Last week was an amazing experience as we gathered with our portfolio company’s Founders and CEOs, as well as our Limited Partners at the Inovia 2023 CEO Summit and Annual General Investor Meeting (AGM). After four years of video conferencing, it was a wonderful feeling to finally reunite with everyone in person.
Throughout those few days, I couldn’t help but feel a renewed sense of pride in our firm, our team, the values we uphold, and the transparency in our relationships with our entrepreneurs and LPs.
It was a privilege to listen to the powerful stories of grit and perseverance shared by industry leaders such as Steven Kramer, the President & CEO of WorkJam, and Rebecca McKillican, former CEO of Well.ca (an Inovia portfolio company acquired by Mckesson in 2018) and McKesson Canada. Their journeys inspired every entrepreneur present. And what a treat to have alum Founder & CEO Andy Nulman interview Broadway producer Jeffrey Seller, known for his work on Rent, Avenue Q, In the Heights and Hamilton, whose stories resonated with everyone in the room.
We concluded the CEO Summit by inviting our LPs to enjoy a detailed account of the Twitter deal by my partner Patrick Pichette and his former colleagues from his time on the board. This story emphasized the importance of planning, adapting and establishing strong alignment between the board, management team and advisors. And getting the job done!
We certainly covered a lot of ground over those two days – here are some of the key themes discussed:
Heads down, Portfolio first
The shifting macro-economic environment, changes in fundraising terms and conditions and corporate restructuring over the past 15 months were top of mind for all attendees. From recalibrating and balancing growth and profitability in our portfolio to ensuring all companies have the right team to support their ambitions, we have focused on guiding founders and helping them weather the storm.
Over the past 18 months, our portfolio companies collectively raised over US$800M in follow-on funding across over 19 companies. Despite the changing landscape and layoffs within our portfolio, we’ve continued to facilitate the creation of new jobs, representing over 17,000 jobs across the portfolio as of last quarter.
Value creation as a mindset
I am sure attendees recognized how value creation is deeply ingrained in Inovia’s culture and mindset. Our team of 53 full-time ‘Company Builders’ embrace their role in contributing value to portfolio companies. To complement our investment and operations teams, we have built out an exceptional Platform Team with extensive experience in scaling technology, building talent, enabling corporate development and marketing & communications. We’ve also expanded our reach and expertise by onboarding eight stellar Executives/Entrepreneurs-in-Residence and Advisors who bring sector-specific and technical expertise, particularly in areas like go-to-market strategies, operations, and sales support.
Since January 2022, we have generated over 1,000 specific value-added activities across the portfolio, including strategic guidance, operational support and mentorship. We continuously reassess how we provide the best value and drive growth and success for our portfolio companies. That’s a builder mindset!
Fundraising and dealflow is a continued effort
Over the past year, we have been steadfast in supporting our core portfolio companies’ fundraising needs while strategically adjusting our fundraising strategies to ensure we have the capital to invest in great entrepreneurs at all stages. Our successful raise of Venture Fund V, a US$325 million early-stage fund, has allowed us to back exceptional entrepreneurs and companies like Signal 1, CommerceBear, Novisto, Flare and Spellbook. We could feel the excitement at our AGM when we proudly announced our latest investment in Cohere. These companies stand for strong business fundamentals, solid teams, and possess a global tech company mindset. We are thrilled to be part of their journey.
We also announced that we recently raised two new market focused early stage funds. Our first European fund is focused on the pre-seed stage, and our first Discovery Fund will allow us to support our North American pre-seed investment strategy and continue to support emerging fund managers. We’ve already closed nine new investments under our pre-seed program and have built a dedicated team in Europe and Canada to support these companies.
Mastering the art of manufacturing exits
I strongly believe that no entrepreneur should be forced to put a “for sale” sign on the company’s front lawn. Our team continues to work hard at establishing relationships that enable secondary opportunities, create optionality and support later stage companies to be IPO ready, preparing companies to bounce, if they choose to, once the window of opportunity reopens. Optionality also means manufacturing an exit for Inovia and our investors without negatively impacting the future outcome of the company: sometimes this requires long conversations and late nights.
2020 and 2021 were record years for Inovia, generating massive investor returns across all our funds. In 2022, activity almost ground to a halt with four exit events. We already see beyond the next corner with two exits in 2023, and we’re actively supporting six more companies in partial or full exit mode. We’re also working with six core portfolio companies as they prepare for IPO. Continuing to work with our companies proactively monetizing assets will be a crucial focus for us in the next year.
Acknowledging Industry inflection points
Lastly, we couldn’t have convened our CEOs and LPs and not acknowledge industry inflection points – the rise of Machine Learning, Large Language Models (LLMs) and Generative AI, which represent a monumental shift in human-computer interaction. We were lucky to have Aidan Gomez and Nick Frosst, Cohere Co-Founders, and Scott Stevenson, Spellbook CEO, bringing their insights to the conversation at both the CEO Summit and the AGM.
Our team already has a deep understanding of machine learning and artificial intelligence (AI) and we have further expanded our in-house AI expertise. Our Partner & CTO, Steve Woods, is an AI pioneer holding a Computer Science Ph.D. New to the team are exceptional talents Melissa Dominguez, a Computer Science Ph.D., ex-Googler and engineering leader, and Mohamed Musbah, an AI and Deep Learning expert from Microsoft Research and co-founder of Maluuba. Our early involvement in helping to launch organizations such as Forum AI Quebec and Mila, an AI research Institute, has further positioned us at the forefront of this technology shift.
Armed with a deep bench of ML knowledge, Inovia is well-equipped to support our companies and deploy red teams to assess the impact and opportunities of LLMs on their businesses. The next decade presents a generational opportunity to invest and build, as this technology will unlock a rich pipeline of companies seeking operational expertise and growth capital.
Company Builders to the bone
The uncertainty of the past 18 months has demanded strong conviction, clear insights and deep experience as we continue to create value and sustainable growth for our portfolio companies. We have faced challenges head-on, making difficult decisions along the way and seizing opportunities that arose.
Venture Capital was created for times like these, and our team is doing some of its best work yet. Our success stems from the Company Builders who make it all possible – our founders, our 64 Inovia team members and EiRs, as well as our LPs. It feels like we’re just getting started.
Bring it on!