, but often many fall flat on the everyday execution for different controllable reasons. Reputations are built & lost fast in a more challenging market. Highline Beta's pre-seed VC & venture studio model continues to not only innovate, but also win predominantly because our core investment value is to always “earn the right on the cap table” with the founders that we support. It’s a complete team effort and after 8 years of building out Highline Beta’s foundation let’s us now grow via new vertical venture studios + funds. 🚀

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THIS is one of the best analyses I've read on the VC ecosystem as of late. While John Rikhtegar spends the report covering the Canadian ecosystem, I find it as useful - and lots of parallels to the US VC ecosystem and where LP dollars went - for the broader global economy. It's a longer read, but I promise, worth every minute. Some of the notes that stuck out most for me: 1/ 50% of the past decade's exit values were generated in 2020 and 2021. Great liquidity for LPs, but that forced LPs to have an unprecedented amount of capital to redeploy, which made them redeploy quickly to VC, but caused a vacuum and left 2023 and 2024 years far drier for GPs fundraising in market. 2/ From peak in 2021/2022, there's been a 76% drop in exit value in the Canadian ecosystem, 85% drop in Canadian VCs fundraising, and a 77% drop in capital Canadian VCs invest into the ecosystem. 3/ The median exit age of for the top 50 Canadian companies is 12 years. The median time between first financing and its exit for the top 50 is 8 years, leaving a median time of 4 years from a company's founding to their first financing. As such, if a Canadian VC's deployment period is 4 years, it's right to assume as an LP, that you're not going to see the end of the fund till 12 years after you invest. Even if the GP pitches a 10-year fund. 4/ Not all exits are created equal. The top quartile of top 50 exits raised more capital than the lower quartile. The median exit capital efficiency for Canada's top 50 companies for was 7.7X. Meaning the median company exited for $7.70 on every $1 they raised. 5/ Median US exit values are 2X Canada's. That said, Canada is catching up. In the past decade, the US produced $2.6T in exit value, compared to Canada's $56B, only a 46X. Lowest delta on record.

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Canadian Founders Shouldn’t need to leave Canada. We need to fix our system. 🍁 Last week I was catching up with a founder from Canada. She had just returned from spending 3 months in SF. She said it was insane how the entire ecosystem there is built to incubate and launch startups but then also support them for the entire lifecycle through Series A and beyond.  In Canada we’re ok at getting companies started but then we have little support beyond that and we ultimately lose them to the valley. Her suggestion was to take all the money the Canadian government is throwing at our tech sector, and instead use it to send our Founders to SF for 3 months for a Founder crash course. As a Canadian, hearing that is super depressing but also accurate. My roadmap at Developer Capital is to find and fund great Canadian companies in the pre-seed and seed round, but then get them into the US for their Series A. Why? Valuations are better, risk appetites are sharper and it will help your sales when breaking into the US market. How can we as a country support them and encourage them to stay in Canada? The Challenge: Canada’s Startup Ecosystem is Broken 💔 If we don’t want to lose our brightest founders to the US, we need to re-evaluate our approach. We need to provide the SF experience right here at home. Here’s what we can do: ⚫ Access to capital. Yeah, im sure you’ve heard this before. Pre-seed doesn’t exist in Canada. Developer Capital is trying to change that but we’re only one firm. There needs to be more deal flow sharing amongst the pre-seed and seed stage funds. This one’s on us in the VC community. We can do better. We can share our deals. We can get out in the world more and meet Founders. Rather than waiting for others to validate our own opinions we can lead rounds and be first money in. ⚫ Ecosystem support. It’s pretty nuts the difference this one makes. When a company comes out of SF they instantly have access to a network of 1000’s of early adopter companies to go out and buy their product. And the VCs who invest ask all their Portcos to take a deep look at buying these great new products. Incestuous? Yes but it works, and gets these start ups to millions in ARR fairly quickly. ⚫ The right infrastructure: Accelerators and incubators sometimes get a bad rap, but the good ones do the job of acting like a bootcamp to get your company launched, understand how to get financed, and then how to iterate until you find product market fit. Canada needs to up its game and come out with a couple of AAA accelerators. If McGill is the “Harvard of the North” why can’t Canada have a “YC of the North”? I’m not pretending to have all the solutions. This is clearly a “hard problem to solve”. But as a proud Canadian I know we can do better and I want to be able for our best companies to stay here forever (whatup Shopify). We have the talent and the ideas; now we need the infrastructure and the networks to match. Let's make Canada a powerhouse! 🍁 🚀

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Freeline and Swan to Spur new AAV Development... I couldn't resist. Syncona announced they are combining Freeline and Swan Bio to create Spur Therapeutics to advance the most viable components of the latter two companies' pipelines. That pipeline will be headlined by Freeline's Gaucher program (on the cusp of starting Ph3), and Swan's candidate in adrenomyeloneuropathy. Syncona previously took Freeline private to create new optionality for the company. This was after AAV headwinds had battered the stock and other candidates reached approval first in their prior lead therapies (hemophilia). This shows there's still interest in AAV and its proven delivery capability to diverse tissues and cells. But there is continuing culling in the industry's pipeline. Want to take a look at that pipeline? or think about how it impacts your own prioritization? Reach out and we can discuss! #venturecapital #genetherapy #pharma https://lnkd.in/g8-ZKp4C

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Canada's Brain Drain is undeniable! 🌍 Why are ambitious Canadian startup founders flocking to the US? 𝗟𝗲𝘀𝘀 𝗖𝗮𝗽𝗶𝘁𝗮𝗹 The US economy is 12.5x larger but its VC industry is 30x larger. In 2023, US VC deals were $150-200 billion while Canada was ~$6 billion. 𝗙𝗼𝘂𝗻𝗱𝗲𝗿 𝗙𝗿𝗶𝗲𝗻𝗱𝗹𝘆 𝗖𝘂𝗹𝘁𝘂𝗿𝗲 In the US, speed and risk-taking reign supreme. It's a dynamic environment where ideas rapidly transform into reality, unlike the more cautious pace in Canada. 𝗕𝗶𝗴𝗴𝗲𝗿 𝗠𝗮𝗿𝗸𝗲𝘁 With an economy 12.5x the size of Canada’s, the US offers unprecedented reach and potential for growth. 𝗛𝗶𝗴𝗵𝗲𝗿 𝗧𝗮𝘅𝗲𝘀 Although not the main factor, higher taxes in Canada add to the challenges. Recent hikes in capital gains taxes have not helped. For Canada to thrive in the innovation economy, it's time to tackle these hurdles head-on. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _  Excerpt from a discussion I had with Mark Nashman. Link to the full video in the comments. #startups #venturecapital #investing #Canada #culture

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Would you move your startup for $10+ million benefit + 50% ish cap gains tax to the 🇺🇲? I did it before, why not again? #SiliconValley "Budget capital gains changes are a tipping point for Canadian #startups: survey." MaRS Discovery District, Communitech, Invest Ottawa survey of #Entrepreneurs and Founders. Canada is a great place to incubate companies with a huge quantity of early stage private and public capital and terrific policy support. So why go anywhere else as a founder once you have incubated in such a great place for entrepreneurs? #capitalgains, capital gains, capital gains. That's what this video is about. Thank you to Krista Jones and Christine Bomé and all my friends at MaRS DD for leading from the front. This survey gave me hope that Canada will once more be able to be an innovation champion. Please read the survey! https://lnkd.in/gqMm6yu7

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If you are a #Canadian #startup frustrated by the lack of #investment opportunities and wondering if #SiliconValley is worth the trip ... I wanted to share a few notable comments from #startups that recently participated in our CELS - Canadian Entrepreneurs in Life Science Showcase. To the companies that participated, I won't drop the F bomb and risk being banned from LinkedIn 😆 but feel free to chime in and share, in your own words, why you think your peers need to take a leap ✈️ and visit #SiliconValley. It's really close to 🇨🇦 but in so many ways, a 🌏 apart. ✍️ "A lot of the people we met with will be relevant in the future. CELS made the introduction. We now have to build the relationship." 💰 "Everyone we met with had a friend or a contact that is relevant to us, even if they were not in our space, so basically everyone we met with was relevant!!" 🚀 "The biggest take away was the different mentality. Risk taking is seen positively here! Innovation is seen as a value driver. Investors want to see the BIG idea!" 🎙 "The Showcase format allowed us to have meaningful conversations. There was lots of time for real networking. Everyone asked, 'what is your ask?'. That was so refreshing!" ⏰ "It's just more sophisticated here. Time to market is faster in the US. We didn't have to spend our time explaining the tech and it felt like conversations got progressively better". So the next opportunity to leverage Connection Silicon Valley to build your network here is May 14th to 16th - open to #FemaleFounders. Don't let fear stop you. If you are looking for global capital, #SiliconValley is where you need to be to build the right connections. Register here - https://bit.ly/48SDuzF Or DM me to chat!

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Learning how to communicate value is a critical skill - check this out.

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Another AI trailblazer…. The Rise of KoBold Metals: Harnessing AI for the Future of Mining In recent years, the global mining industry has seen a transformative shift, with startups like KoBold Metals leading the charge in innovation. Founded in 2018, KoBold is leveraging the power of artificial intelligence and machine learning to revolutionize the way minerals, particularly critical metals required for a sustainable future, are discovered and extracted. KoBold's mission is ambitious: to identify and develop new sources of metals like nickel, cobalt, and lithium, which are essential for batteries, electric vehicles, and renewable energy technologies. By employing advanced AI algorithms, the company analyzes vast datasets—geological information, historical mining data, and even satellite imagery. This data-driven approach allows KoBold to predict where these critical resources are most likely to be found, significantly reducing the time and cost traditionally associated with mineral exploration. Central to KoBold's strategy is its innovative use of data. The company collaborates with geologists and data scientists to create predictive models that have the potential to redefine exploration success rates. This integration of AI not only accelerates the identification of promising mining sites but also enhances the environmental sustainability of mining practices by minimizing unnecessary drilling and the associated ecological impact. KoBold has gained significant attention since its inception, attracting substantial investment from both private investors and major partners in the mining sector. In 2021, the company raised $80 million in a Series B funding round led by notable investors such as Breakthrough Energy Ventures and The Engine, a venture fund spun out of MIT. This financial backing underscores the confidence in KoBold's approach and its potential to reshape the mining landscape. The startup's cutting-edge methods have already begun to yield results. By focusing on unexplored territories and utilizing AI to optimize exploration efforts, KoBold is setting a new standard in the industry. As the world moves towards greener technologies and seeks sustainable solutions to meet the demand for critical resources, KoBold’s pioneering approach to using AI in mining positions it as a leader in this essential transformation. As KoBold Metals continues to push the boundaries of innovation and exploration, it exemplifies the exciting potential that AI holds for the future of mining and resource management. #KoBoldMetals #AI #MiningInnovation #SustainableMining #CriticalMetals #DataDriven #CleanEnergy

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“This event had 1 purpose, build engagement & attract foreign capital to CDN #VC GPs & companies, & the CVCA CEO just threw the entire sector under the bus,” #VentureCapital in Canada just got punched in the face. In Canada we have this weird relationship between Associations and Government which is damaging our innovation community. How can we have Canadian Venture Capital & Private Equity Association (CVCA) and NACO Canada run by people who have never run a business of any significance or even been an entrepreneur. At a recent event in London, one sentence scuttled any chance of investors wanting to come to Canada. FML. Here is the sentence. "When a UK-based FO asked the elephant-in-the-room question "why given that CDN mega PP are splashing their cash everywhere in the world (PE, infra & real estate) are top CDN VCs, having to fundraise abroad". The CVCACEO responded "The reason for the lack of engagement is because the Maple 8's sole objective is performance," leaving the audience to draw one, totally wrong conclusion - that performance [of Canadian companies/vc] is the core issue." Extract from BetaKit news article: According to van der Velden, the meeting was organized by the Global Affairs Canada liaison to the CVCA, hosted by former Canadian Member of Parliament Ralph Goodale at Canada House, and about encouraging foreign investors to participate in Canadian VC as co-investors or LPs, connecting this group with Canadian general partners (GPs).

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Not every startup needs a million-dollar venture capital injection to get off the ground. Bootstrapping, the art of self-funding your business, allows you to retain full control while fostering a resourceful and scrappy culture. But bootstrapping doesn't mean going it alone. Here are some alternative fundraising methods to consider for your self-funded startup journey: 📌 Customer Funding: Pre-Sales: Validate your concept and generate early revenue by offering pre-orders or subscriptions for your product or service. This method builds excitement and gets your target audience invested in your success. 📌 Crowdfunding: Platforms like Kickstarter and Indiegogo allow you to raise capital from a large pool of interested individuals. Be prepared to offer compelling rewards for your backers. 📌 Creative Financing: Grants: Research government grants or competitions relevant to your industry. Winning a grant can provide valuable funds and validation. Revenue-Based Financing: This alternative to venture capital offers funding in exchange for a share of your future revenue, rather than equity in your company. Sweat Equity: Barter and Collaborations: Partner with complementary businesses to trade services or resources. This can help you access expertise or tools you might not otherwise afford. Freelancing or Consulting: Founders can leverage their existing skills to generate income that directly supports the startup. Remember: Focus on Profitability: Every decision should be driven by generating revenue and achieving profitability as soon as possible. Be Resourceful: Embrace free and low-cost solutions whenever possible. Utilize free online tools, co-working spaces, and virtual assistants. Build Your Community: Network with other bootstrapped founders and industry experts. Share knowledge, resources, and potential customer leads. Bootstrapping isn't easy, but it can be incredibly rewarding. By thinking creatively and leveraging alternative fundraising methods, you can turn your startup dream into a self-made success story What other methods can help according to you? #canada #startups #fundraising

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As a founder, have you ever been curious about this whole angel investing thing? This week's findfunding.vc spotlight is on an investor who's an expert in it you simply have to know: Matt Wilson, MBA from Allied Venture Partners. He: 🇨🇦 Is Calgary based 😇 Manages one of Canada's largest angle investor syndicates (now at 1,800+ members!) 🏒 Worked as a professional ice hockey referee, which he says shares remarkable similarities with investing Amongst founders, Matt Wilson, is known for bringing empathy and perspective as a former founder himself. Aside from financial support, his goal is to be the 'right' investor - one that aligns with a founder's vision, shares his network, and provides strategic insights when asked. ✉️ Make sure to pitch him, invest, scout, advise and more at https://linktr.ee/alliedvc For more, check out our funder spotlight card below along with Allied Venture Partners' profile on findfunding.vc (link in comments).

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Building a venture capital platform is more than just about money; it's about moving mountains. John Rikhtegar reveals the secrets to orchestrating successful fund-to-fund operations at RBCx. In today's episode of Swimming with Allocators, John shares invaluable advice for corporates venturing into fund-to-fund practices, emphasizing the critical need for alignment at the top. Tune in to learn how strategic alignment, unique value propositions, and deep integration can transform potential into success in the venture capital landscape. Learn from John Rikhtegar how to actively shape the innovation economy and lead transformative fund-to-fund practices that meet the future head-on.

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Every founder raising VC needs to read this 👇 Leadership advice / coaching from someone who has been round this track themselves can save you - as a first time founder - incalculable stress / time and money.

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* 𝐑𝐞𝐜𝐞𝐧𝐭 𝐌&𝐀 𝐚𝐧𝐝 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐜𝐭𝐢𝐯𝐢𝐭𝐲 𝐢𝐧 𝐥𝐚𝐧𝐠𝐮𝐚𝐠𝐞 𝐬𝐞𝐫𝐯𝐢𝐜𝐞𝐬: 1/2 * It's picking up again! After a period of slowdown, investors show renewed confidence in our industry. Here’s my perspective on 4 recent deals: ----- 1) Propio acquired ULG, Akorbi, and ALS This is likely the most ambitious roll-up among medium-sized LSPs in the United States in 2024. After more than a year in the making, these deals are expected to propel Propio from $125 million to $270-300 million in revenue, potentially surpassing Cyracom and AMN to become one of the top U.S. interpreting LSPs. They may even start to challenge giants like LanguageLine and Sorenson. The key issue will be integration. In the past, after a quick string of 14 acquisitions, Acolad took about five years to build a unified organization. Fusing different people, TMS, and cultures takes a lot of effort and heartbreak. Propio has already acquired at least eight firms, and the latest acquisitions are a larger scale. Challenge accepted? ----- 2) Smartcat Raised $43 Million In my view, Smartcat's recent success is driven by its intense focus on a single customer vertical. Smartcat started a decade ago by building a product for LSPs. They combined a TMS/CAT with a freelancer marketplace and a payment to make it very easy to find freelancers around the world and collaborate with them. Ivan Smolnikov and his team created what is probably the only TMS company with proven success in the long tail of small language businesses. Having hit the ceiling in growth there, Smartcat pivoted from LSPs to serving eLearning managers in large organizations. They added workflows with Articulate training modules, and provided both software and human teams from the marketplace to accomplish localization in a business model that rivals LSPs. It appears that this move has doubled Smartcat sales over the past 2-3 years. Based on their latest funding round, the estimate of Smartcat’s revenue should be $15-20 million, catching up to XTM and Lokalise. -----

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Abundance AND impact? Yes, please! 🌳 Merging historical IRRs of 35% with social impact investing, our search fund is a creative, emergent and exciting way to shape the future of Canadian small business. The New York Times did a great piece on traditional search funds and the opportunities in this space. #regenerativeleadership #canadiansearch #canadiansmb #eta #impactinvesting

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🇨🇦OH CANADA! WARREN HINTS AT A "WE THE NORTH" BIG BET 🇨🇦 BRK ANNUAL MEETING a bit of a snooze fest; a few intriguing nuggets/ dropped hints of coming bets à la their Japan sogo shosha foray. I. GENERAL INSIGHTS (CASH HOARD, SUCCESSION, MACRO): * BRK propping up T auctions (see below) in lieu of foreign direct bidders; reallocating out of equities; but a sudden retracement of rates would sting * a triumvirate will take over from WB (as I posted Friday) with final veto power from CEO Abel on future new positions * WB sounded hoarse, off his game--mistaking CEO Abel for Munger (R.I. P.) * "USA gov owns BRK in part" ascribed to the 21% tax rate along w exhortations for other corporates to pay fair share of Federal taxes * "primary investments only in USA" core names AXP, KO, GEICO; the most important business of the BRK empire? Clearly, I N S U R A N C E * railcar loadings trending down (key macro economic indicator)--BRK exposed * his cryptic comments around Canada: WB has invested in the Great White North before. What is this new play? Probably Energy BEFORE SPECULATING FURTHER, notable highlights as follows: I. APPLE: "2024 SHARE DECLINES YTD PARTIALLY DUE TO BRK SALES" * $189bn cash hoard, invested in "T bills and chill"---awaiting a big bet; a net seller of equities * trimmed AAPL stake (by 13%. 115mn+ shares) to lock in gains < CapGains changes 2025; BRK trim fueled NASDAQ: AAPL recent 2024 declines * fears that AAPL is "losing its moat" in China, Europe as competition intensifies and EU regulatory "takes a bite"; Cook's $110bn buyback a propping up tactic? II. RISK, INSURANCE AND AI: * "USGov = BRK's largest shareholder" begs a Q: would it ever be nationalized? * increased insurance unit exposure to FL last year in the face of others leaving "at the end of the day, still possible to make a decent profit" (in FL) * "in future, largest AI growth industry will be scams"---WB does not understand it, but knows it is potentially dangerous as well as beneficial * self driving cars w AI could be an unknowable threat to BRK insurance cash engine, e.g. GEICO which is in urgent AI catch-up mode (data analytics gap) III. BRK ENERGY: * "we have the money and the knowledge" to win in Energy * rebuilding utilities for AI, data centers is a massive undertaking along with wildfire and other risks to power generation * CEO Abel spent inordinate time on Energy indicating that might be the big bet ----------------------------- NET, BRK MORPHED into a quasi universal bank (asset mgt/money market, credit cards and insurance) with candy and tech sprinkled on top. Insurance alone generates $300bn in revenue: world's biggest insurance company by far. James Eagle has a fascinating visualization on BRK evolution here: https://lnkd.in/gNNRKYJM #BRK #risk #warrenbuffet #strategy #activemanagement #energy

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New Episode Alert: Motion Masters Podcast 🎙️ Thrilled to share our latest conversation with Thomas Becker, CEO of Pulsar Industries North America Inc.! Host: Lika Dumbadze, M.A From Austin to the world 🌍, Pulsar Industries is redefining global manufacturing. Thomas reveals how they're helping businesses navigate the difficulties of international trade and protectionism. Key insights: • Micro-factory approach for agile market entry • Electrification as the driving force of industry transformation • Balancing sustainability with profitability in the new industrial era Curious about the future of energy storage and green manufacturing? Thomas offers a glimpse into exciting innovations that are reshaping our industry. 💡 "The more we innovate, the quicker, more innovations will happen." - Thomas Becker Whether you're a manufacturing veteran or a green tech enthusiast, this episode is packed with valuable insights on navigating today's complex industrial landscape. 🎧 Listen now: https://lnkd.in/dQZadeQr #PowerTransmission #Localization #GlobalManufacturing #Sustainability #MotionMasters Motion+Drives │ Industrial Motion Magazine What's your take on the future of localized manufacturing? Share your thoughts below! 👇

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