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2017: Our Year in Review

 

When you walk in to the Plaza Ventures office, featured front and centre are our portfolio company logos accompanied by a framed photograph of possibly the best baseball hitter of all time, Ted Williams. While his presence in our office speaks to a shared love of sport amongst our team, the photograph has secured its space on our wall because of what it symbolizes: the famed strike zone sweet spot.

In early 2017, I came to an ‘Aha’ moment courtesy of the documentary Becoming Warren BuffettIn this special, Buffett shares his investment thesis, and what he calls the “Circle of Competence”. Like Williams, who waited to swing at pitches within his sweet spot and batted over .400 as a result, Buffet shared that early on his career he recognized that investing requires the same type of discipline and defined the parameters of his own investment thesis sweet spot. Rather than trying to swing for the fences every time, Buffett concentrated his approach on swinging only at pitches within a calculated strike zone with the objective of getting companies to first, second or third base; once on base, the probability of that company ‘scoring a run’ increased exponentially.

Just as Williams’ batting became a studied science (he used lightweight bats, and usually allowed the first pitch through to assess the pitcher’s prowess), so too has our investment decision making. We operate within our sweet spot, investing in growth stage companies looking to scale, seeking merit- and milestone-based funding, and who fully understand their KPIs and unit economics. PV’s growth and success in 2017 has largely been attributable to sticking to our core competencies with financial discipline, opting not to chase early stage start-ups and swing for the fences.

Over the course of the last few years, our team has defined and continuously refined our Circle of Competence. Once in place, Rob, Daniel and I felt that we had the opportunity to scale our practice.

Scaling: Investment in Infrastructure & Personnel 

With confidence in our investment strategy, 2017 has been a year of investment in infrastructure. We have adopted a new CRM system to track everything from deal-flow intake to capital allocations; an online reporting tool to better track KPIs and improve transparency, and a project management tool to assign and track team responsibilities and deliverables. In the spring, we kicked off our hiring imitative to drive our team build. Daniel Israelsohn was the first addition, joining us as Vice-President after leading finance and operations at a SaaS company that exited to a private equity fund. David Hao (Analyst), Ashley Thistlethwaite (Marketing & Operations Manager), and Tina Safaei (Technical Analyst) came on board shortly thereafter. As an example of the promising nature of our connected ecosystem, Tina came to me via NextCanada (where I am one of the Mentors and Advisors) seeking career advice. Interested in utilizing her technical background in a more entrepreneurial and business orientated framework, she wants to found her own startup in the future. Working in a VC is a great way to get some relevant experience. Our team has developed an amazing dynamic and we are excited to continue to scale our practice together. We anticipate that we will bring on additional team members in 2018.

Engagement in the VC Ecosystem

Our team is actively engaged in the Canadian tech ecosystem and the rich array of events and initiatives within it. This year, I was elected to the board of the Canadian Venture Capital Association (CVCA), joined both the MaRS IAF Investment Committee and the L-Spark Investment Committee, participated in the revered Kauffman Fellowship Program, and was a speaker at the SaaS North conference in Ottawa.

In my role as Co-Chair for the Canadian Innovation Exchange (CIX), this year was particularly exciting for me as one of our portfolio companies, StackAdapt, was ranked as one of the top 20 innovative companies in Canada. In November, StackAdapt was ranked sixth by Deloitte Canada’s Technology Fast 50.

An Exit with an Entrance

One of our portfolio companies, SweetIQ, scaled at an extraordinary rate this year. News of their success began to reverberate throughout their industry and while negotiating a Series B financing, an exit offer arose from Gannet, a multibillion dollar US publicly traded media conglomerate.

After thorough deliberation, the founders and the board ultimately decided to sell, with the promise that the company would continue to expand within its home city of Montreal. While it was a relatively short ride with SweetIQ, the outcome was advantageous for the founders and investors. PV was honored to be involved.

Fortunately, the deal not only helped us return significant capital to our investors, but it also delivered CEO Mohannad El-Barachi as our first Venture Advisor. I speak for everyone on our team in expressing how elated we are to have Mo on board to assist with networking, deal-flow and due diligence. I feel strongly that having Mo want to join us is a true testament of PV’s aligned relationship with our entrepreneurs. We are grateful that the people we invest in want to have continued success with us. I hope that all of our CEOs (both current and future) will become PV Venture Advisors!

What’s to Come in 2018

2018 promises to be a very exciting year for Plaza Ventures. As we continue to engage with the wealth management industry, we anticipate the close of Fund V mid-year at 2x to 3x the size of Fund IV. This will expand our operations to be equivalent to a sizeable traditional venture fund, but continuing to raise and deploy funds annually based on the key tenets of alignment of interests and transparency, with the unique features and co-investor philosophy appreciated by private investors.

Our mission is to orientate Canadian family wealth into private tech to the level of 7% to 10% of investible assets, continuing our fiscally disciplined approach focused on higher risk-adjusted returns and quick recycling of capital. We are well on our way and we sincerely thank our investors, partners and advisors for their support and guidance.

In addition to our wonderful portfolio company management teams, I would like to give a shout out to our partners, the folks at TWG, and RBC Innovation Team, as well as our new friends at SideWalk Labs. It is organizations like yours that enable us to go deeper into the ecosystem, to explore the future of technology and to scale our business!

Finally, I would like to extend a heartfelt thank you to our Investment Partners. I feel honored to be working with some of Canada’s most successful investor entrepreneurs. It is because of your confidence in our practice that we have been able to scale to our fourth and largest growth-stage Fund. PV Fund IV is delivering on its promise to allocate at least 50% of the expanded capital base to follow-on investments in our existing portfolio companies, as well as investing in new files. We anticipate that the Fund will be fully deployed by the end of Q1 2018, at which point we will be introducing PV Fund V – again our largest to date due to demand!

 

Matt Leibowitz

Partner, Plaza Ventures