in Canada, Investors

Go big and stay home

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Wattpad announced today a $17.3MM raise from Khosla Ventures, Golden Venture Partners, Union Square Ventures and Jerry Yang. This is huge.

“It has been recognized as highly significant due to having two top-tier US funds investing at this level in a Canadian-based consumer internet company.”

We are seeing Canadian entrepreneurs build companies and demonstrate global traction. The changes to foreign investment related to Section 116 changes in the Tax Act, have allowed Canadian companies to go big and stay home.  The changes to Section 116, coupled with the desire of Canadian entrepreneurs to go big and stay home. Evidenced by Wattpad’s big raise, Wave Accounting’s $12MM series B from Social+Capital, Hootsuite’s $20MM round from OMERS (sure they’re not foreign capital but its a big round), Shopify’s $22MM ($7M series A + $15M series B from Bessemer), Beyond The Rack’s $36MM raise, Fixmo’s $23.4MM Series C from KPCB, Achievers’ $24.5MM Series C from Sequoia, and others. There are startups and there is capital. It’s possible to build a growth company in Canada and raise foreign capital. The game has changed for Canadian VCs, geography limitations can help these funds identify early but it potentially will relegate many to second tier status if they can not enable their startups beyond their geographies.

The great thing in talking with many of these entrepreneurs is that they want to build successful companies in Canada. Allen Lau, CEO of Wattpad, mentioned that his desire was to grow a large successful company in Toronto. He is not looking to move the company. The same is true of my conversations with Kirk Simpson at Wave Accounting, Tobi at Shopify, Mike at Freshbooks, etc. There are a lot of reasons to want to be way from the tensions and pulls the exist in the Bay Area. Canadian startups have access to great talent. While there is some pull between the different startups, many of these companies aren’t competing with each other for employees or mindshare. Just check out Shopify’s recruiting video and tell me why you wouldn’t choose to work for Harley and Tobi instead of a financial institution or a government organization.

It’s a great time to be an entrepreneur in Canada. It’s a great time to work for a startup. You should check out the opportunities on the StartupNorth job board.


  1. Should we officially consider Tira Wireless as a canadian paypal mafia now?  (matt golden, allen lau, ameet shah, jeff z, etc)

  2. Tira Wireless. Maybe Workbrain. How about Redknee? Any other companies creating diaspora of founders and startups? Not as big as the softies, the paypal mafia, the xooglers, ex-Trilogians, etc. But there are starting to be some strong DNA for local founders.

  3. An even bigger news coming shortly… Canadian tech entrepreneurs are aligning their ambitions with relationship building and execution. Canadian VCs are also aligning with the agressive business development approach of american VCs… While the markets are getting shaky and nervous, we are seeing amazing entrepreneurs and opportunities attract substantial funding. As long as the use of proceeds is thought through, we are in good shape. 

  4. If Canada can have a RIM or OpenText type of success stories in Toronto, Vancouver, Montreal, Calgary then the ecosystem will develop rapidly. It is fantastic to hear that so many entrepreneurs are looking to build their multi-billion dollar business and keep in in Canada – I am very optimistic for the future

  5. I’m confused as hell.  I have a startup business plan I’m developing but, perhaps foolishly, my focus is on generating revenue and achieving profitability.  A lot of these companies seem to have no revenue model at all.  “We have a lot of users” isn’t a business and it’s proven that advertising doesn’t cut it, so how are they going to make money?

    My assumption is that VCs are really only looking for the company that can be quickly sold to Google, Apple, Facebook etc and cash out that way because I see no other business model here.  It’s a very strange culture!

  6. There are a few companies that can forgo the monetization question early. But some of these companies are able to raise because they’re able to demonstrate large audiences and growth through their distribution mechanisms, i.e., they have large audiences, tremendous growth numbers. Typically these users are engaged (downloads, time on site, etc). Not ever company can do this. Big numbers certainly help. 

    Focus on distribution, engagement and monetization. 

    Advertising requires scale to work. Some of these companies are using models that aren’t SaaS or advertising to monetize. 

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