Building the Next Technology Flagships to Drive Sustainable Economic Dynamism
WHY IS A NEW VENTURE CAPITAL FIRM NEEDED?
The Canadian innovation ecosystem has grown remarkably in the past 15 years. Startups, accelerators, incubators, investors and supportive government policies have created a hotbed for entrepreneurship and innovation. Bold ideas have flourished and transformative ventures have thrived. Canadian technology has made significant strides in every sector, driving both economic growth and positive societal impact.
Yet, major challenges remain and there is still a lot left to be done. A majority of our technology companies are not achieving the global scale they legitimately could attain. They do not achieve their full potential; frequently selling prematurely instead of being the market consolidator and building for the long term.
One often-pointed cause to this problem is the lack of early-stage venture capital leadership and risk-taking at the “inflection point”, i.e. when startups have achieved early revenue, see signs of product market fit and are getting ready to scale. Indeed, there are plenty of Canadian venture capital funds to follow-on in deals, but very few firms to lead Seed and Series-A rounds, i.e. structure the round of financing, negotiate terms including the valuation of the round, and putting on paper the conditions to succeed.
THE “DEATH VALLEY” IS REAL. CANADIAN VENTURE CAPITAL LACKS LEADERSHIP, AND NEEDS TO CONTRIBUTE MORE EXPERTISE.
The “Death Valley” is the scaling stage that most companies cannot grow beyond. This occurs when a company is trying to grow from $1-2 million in revenue to $10 million in revenue and beyond. This is where Canada lacks venture capital leadership. As an example, in Quebec, our research has found that 65% of Series A rounds (84 transactions over the last 5 years) were led by investors from outside of La Belle Province. The lack of funding alternatives for early stage and scale-up companies is an important barrier for Canadian startups that have global ambitions. Furthermore, many of the best founders continue to leave the country to find stronger funding alternatives south of the border. In contrast, pre-seed venture capital is much more well developed with many active venture capital firms & angel investor groups. Institutional capital is also well developed with many important funds contributing significant amounts of capital. But institutional capital is usually more risk-averse, not bringing hands-on value-add to companies, and certainly not leading financing rounds in critical moments such as in the infamous Death Valley. The void is usually being filled by international investors and no one can blame them. Canadian founders typically outperform, and are more capital efficient than their south-of-the-border equivalents. These founders also recognize their duty to grow with the best financial partner they can find. The best founders will have access to US and international investors and benefit from their deep operating experience and support. This comes at an important cost in terms of economic development for our country; we are rapidly losing the ownership of our most successful businesses. An ecosystem of “follower investors” unfortunately tends to generate an economy of subsidiaries, instead of leaders.
The problem is thus twofold: there is not enough local capital to bridge the funding gap at the inflection point and a lack of expertise to turbocharge portfolio companies to the next level.
If you are convinced - like us - that technology will play an increasingly important role in our economy, it is necessary that our ecosystem levels up as well. We need more early stage capital to support our local leaders with financing diversity and leadership. Equity financing needs to adapt in order to contribute much more expertise, resources and technology to support and nurture our local champions. A paradigm shift is required, new organizations are needed that bring concrete value and that are not afraid to take the lead. This is why we are launching Amiral Ventures.
Amiral Ventures is a new venture capital firm whose mission is to empower talented and passionate Canadian founders, arm them with dynamic capital and scaling expertise in order to create the next generation of technology flagships and enduring societal impact.
Vaisseau Amiral (French for Flagship):
A ship or building that is recognized for its size and strength, making it the pride of a fleet or an organization
Our firm strives to foster a dynamic and supportive ecosystem where visionary founders can thrive. We provide not only capital but also mentorship, industry expertise, international networks and proprietary technology to help startups navigate challenges and capitalize on the opportunities that arise during their growth journey. We bring a deep sense of passion to our work, have built scale ups, gone through the entrepreneurial roller coaster and are committed to working with the best founders tackling important challenges.
A FIRST FUND TO SOLVE PROBLEMS THAT MATTER.
We believe that there are two fundamental challenges that enterprises globally will face over the next 20 years: increasing Productivity and improving Sustainability.
Those challenges are not only massive but systemic. We are convinced that new enterprise-technologies will bring concrete solutions to better equip company leaders. These technologies have the potential to be transformative and mission-critical. This represents one of the greatest investment junctures of our time and we are launching Amiral Fund 1 to capture this opportunity.
The Productivity Opportunity
Low productivity is a drag on Western economies and Canada in particular. In an hour a Canadian worker produces just over 70 per cent of what an American can — that’s below the euro area and even the UK based on 2022 data. This is exacerbated by the labor shortage but also lower investment in R&D. A massive shortage of workers is happening across every sector of the economy. The aggravating factors are aging of the population and new work habits to name a few. This results in major recruitment and retention challenges for companies which will persist for decades. The adoption of Applied AI, innovative manufacturing technologies such as robotics, digital twins and automation technology need to be accelerated.
The Sustainability Imperative
It is no surprise to anyone that global business and industries are by far the biggest polluters. Today’s enterprises have to maintain a double bottom-line: profitability and environmental impact. Prioritizing one at the expense of the other will no longer be rewarded by the market. Every global economy will need to accelerate their transition from carbon based energy to renewables. We believe that software and AI have a critical role to play in the transition to sustainable energy sources as well as in a better optimization of energy consumption.
These are pivotal challenges facing enterprises in all developed economies and our investment thesis directly addresses them.
AMIRAL’S INVESTMENT THESIS: ENTERPRISE-TECHNOLOGIES THAT SIGNIFICANTLY DRIVE SUSTAINABLE ECONOMIC DYNAMISM.
Applied Artificial Intelligence (AI): Traditional industries are adopting technology as new leadership takes over, amidst worker shortages and productivity challenges. Artificial intelligence applied to these specific industries will create immense enterprise value. We will strive to identify, support, and empower Canadian technology startups that are pioneering innovative solutions for applied AI. We are unapologetically pro-AI and believe that acceleration of AI technologies will lead to a world of greater abundance.
Clean Technologies: In the face of pressing environmental challenges, the future of energy lies in renewable and sustainable solutions. We believe that software and AI will play a big role in this necessary transformation. We are committed to accelerating the transition to a clean energy future by supporting groundbreaking Canadian startups in the energy sector with a software first mindset. We will seek out and invest in ventures that are driving positive change and ensuring a greener, more sustainable planet for generations to come.
Smart Industry: Industry is the backbone of any nation's economy, and we firmly believe that innovation holds the key to sustainable growth and prosperity. Our firm is dedicated to investing in visionary Canadian startups that are reshaping traditional industries through technological advancements, disruptive business models, and sustainable practices. Technologies such as digitalization, autonomous robotics, edge computing, augmented reality, and intelligent manufacturing are now entering the deployment phase. By championing these transformative ventures, we aim to position Canada as a global leader in reimagining the future of industry.
Sustainable Economic Dynamism occurs when ambitious mission-driven founders successfully bring to market technologies that materially enhance the productivity and sustainability of enterprises.
MORE THAN JUST CAPITAL.
Amiral Ventures will focus on leading early-stage rounds including Seed and Series A investments and will actively support companies to achieve a strong global position. Capital is a commodity, expertise is not.
An integral part of our investment thesis is having a dedicated impact team that will create value post-investment.
The initial focus will be to help our portfolio companies expand into international markets and tap into global opportunities to scale their operations. Over time, Amiral’s impact team will resemble a service organization with internal staff, networks of outside resources and dedicated proprietary technology to empower our portfolio partners. We aim to prove that each dollar of investment from Amiral Ventures will generate a measurable impact on our portfolio partner’s valuation.
BUILDING AN ENDURING FRANCHISE.
We are proudly Québécois but our market is much wider. We believe that for Québec & Canada to succeed, we must expand beyond our borders just like the Admiral butterfly.
Papillon Amiral (French for Admiral Butterfly):
Emblem of Québec, it is known for its rapid flight, its impressive migration, resilience and its noble appearance.
Building a dynamic, resilient and cleaner economy means building local ownership while scaling globally. We are building an investment firm with an entrepreneurial and operating mindset that will create value for innovative companies. We're standing on the shoulders of giants in the Canadian venture capital community that have come before us.
History will look back at the early 2020’s as an inflection point. Technologies that seemed magical are now commonplace. The means to create a prosperous and wealthy economy are in our hands. But there is more to it. Creating high-paying jobs is good. Driving economic development is good. Creating new technologies is good. But good is no longer good enough. We need to expand ownership in our champion tech companies, deploy smarter capital and elevate our local ecosystem.
The proverbial Death Valley for Canadian startups needs to be overcome as ambitious and talented founders are set to take flight on the global stage. Let’s build the next generation of flagship Canadian companies!
