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Forbes Books presents the Startup Science Podcast
with Gregory Shepherd, brought to you by
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Startupscience dot Io. Greg is an
entrepreneur who has built and sold twelve businesses.
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He's a recipient of four private equity
awards and is a featured ten X
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speaker and Forbes author. Here's Gregory
Shepherd. My guest this week is Owen
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Matthews. Owen is a pioneering tech
investor and entrepreneur. He chairs the Alacrity
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Foundation, which has brought over two
hundred and twenty five million dollars into Western
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Canada's tech ecosystem and employed three hundred
plus people. Owen is a true community
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builder, supporting technology education, serving
on numerous boards and giving back. Owen,
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Welcome to the podcast. Thanks Greg, I really appreciate you having me
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on. Yeah, it's a big
deal. This is a very special guest
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today we have. Owen is one
of the if not the leading fought person
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in Canada, also in the UK, and he's got offices all over the
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world. Owen, maybe we could
start out by you sort of explaining what
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you're up to right now. Right
now, we are running an organization called
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Alacrity. Alacrity is a support organization
for entrepreneurs. We build companies, We
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understand demands that are in the marketplace
and support entrepreneurs to make as many companies
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as possible successful. That started out
here in Western Canada and Vancouver and Victoria
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were on based and we have spread
around the world, so we have offices
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in the UK, in India,
in Turkey and Mexico, France. We've
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had just an amazing sort of global
support organization for helping entrepreneurs to succeed.
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You seem to have been bitten by
the entrepreneurial bug real early while studying at
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the University of Victoria. You ran
a web design firm and a graphics arts
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studio, among other startups. Can
you give people a background on your days
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as an entrepreneur. I mean,
you're unusual because you're actually an entrepreneur and
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you're running programs, which is which
is pretty rare. Yeah, I think
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it's important if you're going to give
advice that you should probably have some of
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that real experience. So, you
know, it was it was critical to
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me when when you know, I
was supporting entrepreneurs, that I had the
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experience of being an entrepreneur and still
you know, building start companies and treat
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alacrity like like it is, you
know, an entrepreneur organization, which it
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is. But coming back to your
question, in the early days, you
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know, I actually was involved in
startups, you know, as a very
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young young kid. My father was
a very successful entrepreneur. He's a guy
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by the name of Sir Terry Matthews. And as a kid, all I
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knew was going into the office and
hanging around with engineers and soldering together prototypes,
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and even you know, at fifteen
years old, I was in startups
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with him. A number of those
turned into very very successful companies, and
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it was what I was accustomed to
doing. So it wasn't really a surprise
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that when it went out to university
a long way away, two thousand miles
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away from from my home in Ottawa, I ended up on the West coast
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of Canada. When I was in
computer sciences, I ended up starting a
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company the idea of having websites and
building websites for people with a pretty easy
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step for computer sciences, you know, student, and so that's what we
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did. It was called a Design
Core. I mean, it was technically
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an office, but it was below
the game end. Steambath and behind a
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pawnshop. So it wasn't exactly the
most glamorous of places down an alley,
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but it was a place of work
for me, and we did some decent
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work and I learned an awful lot
in those early years. It's not an
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unusual story that you had an office
hidden off back in the middle of nowhere.
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It seems like that's a lot of
a lot of folks. I had
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one on top of a bar and
at one point. So as part of
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what you do, right save Yeah, yeah, you do what you can.
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So you have not only started companies, but you've also funded companies,
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and you also run accelerators. This
is an unusual blend of things. Out
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of those things, what's your favorite
thing to do? Like, what do
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you enjoy the most out of all
of that. I mean, you're at
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the center of this whole startup experience. Yeah, so it's easy to understand
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that. For me, what I'm
most passionate about is supporting early stage companies.
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You know, directly involved in technology
companies. So all of the things
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that you described have one thing in
common. They are directly involved in startups.
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So as a founder, you're obviously
very directly involved in startups. You
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know, as a support organization,
I get to help lots and lots of
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startups, and as an investor you
have a very strong opinion and are actively
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involved in startups as well. So
you know, I do all of those
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things because I love what I do. So you know, I could go
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from startup to startup and be actively
involved in one, or I could use
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my experience and apply it across a
broad base of startups, which is what
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I ended up doing. When I
was younger, I was very focused on
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making the companies I was involved in
successful. As I got older and I
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had a lot more experience, I
applied that across a broader group of covenants.
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But ultimately, I'm the same person
doing the same thing that I love,
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which is being actively involved in startups, loving what I do, helping
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as many people's possible teams, you
know, grow and succeed. So I'm
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really doing the same thing I've always
always done. I just have a broader
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platform to do it. So let
me ask you a question that applies to
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three different areas. Okay, from
an entrepreneur perspective, from as being an
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entrepreneur yourself, and then also from
an investor perspective, and also from an
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accelerator perspective, what do you think
the most difficult initial challenges are for founders.
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I would say the most difficult thing
is that initial leap of faith.
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We've done a lot to try and
reduce that to make it easier for founders
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to get actively involved in founding companies
and doing startups. But having someone decide
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they want to be a founder and
take that leap of faith, it's a
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very daunting thing to do, especially
when you have no experience having done it.
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You don't necessarily know what the market
needs, and you've decided to just
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sort of do this thing without without
context. You know, if you want
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to be an engineer, you want
to be, you know, a data
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scientist, there's there's courses and paths. There really isn't that for for entrepreneurs,
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they're certainly programming, and you know, there are startup studios and there
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are you know, accelerators and incubators, but ultimately it relies on someone taking
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a leap of faith to do it, and that's that's hard, especially when
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there's no obvious path, and if
you understood how difficult it would be,
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maybe you wouldn't make that choice.
So I've thought about that a lot.
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We try and make it less of
a leap of faith and bring market experience
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market knowledge, so somebody who was
thinking about doing it has a much better
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chance of succeeding when they see that
there's a market need and they hear very
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clearly that if that market need is
addressed, they'll get a customer out of
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it or investors. It's much it's
just much more likely to succeed. It's
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a much easier path than thinking you
know something and you don't really have that
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much market experience and you're just going
to jump in any way. You're just
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asking, you know, to get
beat up for two or three years until
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you learn enough about that market to
actually be successful. Not that you can't
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do it, but it's a really
big leap of faith, and that's tough.
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But you're a little different, I
mean in your world at Alacrity,
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you do things completely different. I
mean, you guys actually do the market
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research, you help them commercialize what
they're doing. Can you talk a little
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bit about the uniqueness of Alacrity as
compared to the other accelerators that are out
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there, because I found it to
be just extremely novel. Well, thanks,
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for that, I don't feel like
it's novel to me. It's pretty
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obvious. If you're going to support
companies, you want companies to be successful.
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Understanding what the market demand is,
Understanding what customers want is really the
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only way to do it. So
I've never known any other way, but
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you are right. I come across
accelerators and incubators and other organizations that support
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startups, and they have very specific
agendas like, you know, we're going
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to teach you for three months out
of pitch, You're going to pitch,
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You're going to raise money or you're
not. If you raise money, good
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for you. You're one of our
poster childs and we get some equity in
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you and good luck, you know. Because they have a very specific thing
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that they need to do that I'm
sure is helpful, and certainly there's a
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community of people that are you know, offer a great deal of support to
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companies that go through that, But
it's not really what the companies need to
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be successful. Really. They need
a more holistic approach. They need to,
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you know, do the market research
before they decide on what they're going
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to do, bed before they've settled
on a particular idea or that they're going
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to work on. They need you
know, market development support, they need
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fundraising support. There's you know,
it's not a three month come into a
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program, learn what you can and
get out. The truth is, it's
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it's years and years of development.
Typically, you know, more than five
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years of support to get to a
startup to the point where it's reasonably successful
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and can attract significant funding. So
for us, it you know, it
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is the way in which we've always
done our work, the way we've been
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involved in startups. It doesn't seem
like a particularly creative or particularly novel approach,
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but you're quite right to have an
organization that is focused on supporting people
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who are thinking about being entrepreneurs,
giving them an opportunity to evaluate you know,
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products ideas that are based on sort
of known quantifiable customer demand and and
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helping them develop that, helping them
attract funding, you know, helping to
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help helping them get traction in the
market. You know, doing that over
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a number of years is unusual and
a lot of organizations, you know,
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don't do it. It's ultimately what
we need to create more companies and support
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companies that have a high likelyhood of
success. But you're right, it's it's
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unusual, but it didn't seem that
way to ask. It seemed just like
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the obvious way to do what we
needed to do. You have your pulse
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on the entire startup ecosystem from multiple
different perspectives. When you look at what's
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going on, and you see,
you know, the market closed down on
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all the overvaluation and all these companies
lost money, all these vcs lost money,
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et cetera, et cetera. When
you think about it now and you
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have your pulse on what's going on, what sort of changes do you see
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happening in the startup ecosystem over the
next you know, a year or so.
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Thank you for being so complimentary.
I, you know, feel like
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I've got a decent understanding, but
it's a very complex marketplace and I don't
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think anybody can fully wrap their head
around it. I think important thing to
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understand in inventure is the cycles.
The most obvious cycle that I can point
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to is when Alacrity started, which
was two thousand and nine, which you
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remember was not a great time for
you know, for startups in general.
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Cash was extremely tight in two thousand
and nine, so having a support organization
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to help startups seemed like a pretty
pretty pretty good thing to do. You
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know, we dove in to try
and help as many people as we could,
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and we created about a dozen companies
in a program that that have valuations
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in excess of a billion dollars today. So these are companies we started from
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scratch with people that had no experience
as entrepreneurs. They were just engineers that
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we gave some important market knowledge to, and that market knowledge led to companies
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that, you know, all of
them did three or four million dollars in
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revenue as a minimum. So that
was a successful program, but it was
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part of a cycle. If you
were an investment fund and you were raising
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money, and you had a history
of successfully raising money, and you were
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out to market in two thousand and
nine, your investors would give you a
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very clear message, which is no, not today. So you would have
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held off if you were raising money
in two thousand and eight. You know,
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certainly the last half of two thousand
and eight, you wouldn't have been
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raising money. Two thousand and nine, you wouldn't been raising money. The
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market opened up a little bit in
twenty ten, and most were back in
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the market and raising money in twenty
eleven and they've got a five year investment
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period. So if you remember back
to late twenty fifteen twenty sixteen, you
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know you had this sort of VC's
behaving badly where they were fighting over deals
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and they were overpaying for deals and
valuations were quite high. It was a
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very specific reason for that. There
was a glut of capital that was raised
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in twenty ten, twenty eleven,
and they have to deploy that capital.
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And by the time twenty fifteen twenty
sixteen, ye rolls around, otherwise they're
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they're returning it to their LPs without
having done their job, which was to
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invest it. So better that you
overpay by twenty or thirty percent and you
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deploy the capital than not and you
don't have the portfolio you're supposed to have.
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So that created a glut and overvaluation. You know, tack on another
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five years in a cycle and what
do you have, Well, you've got
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pretty strong valuations in in in you
know, twenty twenty one, twenty twenty
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two, you know, yes,
pandemic you certainly had added a little bit
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of pressure, and a lot of
government stimulus added more pressure. And then
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you have the current environment where we
in, which is which a little bit
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of a hangover from that. However, the venture funds that were in the
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early part of the cycle are always
the ones that make the most money,
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so capital is tight, but deals
are also much better valued. I didn't
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like looking at deals in twenty twenty
one because I thought they were overvalued.
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We we were, you know,
busy selling secondaries and selling companies at that
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time because it was a really really
strong market. And in a really really
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strong market, it's good to be
a seller, not a buyer. And
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you know, now, you know, we're back being buyers. So you
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know, it is difficult to raise
money. Companies that that possibly shouldn't exist
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are really struggle raising money. And
you know, companies that would have gotten
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funded three or four years ago maybe
they should have gotten funded, you know,
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in this environment are going to make
it. So, you know,
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it's not it's not a time where
I think, you know, we should
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all be depressed and and you know, pack up our toys and go home.
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It's a it's a time when you
know, I'm excited about looking at
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deals and supporting companies that I think
are real companies that are really focused on
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revenue and can grow quickly, and
their competitors are busy falling by the wayside.
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It's the right time to be a
good investor. So when you look
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at the current market and you look
at you know, to your point the
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opportunity, right, the opportunity is
when it's hot. It happens before that.
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If you jump in when it's hot, you already missed a lot of
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it. So if you're a founder
in this market right now, your recommendation
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is build, build, build,
and get to the point when the cycle
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starts to go back the other when
the pendulum you know, swings the other
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way, you're ready for that or
what would you say, Well, it
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always comes down to revenue. Right, The value of any company, whether
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it's to an investor or to an
acquirer, is you know, how do
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how do I value your business?
I value it based on revenue. It's
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a multiple of revenue, right,
Oh, you get in, you know,
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you get at ten times multiple on
your revenue. Revenue drives value.
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So if you don't understand product market
fit, if you don't understand who your
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customer is, and you're not growing
with customer dollars, then it's much more
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difficult to attract investor dollars. So, you know, thinking like the investor
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is going to save you or it's
the investor's environment, you know, which
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is the problem is really backwards thinking
the investment is an outcome. The investment
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is not the goal. The goal
is to build a successful and valuable business,
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and the investors will come to that
recognizing there's a successful and valuable business
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and you don't necessarily need a truckload
of money to do it. You might
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need a truckload money to grow,
but that's because you have a business that's
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working, that has product market fit
and as customers, thinking the investor will
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save you or help you create that
is a ridiculous expectation. So know your
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customers, focus on understanding what they
need, make sure you're giving it to
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them and they're paying you, and
investors will come to help you grow that.
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And the cycle doesn't change that.
In fact, it makes it more
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disciplined, which is exactly what you
want. You want good discipline companies that
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are going to be successful, and
just sort of hides the inefficiencies. So
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I'm perfectly happy in these environments.
I like listening to customers, I like
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understanding markets and the idea that you
know, well, it's a tough investment
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market suddenly means that we can't do
our job. Is it's crazy? You
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know, of course, do your
job. Understand customers as a founder,
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work hard to get those customer dollars. That's what creates the opportunity for investment.
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I love that and I want to
get into all those exciting projects we're
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working on, including the Canadian Full
Right Entrepreneur Initiative, but we have to
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stop right there. Next time on
Startup Science, Owen Matthews, the chairman
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of Alacrity Canada, talks about his
role as a humble thought leader in the
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global tech ecosystem. We've been pretty
quiet about what we've done. Maybe that's
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00:17:51.680 --> 00:17:56.400
just sort of default Canadian humbleness,
but we have done a really, really
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remarkable job in building technology companies from
scratch. Primarily, I just love helping
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the companies and I've got a great
platform to do that for a long,
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00:18:03.599 --> 00:18:08.799
long, long time. This Startup
Science podcast with Gregory Shepherd is brought to
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00:18:08.880 --> 00:18:15.680
you by Startupscience dot Io. Founders
can log on too startupscience dot io and
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00:18:15.799 --> 00:18:22.160
use code Forbes to get free access
to connect and find out more about Greg
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00:18:22.599 --> 00:18:27.720
Go to Gregory sheepherd dot com.
The Startup Science podcast is a production of
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00:18:27.880 --> 00:18:29.680
Forbes books.
1
00:00:01.280 --> 00:00:07.040
Forbes Books presents the Startup Science Podcast
with Gregory Shepherd, brought to you by
2
00:00:07.080 --> 00:00:13.720
Startupscience dot Io. Greg is an
entrepreneur who has built and sold twelve businesses.
3
00:00:14.160 --> 00:00:18.760
He's a recipient of four private equity
awards and is a featured ten X
4
00:00:18.800 --> 00:00:23.960
speaker and Forbes author. Here's Gregory
Shepherd. My guest this week is Owen
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00:00:24.000 --> 00:00:29.879
Matthews. Owen is a pioneering tech
investor and entrepreneur. He chairs the Alacrity
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00:00:29.960 --> 00:00:34.560
Foundation, which has brought over two
hundred and twenty five million dollars into Western
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00:00:34.600 --> 00:00:40.240
Canada's tech ecosystem and employed three hundred
plus people. Owen is a true community
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00:00:40.240 --> 00:00:45.840
builder, supporting technology education, serving
on numerous boards and giving back. Owen,
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00:00:45.920 --> 00:00:49.159
Welcome to the podcast. Thanks Greg, I really appreciate you having me
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00:00:49.200 --> 00:00:52.240
on. Yeah, it's a big
deal. This is a very special guest
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00:00:52.280 --> 00:00:58.200
today we have. Owen is one
of the if not the leading fought person
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in Canada, also in the UK, and he's got offices all over the
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world. Owen, maybe we could
start out by you sort of explaining what
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you're up to right now. Right
now, we are running an organization called
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Alacrity. Alacrity is a support organization
for entrepreneurs. We build companies, We
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understand demands that are in the marketplace
and support entrepreneurs to make as many companies
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as possible successful. That started out
here in Western Canada and Vancouver and Victoria
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were on based and we have spread
around the world, so we have offices
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in the UK, in India,
in Turkey and Mexico, France. We've
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had just an amazing sort of global
support organization for helping entrepreneurs to succeed.
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You seem to have been bitten by
the entrepreneurial bug real early while studying at
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the University of Victoria. You ran
a web design firm and a graphics arts
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studio, among other startups. Can
you give people a background on your days
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as an entrepreneur. I mean,
you're unusual because you're actually an entrepreneur and
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you're running programs, which is which
is pretty rare. Yeah, I think
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it's important if you're going to give
advice that you should probably have some of
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that real experience. So, you
know, it was it was critical to
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me when when you know, I
was supporting entrepreneurs, that I had the
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experience of being an entrepreneur and still
you know, building start companies and treat
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alacrity like like it is, you
know, an entrepreneur organization, which it
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is. But coming back to your
question, in the early days, you
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know, I actually was involved in
startups, you know, as a very
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young young kid. My father was
a very successful entrepreneur. He's a guy
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by the name of Sir Terry Matthews. And as a kid, all I
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knew was going into the office and
hanging around with engineers and soldering together prototypes,
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and even you know, at fifteen
years old, I was in startups
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with him. A number of those
turned into very very successful companies, and
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it was what I was accustomed to
doing. So it wasn't really a surprise
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that when it went out to university
a long way away, two thousand miles
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away from from my home in Ottawa, I ended up on the West coast
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of Canada. When I was in
computer sciences, I ended up starting a
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company the idea of having websites and
building websites for people with a pretty easy
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step for computer sciences, you know, student, and so that's what we
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did. It was called a Design
Core. I mean, it was technically
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an office, but it was below
the game end. Steambath and behind a
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pawnshop. So it wasn't exactly the
most glamorous of places down an alley,
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but it was a place of work
for me, and we did some decent
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work and I learned an awful lot
in those early years. It's not an
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unusual story that you had an office
hidden off back in the middle of nowhere.
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It seems like that's a lot of
a lot of folks. I had
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one on top of a bar and
at one point. So as part of
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what you do, right save Yeah, yeah, you do what you can.
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So you have not only started companies, but you've also funded companies,
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and you also run accelerators. This
is an unusual blend of things. Out
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of those things, what's your favorite
thing to do? Like, what do
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you enjoy the most out of all
of that. I mean, you're at
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the center of this whole startup experience. Yeah, so it's easy to understand
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that. For me, what I'm
most passionate about is supporting early stage companies.
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You know, directly involved in technology
companies. So all of the things
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that you described have one thing in
common. They are directly involved in startups.
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So as a founder, you're obviously
very directly involved in startups. You
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know, as a support organization,
I get to help lots and lots of
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startups, and as an investor you
have a very strong opinion and are actively
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involved in startups as well. So
you know, I do all of those
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things because I love what I do. So you know, I could go
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from startup to startup and be actively
involved in one, or I could use
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my experience and apply it across a
broad base of startups, which is what
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I ended up doing. When I
was younger, I was very focused on
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making the companies I was involved in
successful. As I got older and I
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had a lot more experience, I
applied that across a broader group of covenants.
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But ultimately, I'm the same person
doing the same thing that I love,
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which is being actively involved in startups, loving what I do, helping
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as many people's possible teams, you
know, grow and succeed. So I'm
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really doing the same thing I've always
always done. I just have a broader
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platform to do it. So let
me ask you a question that applies to
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three different areas. Okay, from
an entrepreneur perspective, from as being an
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entrepreneur yourself, and then also from
an investor perspective, and also from an
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accelerator perspective, what do you think
the most difficult initial challenges are for founders.
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I would say the most difficult thing
is that initial leap of faith.
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We've done a lot to try and
reduce that to make it easier for founders
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to get actively involved in founding companies
and doing startups. But having someone decide
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they want to be a founder and
take that leap of faith, it's a
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very daunting thing to do, especially
when you have no experience having done it.
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You don't necessarily know what the market
needs, and you've decided to just
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sort of do this thing without without
context. You know, if you want
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to be an engineer, you want
to be, you know, a data
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scientist, there's there's courses and paths. There really isn't that for for entrepreneurs,
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they're certainly programming, and you know, there are startup studios and there
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are you know, accelerators and incubators, but ultimately it relies on someone taking
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a leap of faith to do it, and that's that's hard, especially when
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there's no obvious path, and if
you understood how difficult it would be,
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maybe you wouldn't make that choice.
So I've thought about that a lot.
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We try and make it less of
a leap of faith and bring market experience
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market knowledge, so somebody who was
thinking about doing it has a much better
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chance of succeeding when they see that
there's a market need and they hear very
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clearly that if that market need is
addressed, they'll get a customer out of
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it or investors. It's much it's
just much more likely to succeed. It's
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a much easier path than thinking you
know something and you don't really have that
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much market experience and you're just going
to jump in any way. You're just
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asking, you know, to get
beat up for two or three years until
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you learn enough about that market to
actually be successful. Not that you can't
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do it, but it's a really
big leap of faith, and that's tough.
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But you're a little different, I
mean in your world at Alacrity,
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you do things completely different. I
mean, you guys actually do the market
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research, you help them commercialize what
they're doing. Can you talk a little
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bit about the uniqueness of Alacrity as
compared to the other accelerators that are out
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there, because I found it to
be just extremely novel. Well, thanks,
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for that, I don't feel like
it's novel to me. It's pretty
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obvious. If you're going to support
companies, you want companies to be successful.
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Understanding what the market demand is,
Understanding what customers want is really the
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only way to do it. So
I've never known any other way, but
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you are right. I come across
accelerators and incubators and other organizations that support
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startups, and they have very specific
agendas like, you know, we're going
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to teach you for three months out
of pitch, You're going to pitch,
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You're going to raise money or you're
not. If you raise money, good
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for you. You're one of our
poster childs and we get some equity in
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you and good luck, you know. Because they have a very specific thing
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that they need to do that I'm
sure is helpful, and certainly there's a
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community of people that are you know, offer a great deal of support to
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companies that go through that, But
it's not really what the companies need to
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be successful. Really. They need
a more holistic approach. They need to,
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you know, do the market research
before they decide on what they're going
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to do, bed before they've settled
on a particular idea or that they're going
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to work on. They need you
know, market development support, they need
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fundraising support. There's you know,
it's not a three month come into a
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program, learn what you can and
get out. The truth is, it's
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it's years and years of development.
Typically, you know, more than five
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years of support to get to a
startup to the point where it's reasonably successful
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and can attract significant funding. So
for us, it you know, it
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is the way in which we've always
done our work, the way we've been
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involved in startups. It doesn't seem
like a particularly creative or particularly novel approach,
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but you're quite right to have an
organization that is focused on supporting people
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who are thinking about being entrepreneurs,
giving them an opportunity to evaluate you know,
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products ideas that are based on sort
of known quantifiable customer demand and and
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helping them develop that, helping them
attract funding, you know, helping to
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help helping them get traction in the
market. You know, doing that over
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a number of years is unusual and
a lot of organizations, you know,
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don't do it. It's ultimately what
we need to create more companies and support
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companies that have a high likelyhood of
success. But you're right, it's it's
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unusual, but it didn't seem that
way to ask. It seemed just like
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the obvious way to do what we
needed to do. You have your pulse
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on the entire startup ecosystem from multiple
different perspectives. When you look at what's
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going on, and you see,
you know, the market closed down on
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all the overvaluation and all these companies
lost money, all these vcs lost money,
145
00:11:03.679 --> 00:11:05.679
et cetera, et cetera. When
you think about it now and you
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00:11:05.679 --> 00:11:09.279
have your pulse on what's going on, what sort of changes do you see
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00:11:09.320 --> 00:11:13.519
happening in the startup ecosystem over the
next you know, a year or so.
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Thank you for being so complimentary.
I, you know, feel like
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I've got a decent understanding, but
it's a very complex marketplace and I don't
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00:11:20.799 --> 00:11:26.080
think anybody can fully wrap their head
around it. I think important thing to
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00:11:26.159 --> 00:11:31.799
understand in inventure is the cycles.
The most obvious cycle that I can point
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to is when Alacrity started, which
was two thousand and nine, which you
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00:11:35.200 --> 00:11:39.240
remember was not a great time for
you know, for startups in general.
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00:11:39.320 --> 00:11:45.080
Cash was extremely tight in two thousand
and nine, so having a support organization
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00:11:45.200 --> 00:11:48.759
to help startups seemed like a pretty
pretty pretty good thing to do. You
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00:11:48.759 --> 00:11:50.879
know, we dove in to try
and help as many people as we could,
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00:11:50.879 --> 00:11:56.039
and we created about a dozen companies
in a program that that have valuations
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in excess of a billion dollars today. So these are companies we started from
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scratch with people that had no experience
as entrepreneurs. They were just engineers that
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we gave some important market knowledge to, and that market knowledge led to companies
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that, you know, all of
them did three or four million dollars in
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revenue as a minimum. So that
was a successful program, but it was
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part of a cycle. If you
were an investment fund and you were raising
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money, and you had a history
of successfully raising money, and you were
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out to market in two thousand and
nine, your investors would give you a
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very clear message, which is no, not today. So you would have
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held off if you were raising money
in two thousand and eight. You know,
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certainly the last half of two thousand
and eight, you wouldn't have been
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raising money. Two thousand and nine, you wouldn't been raising money. The
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market opened up a little bit in
twenty ten, and most were back in
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the market and raising money in twenty
eleven and they've got a five year investment
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period. So if you remember back
to late twenty fifteen twenty sixteen, you
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know you had this sort of VC's
behaving badly where they were fighting over deals
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and they were overpaying for deals and
valuations were quite high. It was a
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very specific reason for that. There
was a glut of capital that was raised
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in twenty ten, twenty eleven,
and they have to deploy that capital.
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And by the time twenty fifteen twenty
sixteen, ye rolls around, otherwise they're
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they're returning it to their LPs without
having done their job, which was to
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invest it. So better that you
overpay by twenty or thirty percent and you
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deploy the capital than not and you
don't have the portfolio you're supposed to have.
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So that created a glut and overvaluation. You know, tack on another
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five years in a cycle and what
do you have, Well, you've got
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pretty strong valuations in in in you
know, twenty twenty one, twenty twenty
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two, you know, yes,
pandemic you certainly had added a little bit
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of pressure, and a lot of
government stimulus added more pressure. And then
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you have the current environment where we
in, which is which a little bit
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of a hangover from that. However, the venture funds that were in the
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early part of the cycle are always
the ones that make the most money,
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so capital is tight, but deals
are also much better valued. I didn't
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like looking at deals in twenty twenty
one because I thought they were overvalued.
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We we were, you know,
busy selling secondaries and selling companies at that
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time because it was a really really
strong market. And in a really really
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strong market, it's good to be
a seller, not a buyer. And
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you know, now, you know, we're back being buyers. So you
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know, it is difficult to raise
money. Companies that that possibly shouldn't exist
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are really struggle raising money. And
you know, companies that would have gotten
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funded three or four years ago maybe
they should have gotten funded, you know,
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in this environment are going to make
it. So, you know,
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it's not it's not a time where
I think, you know, we should
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all be depressed and and you know, pack up our toys and go home.
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It's a it's a time when you
know, I'm excited about looking at
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deals and supporting companies that I think
are real companies that are really focused on
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revenue and can grow quickly, and
their competitors are busy falling by the wayside.
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It's the right time to be a
good investor. So when you look
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at the current market and you look
at you know, to your point the
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opportunity, right, the opportunity is
when it's hot. It happens before that.
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If you jump in when it's hot, you already missed a lot of
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it. So if you're a founder
in this market right now, your recommendation
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is build, build, build,
and get to the point when the cycle
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starts to go back the other when
the pendulum you know, swings the other
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way, you're ready for that or
what would you say, Well, it
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always comes down to revenue. Right, The value of any company, whether
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it's to an investor or to an
acquirer, is you know, how do
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how do I value your business?
I value it based on revenue. It's
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a multiple of revenue, right,
Oh, you get in, you know,
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you get at ten times multiple on
your revenue. Revenue drives value.
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So if you don't understand product market
fit, if you don't understand who your
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customer is, and you're not growing
with customer dollars, then it's much more
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difficult to attract investor dollars. So, you know, thinking like the investor
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is going to save you or it's
the investor's environment, you know, which
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is the problem is really backwards thinking
the investment is an outcome. The investment
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is not the goal. The goal
is to build a successful and valuable business,
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and the investors will come to that
recognizing there's a successful and valuable business
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and you don't necessarily need a truckload
of money to do it. You might
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need a truckload money to grow,
but that's because you have a business that's
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working, that has product market fit
and as customers, thinking the investor will
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save you or help you create that
is a ridiculous expectation. So know your
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customers, focus on understanding what they
need, make sure you're giving it to
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them and they're paying you, and
investors will come to help you grow that.
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And the cycle doesn't change that.
In fact, it makes it more
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disciplined, which is exactly what you
want. You want good discipline companies that
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are going to be successful, and
just sort of hides the inefficiencies. So
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I'm perfectly happy in these environments.
I like listening to customers, I like
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understanding markets and the idea that you
know, well, it's a tough investment
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market suddenly means that we can't do
our job. Is it's crazy? You
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know, of course, do your
job. Understand customers as a founder,
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work hard to get those customer dollars. That's what creates the opportunity for investment.
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I love that and I want to
get into all those exciting projects we're
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working on, including the Canadian Full
Right Entrepreneur Initiative, but we have to
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stop right there. Next time on
Startup Science, Owen Matthews, the chairman
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of Alacrity Canada, talks about his
role as a humble thought leader in the
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global tech ecosystem. We've been pretty
quiet about what we've done. Maybe that's
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just sort of default Canadian humbleness,
but we have done a really, really
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remarkable job in building technology companies from
scratch. Primarily, I just love helping
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the companies and I've got a great
platform to do that for a long,
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long, long time. This Startup
Science podcast with Gregory Shepherd is brought to
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00:18:08.880 --> 00:18:15.680
you by Startupscience dot Io. Founders
can log on too startupscience dot io and
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00:18:15.799 --> 00:18:22.160
use code Forbes to get free access
to connect and find out more about Greg
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00:18:22.599 --> 00:18:27.720
Go to Gregory sheepherd dot com.
The Startup Science podcast is a production of
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00:18:27.880 --> 00:18:29.680
Forbes books.
