CVCA Member Profile: Real Ventures
In a record-breaking H12016, they top our list as Canada’s most active VC
By the Canadian Venture Capital and Private Equity Association
The first half of 2016 saw a record 255 venture capital deals and $1.5B invested — an increase of 41 per cent from the same period in 2015. And Real Ventures emerged as the most active firm, contributing to 39 of those deals, investing a total of $77M.
Real Ventures is a leading source of seed stage capital in Canada. Since getting started in 2007 with a $5M fund, they raised two subsequent funds — $50M in 2010 and $89M in 2014. They have invested in close to 200 companies, both through their seed-stage fund and their pre-seed accelerator, FounderFuel.
It’s clear Real Ventures understands what it takes to go from seed to a strong Series A investment round. We talked with Janet Bannister, General Partner, Real Ventures, to gain some insight on their approach. Bannister attributes the firm’s success to three key factors:
1.) Ability to Spot Entrepreneurial Success
Bannister says having invested in so many founding teams over the past nine years has given them significant insights into the factors behind entrepreneurial success. “The key attributes we look for in founders are an ability to attract amazing talent and build great teams, being extremely driven, tenacious, and scrappy, demonstrating a strong product and customer focus, openness to feedback and personal reflection, and outstanding communication skills,” Bannister says.
2.) Investing More Than Just Dollars in Portfolio Companies
Bannister explains the firm takes pride in helping its portfolio companies through a variety of programs as well as through one-on-one time with the investment team. “Many companies face similar challenges during the critical early-growth phase, so we have developed programs and tools that are valuable to all our companies and can be delivered at scale,” she explains. For instance, all of their companies attend a two-day boot camp shortly after their initial investment, which gives them the opportunity to learn the core mindset and frameworks to get to Series A and beyond, and understand how VCs think and operate. In addition, Real Ventures’ investment team actively works with each company to help them achieve their milestones and objectives.
3.) Building Trust & Loyalty (Which Doesn’t Happen Overnight)
The best entrepreneurs usually have a choice when selecting an investor, Bannister says. “In order to have the opportunity to work with the best entrepreneurs, we build trust and respect amongst entrepreneurs.” This is done through years of investment, hard work, and nurturing shared values. “I believe that you need to earn your reputation every day.”
A Focus on Strengthening the Ecosystem
A big part of Real Ventures’ focus is on strengthening the entrepreneurial ecosystem. The company wholeheartedly believes that great companies are built in strong entrepreneurial ecosystems, Bannister says.
“We have a real commitment to fostering the communities in which our companies operate. This includes initiatives such as our FounderFuel accelerator and our participation in initiatives such as The Next 36 in Toronto, Fierce Founders in Waterloo, and Notman House in Montreal.”
A Disciplined Investment Strategy
A big part of Real Ventures’ investment strategy is taking relatively small stakes in early stage companies and then “doubling down” on the winners. In fact, while the vast majority of initial cheques into a company are less than $1M, when a company starts to “take off”, Real will invest significantly more to increase its stake. In a world where three out of four start-ups fail, investing early with relatively small amounts of capital gives the firm a first window into which enterprises are moving in the right direction.
Read the VC & PE Canadian Market Overview // H12016 for more insights regarding venture capital activity in the first half of 2016.