Year: 2023

The Battle of B2B and B2C Startups

Figuring out what potential investors are looking for from startups in emerging markets such as Alberta can be worlds apart from what they’re expecting in more established hotspots such as Silicon Valley, Stockholm or even Toronto.

For example, In July Silicon Valley-based software company Teknol announced plans to move its engineering headquarters to YYC, a $12.5-million investment which is predicted to create 125 jobs over the next three years, with the company’s CEO hailing Cowtown for the “positive buzz” of its tech sector.

This year’s annual Tech Talent report also found Calgary to be Canada’s second largest tech hub (trailing behind Vancouver) with job growth in the sector increasing by a massive 61 per-cent.

Most companies, however, can be separated into two different groups with unique factors driving their investability from a VC perspective: 

Business to Business (B2B)

B2B simply means the business will focus on selling its product, service, or technology to other businesses. A company dedicating itself to this strategy needs to make sure potential investors understand why they have chosen to target other businesses (as compared to individual consumers) and the benefits of doing so.

A B2B sales strategy allows for larger purchase orders or broad installations of technology, as other businesses usually have significant buying power (much more than the average consumer), as well as a willingness to sign long-term contracts.

When preparing to pitch a B2B business to potential investors, founders should make sure to highlight the advantages of targeting other businesses and clearly explain why this is the strategy that provides the largest avenue for further growth for their company.

Business to Consumer (B2C)

Where B2B’s target other businesses, B2C’s target the retail consumer. By going direct to consumer, companies are targeting an audience with much lower buying power when compared to other businesses. However, the size of the potential market is usually much larger.

Typically, B2C businesses benefit from higher gross margins, as well as a much wider reach in terms of who they can market their product/technology to.

As an entrepreneur begins to think about presenting their B2C business to venture capitalists they should remember to articulate the breadth of the market, high margins and (again) why specifically this is the best decision for their company.

Testimonial: A Lift for Arolytics

In September 2023, Arolytics Ltd – a provider of methane software and data analytics solutions for the oil and gas sector – became the inaugural investment in BDC Capital’s new $150M Sustainability Venture Fund.

The fund itself is dedicated to investing in businesses which develop technology that furthers the field in meeting sustainability and climate targets. 

While additional investors include Yaletown Partners, StartupTNT, and a Houston-based strategic investor, it was co-founder Liz O’Connell’s work with Metiquity Ventures which she credits to helping leverage the company’s seed round experiences.

Metiquity Ventures was one of the first investors to partner with Arolytics Ltd. And Liz says their startup journey was in a much better position to raise greater investment because of their lead infuse of cash and contribution (for example, Bryan Slauko sits on the Arolytics Board).

“Metiquity has been there through all of these crazy ups and downs, and all these things that get thrown at us as a result of running a startup,” says Liz. “These issues include a new range of data challenges at the hand of an evolving emissions measurement infrastructure, many of which pertain to the (very significant) monitoring, measuring and quantifying of emissions data across hundreds and thousands of individual facilities across dozens of different states and provinces and countries.”

Liz met her two fellow co-founders during an academic emissions research group, during a time in which there were little-to-no strong widespread regulations around emissions management for the oil and gas sector. However, with a prompt wave of new regulations came an opportunity for Liz and her co-founders to create digital solutions to support and automate new processes.

On the influence of lead investor Metiquity Ventures, Liz elaborated: “There’s always that ear to run something by – a second piece of advice. Jacques and Bryan are extremely responsive and they always bring a unique perspective to the table.”

“Leading up to our seed round that we kicked off earlier this year. Bryan (Slauko) had great recommendations on what type of investor we should consider and why. Their lead investment contribution of not only time but experience has helped us move to further seed rounds.” 

Bryan Slauko continues to sit on the software development company’s board of directors.

 

Testimonial: When WaitWell Got Tired of Waiting

In July this year, queue management software WaitWell – a queue management software optimizes service delivery at busy locations like universities, government offices and clinics – secured $1.5 million CAD in seed funding to expand its product offering across the States, venturing into new markets along the way. However, without the “sounding board” of Bryan Slauko and Jacques LaPointe the WaitWell story would have been very different indeed.

Before the coronavirus pandemic, WaitWell’s founders – husband and wife Steve and Shannon Vander Meulen – ran a motor vehicle registry office in Alberta, but with the ‘unprecedented new normal’ of Covid-19 came a cavalcade of service problems for customers and companies alike.

When the Vander Meulens noticed an opportunity to better resolve lineup management issues, they decided to launch beta testing on WaitWell in August 2020. 

“Through the pandemic, we knew that we had the important role of providing an essential service while doing so in a safe and effective manner,” Steve began. “The solutions that were out there weren’t exactly fit for the style of business that we ran, so we built our own and had the good fortune to commercialise that to neighbouring markets.”

On the topic, Shannon said: “Immediately we realised once you digitize the way that people enter a queue, you have an opportunity to really digitally transform the entire customer experience from the time they join the queue until after they’ve left the building.”

The pair met Bryan and Jacques at an investment summit hosted by Startup TNT (WaitWell won the investment, by the way) and were struck by the pair’s unparalleled experience in the startup world, as well as their shared determination for the company to exit within Steve’s intention of a seven-to-ten-year timeframe.

It’s this “emotional investment” in the WaitWell journey that Shannon credits to the company’s success to date, crediting the pair as a “sounding board” for their questions and concerns as they worked to build WaitWell as a leader in queue management software.

“Although we’re experienced entrepreneurs, we are not experienced in the startup world, and so a lot of times we run into hurdles, challenges and questions,” Shannon said. “Bryan and Jacques have also been really helpful in providing connections for us. They’ve done a lot of introductions where necessary.”

A Beginner’s Guide to Startup Investing

As an entrepreneur sets off on their journey from humble beginnings to startup success, they will inevitably need financial support to fund their business. This funding may come from a variety of different sources, such as their own bank accounts, friends and family, business loans, grants, or private investment. 

So how does a promising new entrepreneur get a handle on how and when to seek out sector and investor help? Here’s a guide to some of the most common avenues founders will encounter when navigating the weird and wonderful world of startup investment.

Bootstrapping

A founder who can start their company with little outside investment is said to have ‘bootstrapped’ their startup. They may have little to no assets, but they get things up and running. Later in the evolution process the business and founder may need to scale up or go public to attract investment, but for now they’ve managed to get off the ground without any external investments.

Friends and Family

When a business is first starting out – and is perhaps better described as an ‘idea’ than a fully-functioning organization – capital is an essential asset in funding market research, developing prototypes and testing their business hypothesis. The journey for this capital among many entrepreneurs begins at home, with friends and family. 

At this point, the company would usually not have any sales or customers. The founders are simply looking for capital to explore their business idea to see if their concept has further potential. This stage of VC is also called pre-seed investment, as this capital raise is fairly unofficial with little (or no) paperwork completed. 

In short, this is usually an entrepreneur’s first try at raising capital for their business if they don’t have enough money to ‘bootstrap’ the business and lack the information and business proof-of-concept to look to larger investors. 

However not everyone is comfortable bringing their nearest and dearest into their business plans. 

Angel Investors

Angel investors are typically individuals or family offices who are looking to provide capital to startups they believe have potential. Angel investors can range from a single person to official angel groups who invest across multiple businesses. 

These business angels tend to be wealthy individuals who are entrepreneurial in nature and want to support other entrepreneurs while also seeking a high return on investment. Alongside capital, it’s important for founders to consider what expertise and history of success angel investors bring to the table before offering them a seat at the table.

While securing capital from friends and family is considered pre-seed funding, working with an angel investor (or anyone else who gains equity in the business) becomes the first round of fundraising – otherwise known as “seed funding”. Angel investors will look for a stake (or equity) in the company in exchange for their investment and may or may not be interested in actively assisting in growing the company. Exchanging shares of a company for capital is an official transaction and is considered to be seed funding. 

Lead investors or early stage investors are a form of angel investor; however, early seed rounds are less about one individual who might invest in a business. Instead, they are based on a fund and due-diligence process around private investment. 

Family Office

Family offices are private wealth management advisory firms dedicated to serving high net worth individuals or families. They generally fall under the label of LP (limited partners) who invest in larger VCs or funds. Traditionally, family offices are categorized into two separate types – single-family offices (SFOs) and multi-family offices (MFOs)

Single-family offices serve only one family and are responsible for managing their finances. This includes allocating capital into various investment opportunities such as venture capitalism, along with functions such as succession planning, lifestyle management, risk management, filing taxes, and more.  

Multi-family offices serve similar functions with one important distinction: where single family offices only serve one family, MFOs can be thought of as more traditional private wealth management firms who serve multiple different clients. This allows them to enjoy economies of scale by pooling their clients’ resources together when appropriate. 

The value behind family offices is their ability to manage the entire financial umbrella of a high-net-worth family. Functions like estate planning and taxes are typically done by separate institutions, and for families with extreme wealth these processes can become quite complex. Family offices enable wealthy families to have all financial tasks handled by a single entity, simplifying the process and ensuring their capital resources are managed efficiently.  

Venture Capital Firms (VC)

Venture capital firms can be similar in function to angel investors, yet differ in their expertise and access to resources. These VC firms are most often led by former entrepreneurs who exited their own businesses successfully. They are experts in evaluating and analyzing the potential of other startups, and typically have teams of investment analysts to help them sift through research reports. This makes it easier for them to determine where their investment capital is best allocated. 

VC firms draw their funding from pensions, family offices, and other institutions. For this reason, they have a substantial amount of capital to invest in prospective startups. Many VC firms will focus on companies who have moved past the prototype stage and are looking to expand operations and grow their customer base. However, some firms focus on the early-stage startups where founders are still testing their business hypothesis and researching their proposed market opportunity. 

Just like angel investors, VC firms will gain a portion of ownership in an entrepreneur’s business in exchange for capital, and take a hands-off or hands-on role in assisting the entrepreneur in building their company. 

A common question is how much equity is a VC firm likely to want in exchange for the capital a founder needs? This is a complex question that unfortunately does not have a simple answer. 

The important thing to remember is that VC firms operate with precision and intention. When determining how much equity they are looking to gain in exchange for providing a business with capital, they will usually resort to some sort of valuation model. One such model called a discounted cash flow (DCF) attempts to forecast how much revenue a company will achieve in the future and then work backwards to what a company is worth today. VC firms will then take into consideration other important factors such as risk tolerance and the total return they want to gain from this investment. 

Upon understanding what a company is worth, what sort of return they want to achieve, and what their risk tolerance is, a VC firm can begin to determine the equity required to align with their strategy.

As an example, let’s say a founder wants to raise $500,000. A VC firm, through using a DCF model, values their company at $23 million in five year’s time. Assuming they are looking for a return of 9-10 times their initial investment, that would put the startup’s worth at $2.5 million today. This means that for an investment of $500,000 the founder would give 20% of the company’s equity to the VC firm. Check out this handy startup valuation calculator to understand the relationship between the capital entrepreneurs are looking to raise, the value of a company, and the equity stake a founder would give to a potential investor.

The above is an example of one possible methodology a VC firm may use to begin to value a company and determine how much equity they wish to receive. In reality, several factors – including operating history and whether there is a developed prototype – will come into play when negotiating with a VC firm on the investment amount and equity stake.

The most important thing to remember when beginning conversations with a VC firm is to work with them and not against them. Founders should come prepared with a clear outline of the future potential of their business, as well as projected revenue/earnings. This will help to navigate preliminary negotiations and assist in determining what percentage of equity an entrepreneur is willing to give in exchange for capital.

Metiquity Ventures Announces $400,000 Investment in Saskatoon-Based Runnr Delivery

Metiquity Ventures, a leading pre-seed stage focused venture fund based in Calgary, today announced a significant investment of $400,000 in Runnr Delivery, a Saskatoon-based company specializing in efficient and technology-driven last mile delivery solutions.

Runnr Delivery has emerged as a leader in the rapidly growing on-demand, last mile delivery sector, providing a seamless platform connecting local delivery vendors with their enterprise customers. The company leverages technology to digitize and streamline delivery processes, enabling organizations to schedule deliveries online, track shipments, access upfront pricing, and manage both internal fleets and external vendors efficiently, while enhancing the overall customer experience.

Metiquity Ventures recognizes the immense potential of Runnr Delivery in transforming the local delivery landscape. This strategic investment aligns with Metiquity’s commitment to fostering innovation and supporting promising pre-seed stage startups in emerging tech ecosystems that are underserved by local investors.

Bryan Slauko, Managing Partner at Metiquity Ventures, expressed enthusiasm about the partnership, stating, “We are thrilled to be part of Runnr Delivery’s journey. The company’s commitment to leveraging technology for efficient and reliable delivery services aligns with our vision of supporting ventures that redefine industries. We believe that Runnr Delivery has the potential to make a significant impact in the local delivery market, and we are excited to contribute to their growth.”

Runnr Delivery’s CEO, Louis Kolla, expressed gratitude for the support from Metiquity Ventures, stating, “This investment from Metiquity Ventures comes at a pivotal time for Runnr Delivery. It will allow us to accelerate our growth plans, invest in technology upgrades, and better serve both our business partners and customers. We are excited about the possibilities that this partnership brings and look forward to reaching new milestones with Metiquity Ventures by our side.”

About Metiquity Ventures:

Metiquity Ventures is a pre-seed stage focused venture fund based in Calgary, dedicated to supporting innovative startups in their pre-revenue and early-revenue stages. With a focus on empowering emerging businesses, Metiquity Ventures provides strategic investments and mentorship to drive growth and success.

About Runnr Delivery:

Runnr Delivery is a Saskatoon-based logistics management platform that is standardizing local third-party logistics by digitizing local delivery processes for enterprise companies while also modernizing local delivery vendors through a suite of tools to digitize and simplify their workflows. RUNNR aims to streamline the local delivery process and enhance the overall customer experience.

 

Metiquity Ventures Closes its $300,000 Investment in Calgary-Based Mastrius.

Metiquity Ventures, a leading pre-seed stage focused venture fund based in Calgary, has announced a strategic investment of $300,000 in Mastrius and its $1 million pre-seed round. Mastrius is a prominent virtual mentorship company headquartered in Calgary, Alberta. This significant infusion of capital is poised to further fuel Mastrius’s expansion, enhance its technological infrastructure, and bolster its presence in the burgeoning virtual mentorship market.

Mastrius, known for its cutting-edge platform connecting artists with mentors for live, personalized creative guidance, will utilize this investment to strengthen its position in the virtual mentorship sector. The company plans to innovate its platform, develop new features, and scale its operations to cater to a broader global audience of aspiring artists and creative enthusiasts.

Metiquity Ventures’ partner Bryan Slauko is thrilled to partner with the team at Mastrius, stating: “We are excited about the potential Mastrius holds in revolutionizing the way emerging artists and other creatives learn and grow. The Mastrius team have already proven global demand for their platform and their determination and commitment to succeed aligns perfectly with our mission to support innovative ventures here in Alberta. We believe that this investment will empower Mastrius to reach new heights in the virtual mentorship landscape.”

Mastrius CEO Mike DeBoer expressed gratitude for the investment, stating: “Metiquity Ventures’ support is a testament to the value we are creating in the creative community. This investment will enable us to expand our services, offer more opportunities to artists, and continue our mission of empowering creative minds. We are thrilled to embark on this journey with Metiquity Ventures.”

This investment marks a significant milestone for both Metiquity Ventures and Mastrius, showcasing the synergy between strategic investors and innovative startups in driving progress and fostering talent within emerging and often overlooked sectors in Alberta.

About Metiquity Ventures:

Metiquity Ventures is a pre-seed stage focused venture fund based in Calgary, dedicated to supporting innovative startups in their early stages. With a focus on empowering emerging businesses, Metiquity Ventures provides strategic investments and mentorship to drive growth and success.

About Mastrius:

Mastrius is a leading virtual mentorship platform based in Calgary, connecting artists with experienced mentors for personalized creative guidance. Through its innovative platform, Mastrius empowers aspiring artists to develop their skills, gain insights, and thrive in their creative pursuits. Emerging Artists join small, high-impact apprenticeship groups to be mentored in a live virtual setting by their choice of Master Artist, whom they’d otherwise never have access to. Mastrius brings its members the encouragement of a safe and trusted community of fellow artists, working together to help even the loftiest goals become achievable.

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