With a focus on Canadian technology, Kanata Ventures wants international startups to become a part of history.

How trips to São Paulo, London and Hong Kong sold Kanata Ventures in Canada.

In June 2015, Yuri Navarro traveled to São Paulo, Brazil, to deliver a opening speech at the Anjo Investimento Congress, an event for angel investors in Brazil. Trips to international tech ecosystems like São Paulo were routine for Navarro, who was then executive director of Canada’s National Angel Capital Organization (NACO).

As part of the event, Navarro engaged with a number of Brazilian startups vying for an initial investment of $1 million from local and international investors. Before long, something puzzled Navarro about these Brazilian startups: Despite their relatively young age, many were already profitable.

For Navarro, this was a clear departure from the North American “growth at all costs” mentality that has many startups prioritizing rapid growth over building a sustainable business. Furthermore, this was not limited to Brazil. It was an observation that played out in the other global tech ecosystems Navarro visited, including Italy, Estonia and Finland.

“We want this to be essentially the best and most founder-friendly path for a company that wants to come to Canada.”

“I remember thinking about how different those ecosystems were from ours, but also how competitive those companies would be in a North American context if they had access to this market,” he added.

Navarro said that event in Brazil was his “ah-ha moment,” a seed that would eventually become kanata companieswhich is now being launched stealthily.

Toronto-based Kanata Ventures wants to help global B2B startups accelerate their growth by providing a soft landing in the Canadian market. Although it will invest through a standard 10-year limited partnership, Kanata Ventures is not purely a venture company.

By forging corporate partnerships and taking a service-oriented approach to its portfolio, Kanata Ventures hopes to merge the models of Canada’s leading start-up support programs and, with a global perspective, help a new generation of technology companies thrive. in Canada.

“We want this to be essentially the best and most founder-friendly path for a company that wants to come to Canada,” Navarro said.

Kanata Ventures was founded in 2020 by Navarro, who serves as managing partner; managing director Chris Kay; and partner Sean Kondra. While at NACO, Navarro worked on a number of business and angel investment initiatives, including Canada Start-up visa program. Then leaving NACO In 2018, he went on to work with several notable organizations in the ecosystem, including Panache Ventures and VentureLAB.

Kay is the CEO and founder of Multiplicity, a corporate innovation lab that has provided innovation programming and consulting services to government, the automotive, real estate, and financial services industries. Kondra has worked as a partner at Multiplicity since November 2018.

The three founders, who are personal friends, have traveled to emerging startup markets and have independently discovered a need for more support for businesses looking to establish themselves in Canada. The trio decided to combine their experience to build the Kanata Ventures business model.

Reduce the risk of expansion to Canada

Kanata Ventures’ approach to supporting international startups revolves around three core pillars: immigration, corporate partnerships, and equity investment.

The company begins by partnering with stakeholders in emerging markets, including investors, for qualified deal flow. While the company is independent of the industry, Kanata specifically looks for companies that have a product on the market and are gaining some traction in their local ecosystem.

Once Kanata has selected a company, she plans to work with various programs, such as the Start-up Visa Program, and firms such as BDO and Fasken, to help companies with the legal and jurisdictional requirements to establish business operations in Canada.

The second component of Kanata’s model is mentoring his portfolio companies: helping them refine their sales process, establish a North American team, and connect them with target customers.

“What we have gathered is not entirely innovative. The ingredients we use in our recipe already exist in other companies. It’s the way we’ve combined them that’s unique.”

As part of this commitment, Kanata plans to establish pilot projects between portfolio companies and business partners (leveraging Kay and Kondra’s expertise in corporate innovation), while helping companies navigate the legal and risk-related activities associated with expansion. international.

The venture firm also plans to work with Canadian accelerators and incubators that can provide startups with office space, mentorship and other forms of growth support for portfolio companies. Kanata Ventures’ role is to put these startups on the path to generating initial sales and validating them in the North American market.

“We see it as a reduction in the risk of the expansion process,” added Navarro. “Part of that is getting here in the first place and setting everything up right. The second most important part is validating that you can sell in this market, because most investors won’t take you seriously until you can.”

Finally, Kanata Ventures will invest to participate in the top of its portfolio. The firm is currently establishing an LP legal entity and rounding up investors for its first formal fund, for which it hopes to raise $10 million.

The fund will invest up to $125,000 in each company as they work to land in Canada and secure sales traction in North America. Kanata will earmark half of the fund’s value for follow-on investment once the companies are ready for a post-seed or Series A funding round, and seeks to build a capital position of between three and six percent. cent during the useful life of each company.

Navarro said the firm expects to make between 15 and 20 investments per year. So far, Kanata Ventures is in talks with family offices as possible LPs and is targeting $5 million for a first closing in the second quarter of this year.

Same ingredients, different recipe

Navarro and Kay don’t think they’ve reinvented the wheel. Indeed, they were quick to point out how several elements of the Kanata Ventures model mirror those of Canada’s leading venture studios.

The Power Financial-backed venture study Diagram Ventures, for example, also partners with founders and provides investment, hands-on support and partnership opportunities. Toronto-based Highline Beta is also distinguished for its work in scaling businesses through corporate innovation associations. Unlike Kanata Ventures, Diagram Ventures and Highline Beta mostly build their companies in-house. However, the Kanata Ventures model takes a similar approach to de-risking portfolio companies.

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“What we have gathered is not entirely innovative. The ingredients we use in our recipe already exist in other companies. It’s how we’ve combined them that’s unique,” ​​Kay said, adding that Kanata Ventures is taking a unique and intentional global approach to its de-risking model.

Although Kanata Ventures will not be investing capital in Canadian companies, the firm may work with local startups through a cohort-style initiative that it will launch in the coming months. Through these 16-week cohorts, Kanata will play matchmaker for specific vertical startups and corporate partners for relevant pilot engagements. The firm is already in talks with about a dozen corporate partners for the first cohort, which will focus on proptech.

Nurturing Canada’s Tech Portfolio

From his years of interacting with stakeholders in international technology markets, Navarro has witnessed Canada’s appeal to foreign founders. He said that many companies want to access the North American market and noted that Canada offers a great landing point, with its welcoming attitude to immigrants, high standard of living, large amount of capital support and highly active technology sector.

Navarro and Kay independently realized these strengths during their many trips abroad. “We had realized that the level of sophistication of the Canadian startup ecosystem was considerably more advanced than many places,” Kay said, adding that he was surprised at how far away hubs like Hong Kong or London, England were compared. with Canadian cities like Toronto.

“New companies coming [to North America] they are thinking of Canada. We are not going to have to convince them of anything,” added Navarro. “They already know that Canada is an interesting market and that this is a place they want to consider launching their company from.”

In recent years, technology startups in the United Kingdom, Sweden, New Zealandand Nigeria, among many other countries, have chosen Canada as their anchor in North America. Now cities like Toronto and Vancouver are among the fastest growing technological centers of the continent.

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As global founders are increasingly drawn to Canada as their North American destination, these founders are playing an equally important role in growing Canada’s tech ecosystem. According to a report by the Council for the Economy of Innovation, first and second generation entrepreneurs undertake almost one third of all early-stage entrepreneurship in Canada, significantly higher than most other comparable economies.

However, Navarro noted that most Canadian funds and accelerator programs do not seek deal flow outside of Canada, although some programs, such as toronto tech stars, are signs that the country is moving in that direction. “Canada is really well positioned right now, more than ever, in terms of our ability to work with global founders,” Navarro added.

Navarro hopes that Kanata Ventures will encourage more organizations to think globally when it comes to their investments, not only to support high-potential companies, but also to bring new ideas and talent to strengthen Canada’s tech ecosystem.

Featured image courtesy of Kanata Ventures. Photo by cedric cisneck.

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