Memo III
VC Insights: Kory Henn, MaRS is on Fire, Work in Tech, Latest Seed Rounds
Welcome!
For those of you new to Murdock Memo, it’s a bi-weekly newsletter focusing on the early-stage startup ecosystem in Canada 🇨🇦
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VC Insights: Kory Henn
Concrete Ventures | Halifax, NS | Geospatial
As previously stated, I want my memos to provide inputs from early-stage investors on interesting sectors or particular investments across Canada. For Memo III I'm excited to share the first iteration of VC Insights.
For this, we head out east to chat with Kory Henn of Concrete Ventures. A micro VC fund based in Halifax, Nova Scotia, Concrete’s investment mandate is Atlantic Canadian startups. Having announced their first fund in 2019 for $17 million, the team has already made eleven seed investments.1 The latest investment was in Troj.AI, a cybersecurity company based in Saint John, New Brunswick leveraging AI to prevent cyber attacks on data. Having joined the team in September 2019 as an analyst, Kory comes to the fund having completed Ripple Ventures RippleX Fellowship along with his BCom from Saint Mary’s University.
During our chat, we focused on the impact geospatial data and GIS systems are having on multiple industries, their exciting implementation possibilities, and east coast companies doing just that! Halifax-based KorrAI has built a no-code geoAI platform allowing users to build their own models to extract data.
Some interesting use cases for the platform are identifying infrastructure footprints such as bodies of water, building density, or as seen above identifying aircraft. The company’s no-code footprint AI engine is added to raw satellite data to do interesting detection, like wildlife monitoring, allowing farmers and wildlife sanctuaries to keep track of livestock all from their laptops. This technology can become vital to Canada’s mining industry -- KorrAI claim’s its able to evaluate specific mineral deposits through GIS data.2
KorrAI is just one example of the exciting implementation of this technology. To dig a bit deeper on geospatial, here are excerpts from my conversation with Concrete Ventures’ very own Kory Henn:
Quinn: What is geospatial tech?
Kory: So geospatial tech, in the way I look at it, is anything that has something to do with how we see or interact with our surroundings. Everything around us can be geo-referenced one way or another. But the core of it, I think, is the world around us is physical. So how can we extract insights and make decisions based on all that data relatively quickly? That's kind of the technology trend I'm interested in.
Quinn: What makes it from a venture capital perspective an attractive investment? Does it have an ability to scale?
Kory: It's interesting. So the big macro trend I'm looking at that is interesting from the VC perspective is the amount of geospatial data has exploded. There's satellites launching every year, there's new (satellite) constellations launching every year. The cost to go to space is falling which means the competition in space to deliver data is increasing. I spoke with someone at the US Department of Agriculture who mentioned, 10 years ago they were paying maybe two hundred dollars for a unit of data. And that price has fallen significantly over the last 10 years. While the quality of that product has increased tenfold.
The other side of the coin is as the prices of data begin to fall, that opens up the opportunity for more people to use this type of data. It's no longer just restricted to governments, for example. But now you have lots of companies out there who want insights. For example, if there's a natural disaster, maybe there’s an insurance company that wants to see quickly, what is the level of disaster we have here? Is it 50 homes or five thousand homes? How many of those homes are we ensuring? So you can pay an analyst to sit there and count the number of homes with a roof blown off. Or you can employ an AI model or use machine learning to do that automatically, relatively quickly. And that's only possible because it's now feasible for the insurance company to pay for that GIS data. Because the data is cheap enough now. So there's been this kind of explosion of geospatial-value-added-service companies where they'll take a piece of data, they'll do something to it, they'll add some value to it, and then they'll sell that to the customer.
What I think is going to happen is all of the legacy data providers, the owners and operators of satellites are going to need to bring on those value added services into their companies. Having to acquire those competencies in order to remain competitive, because as the margins for your product fall, how do you continue to make money? So you can use value-added services, which is basically high margin SAAS to boost your margins because now you are vertically integrated. You own the means to collect the data and now you can own the means to add value to that data. So I think it's interesting. I think that's kind of the opportunity I see from a VC standpoint.
Quinn: Is there a reason for the small growing cluster of geospatial companies on the east coast?
Kory: I don't think there is in particular, I think it's KorrAI, 3D Planeta, and there's a company called Vine View which does computer vision for vineyards. They can tell you on a plant by plant basis the health of your plants and how the field is doing. It's really cool. They merged with Sky Squirrel. I know there's SceneSharp based out of New Brunswick. What I will say is that in Atlantic Canada, there is kind of like a research powerhouse, if you will, in terms of the universities. I think there are five or six fairly well-known and well-funded research universities that can pump out some good IP. That's the case for a couple of the companies that have taken the IP and commercialized it. So to answer your question, I'm not sure why there's this kind of geospatial stuff going on around here, but I know there's quite a bit of it. There are the right pieces to the puzzle, you have the entrepreneurs, and you have the research here.
Quinn: Are there any consumer applications you see for this in the future or are there some already today?
Kory: I feel like there's opportunity in the e-commerce space as well when you get into things like delivery because all of that is geo reference data. If you're a driver for Amazon, you know, you have eighty orders to drop off. What's the most optimal way to drop off those orders. And if there's a more ecological route, you can take based on the vehicle you drive, the terrain, and other things like that. So that's where it gets kind of interesting for consumers, is how we move around the physical space and creating tools that can help us do that more efficiently?
Quinn: Any noteworthy commercial applications of GIS data?
Kory: I saw an interesting tweet where John Deere has been involved in geospatial for quite some time. And it makes sense when you think about it. I don’t think they were pioneers, but they were big into advancing GPS technology because of their assisted driving GPS on the tractors. So if you're a farmer, having a GPS as accurate as 10 meters is useless! Because if you sway 10 meters off, you just plowed over how many rows of crop. But if you have something that's a couple of inches now, you can be very precise on where you're planting, where you're fertilizing, or harvesting things like that. So the use cases are broad and in places you don't really think they are, like the agricultural industry is a pretty big user of GIS in terms of GPS information.
Quinn: How do you see this space in the future?
Kory: I think there's going to be a lot of consolidation relatively quickly. Of legacy firms choosing to vertically integrate through acquisition. You know, the days of just selling data I think are coming to an end. You have to do something with that. There has to be a value-add. You're not really going to be selling the data anymore. You're selling a fully integrated product, which is only possible because data has become more accessible and is decreasing in price. So that's kind of where I think space is going. It'll be interesting to see kind of how it plays out.
Besides the east coast, other interesting companies are developing unique business models by leveraging GIS data. Kitchener-based PiinPoint, a graduate of the Y-Combinator accelerator in California, is designing a toolkit specifically for retailers to better understand local demographics to make informed expansion decisions. Additionally, Toronto-based Ecopia.ai is using geospatial data to help with critical decision-making when it comes to the welfare of societies, healthcare, and the efficiency of economies. The Southeast Michigan Council of Governments (SEMCOG), uses Ecopia.ai to make sidewalk and crosswalk extractions to make data driven decisions when it comes to planning community transportation.3
In conclusion, as GIS data becomes cheaper and more accessible the practicality of this asset will increase with packaged value-add services from the utilization of AI and visualization tools. We’ve already seen its application in agriculture, city planning, and retail development. It will be exciting to see how geospatial tech expands into new industries!
MaRS is on Fire
MaRS IAF | Toronto, ON | Early Stage Venture
Based in Toronto MaRS IAF (Investment Accelerator Fund), is one of Canada’s most active early-stage venture funds investing in IT, Health, and Cleantech companies. IAF is publicly funded and a major component of the Ontario Network of Entrepreneurs (ONE). IAF had a huge year, with portfolio company Ideal, recently announcing their exit to Ceridian, making it IAF’s 13th exit in thirteen months.
The fund has a mandate where they invest up to $500K into companies that are seeking a minimum addressable market of $100M and headquartered in Ontario.4 With this increase in exit activity, I think it’s safe to say, Ontario and arguably Canada as a whole is on a role as our startup ecosystem begins to generate consistent returns. Some noteworthy recent exits from IAF’s portfolio include:
Funnel Cake acquired by Varicent - October 2020
Chatter acquired by StingRay Group for $18 million - January 2020
Rubikloud acquired by Kinaxis for $60 million - June 2020
Add to this the exciting news of Wealthsimple reaching a $5 billion valuation, Shopify making it on the Times 100 most influential companies, and Dialogue Health executing a $100M IPO last month. To further emphasize the growth of Canadian tech, a recent BNN Bloomberg article highlighted thirty-two firms are set to raise a total of US$3.26 billion via IPO, which is the most in any first quarter in Canada since 2006!5
Tyler Swan, Head of Equity Capital Markets at CIBC said,
“The success of some of those tech companies is feeding into a cycle that encourages more entrepreneurs to start or maintain their businesses in Canada -- and keeps more experienced tech founders in the country as well. There’s also more Canadian venture capital becoming available, along with continued early-stage funding from the U.S.” 6
These indicators speak positively to the future growth of entrepreneurship and equity investments into innovative companies, as they continue to create the jobs of the future and returns for both privately and publicly backed funds.
Work in Tech 💼
I recently reviewed the list of the amazing subscribers to Murdock Memo and found many were either university students or young professionals. With that, I have decided in every third memo to provide a personally curated list of exciting intern/co-op and entry-level positions posted at some thrilling Canadian startups!
Marketing Intern - Delphia - AI, Financial Services - Remote
Marketing Partnerships Intern - NEO Financial - Fintech - Remote
Implementation Specialist Intern - Acto - EdTech, HealthTech - Remote
Program and Marketing Analyst Intern - C100 - Not For Profit - Remote
Startup Operations Intern - Opslock - SAAS - Remote
Latest Seed Rounds
Below is a short curated list of early-stage funding annoucements that Murdock Memo finds intriguing!
Heirlume - Toronto, ON - Leveraging legal technology, Heirlume looks to make the Trademark process easier, quicker, and cheaper for entrepreneurs, thus allowing them to spend more time on growing their company. An Alumni of The Forge Incubator at McMaster University, the company raised $1.7M from Backbone Angels, MaRS IAF, and many angels
MedChart - Toronto, ON - Utilizing the cloud, MedChart is creating a better process for sharing medical records that is digital and secure - $17M raised from Golden Ventures, Grosslink Capital, iGan Partners, Stanford Law School, and others
Open Screenplay - Toronto, ON - Backed by notable Hollywood veterans, founder Khaled Sabawi is building a platform to allow writers from around the world to collaborate on films and more importantly providing underrepresented artists the recognition in a crowded industry - Raised undisclosed amount at a $15 million pre-money valuation
Milk Moovement - Halifax, NS - Founded in 2018, the company builds Enterprise Resource Platforms (ERP) specifically to the dairy industry to monitor production and maximize profitability - $3.5M led by Dyanmo Ventures, with participation from Techstars, Matchstick Ventures, SOSV, and Bread and Butter Ventures
Sherpa - Toronto, ON - A travel software company originally launched in 2015 has now expanded to eHealth pre-flight declarations required in the current COVID-19 environment. This new product offering has awarded them an $8.5 million seed round led by Narrative Fund and True Ventures. With participation from Relay Ventures, Golden Ventures, and Plug and Play
Memo IV will be released May 13th!
https://www.concrete.vc
https://www.korrai.com
https://ecopia-ai.medium.com/customer-profile-semcog-91265e2c70b6
https://www.marsiaf.com/why-iaf
https://www.bnnbloomberg.ca/ipos-at-15-year-high-in-canada-with-tech-industry-coming-of-age-1.1585279
https://www.bnnbloomberg.ca/ipos-at-15-year-high-in-canada-with-tech-industry-coming-of-age-1.1585279