What it’s going to take to fuel next-gen tech growth to cultivate big, meaningful businesses right here in Canada
Article originally published in May 2016 edition of Private Capital Magazine
By Kirk Simpson
Co-founder and Chief Executive Officer, Wave
Reflecting back on the early days of Wave in 2010, I’m amazed at how much has changed in the tech landscape — all within a short six years.
Firstly, while raising capital is never easy, it’s increasingly viable for Canadian companies today — once they’ve gained some traction — to raise large and ambitious rounds from Canadian VCs like OMERS Ventures or BDC, or from the plethora of US investors who have proven that they are more than willing to write large cheques to Canadian start-ups.
Even for early-stage ventures, we’ve seen far more seed-round activity. We’ve even seen successful entrepreneurs such as Ryan Holmes (Hootsuite), Markus Frind (PlentyofFish), Dan Debow (Rypple/Salesforce), David Ossip (Ceridian), Allan Lau (Wattpad) and my co-founder, James Lochrie, give back to the start-up ecosystem by making angel investments in early-stage companies. In fact, Holmes even started the Maple Syrup Mafia to bring some formality to this growing group. The fact that experienced start-up entrepreneurs are helping to fund the next generation of Canadian founders is a truly positive sign that the ecosystem is maturing.
Sow the Seeds
For me, the greatest difference in the past six years is how Canadian tech founders are viewing success. In the early part of this decade, as I was first coming into this ecosystem, any exit with eight figures was a big one — like BumpTop, PushLife and BufferBox, all of which exited to Google in the $25-30 million range, all around the same time. We celebrated their success — and rightly so. But these are not the exits that will drive our ecosystem to the next level. For that to happen, we need hugely successful companies to form, to train amazing leaders through the experience and show their employees that massive success and wealth can be created (and through that experience, have them want them to do it all over again themselves). In other words, we need the phenomenon of the PayPal Mafia to truly echo on this side of the border.
I believe we are now on the cusp of doing just that. There’s never been a time when we’ve had such a plethora of growing tech businesses that are creating value. With Shopify leading the charge and followed by Kik, Hootsuite, D2L, Wattpad, Hubba, Influitive, 500px, Nymi, and of course Wave, we are growing big, meaningful businesses at a pace that hasn’t been seen before in Canada.
Embrace the Newbies
But there are still a few gaps. If you’re a visionary entrepreneur with all the right stuff, but no previous connections, there remains a chasm between you and seed capital. Add a hard-to-understand model (free accounting and invoicing as an example — which was the case for Wave), and the chasm can be un-crossable. A well connected second-or-third-time entrepreneur has options, but when I meet with ambitious, usually young, entrepreneurs on their first time around, it’s the lack of connections, and a reticence on the part of investors, that stands in their way the most. We still suffer a bit from Canadian conservatism at the early stage — especially with investors who haven’t been tech founders themselves.
Keep it Canadian
And then as these companies grow, we need more Canadian players to be writing the large growth-round cheques rather than always relying on US investors to step up. Let’s face it, the stakeholders who often reap the biggest rewards when these large companies IPO or have massive outcomes are often the firms that wrote the cheques. Our goal should be to keep more and more of that wealth right here at home so that it helps fuel the next generation of amazing Canadian entrepreneurs. To me that is our next big challenge.
*Kirk Simpson is the co-founder and CEO of Wave (waveapps.com), the world’s fastest-growing financial software for small businesses. In five years, Wave has signed up nearly two million small businesses around the world, and raised $42 million in funding, while building disruptive Fintech tools in payments, accounting, invoicing, payroll and more.