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500 Startups launches in Canada: In conversation with Sanjay Singhal

500 Startups recently announced they are launching a $30 million fund focused on Canadian early stage technology companies. While 500 Startups has already invested in over 30 Canadian startups through their Silicon Valley fund, this is their first dedicated fund in Canada.

Sanjay Singhal is the Canadian Venture Partner for 500 Startups. He is best known as the founder and CEO of Audiobooks.com and founding member of AngelOne.

Amrita Chandra spoke to Sanjay about his new role and 500 Canada’s plans.

You are already a successful serial entrepreneur and angel investor. Why did you decide to take on this role bringing 500 Startups to Canada?

I was winding up my involvements in Audiobooks.com - I’ve named a CEO so I’m not involved anymore. I was ready for the next stage of my career and I would have just started another business but I’d become an investor with 500 Startups in Silicon Valley a couple of years ago and I completely fell in love with the organization, with their strategic plan, the people. I thought I’d love to be involved with these guys. So the opportunity came up to start a 500 Canada fund and I jumped on it. I see it as a once in a generation opportunity.

The official launch was last week. What has the response been so far?

Overall, the startup community is ecstatic. I’ve gotten so many emails saying thank God 500 Startups has come to Canada, we need this early stage involvement. And I’ve also been flooded by offers to help in one form or another.

And then the thing I’ve been most pleased with is that the rest of the investment community from the early stage right up to Series A/B are all happy we’re here because we tend to be co-investors, we don’t try and grab deals. So we are really going to help out the ecosystem. We are money that will come in alongside them in early deals and they get access to our global resources which I think everybody is happy about.

We are going to be able to impact the funding landscape for early stage companies.

How does your background as an entrepreneur help you now that you are on the other side of the table?

I can give you an answer that may be counterintuitive or it wouldn’t be the first thing I thought of. Is it gives me credibility with the people I want to invest with. Obviously I can talk with them about operational aspects of running the business. But having been an entrepreneur, it’s just straight up credibility.

Any really good investment deal you are going to be battling other people to get into that company.  In cases like that you want the entrepreneur to say I want Sanjay’s money not that person’s money over there. Up until now my reputation as an angel has been building. I’ve got 30 investments so far, many of them doing quite well. I’ve been able to get in on deals just because of that reputation. And it’s probably the biggest thing you have to work on as a VC is making sure that reputation stays untainted.

Will 500 Canada be funding companies that may not fit the criteria of existing funds in Canada?

We are far more likely to fund at pre-seed than probably any other fund in Canada. There are a few funds, but certainly no national funds. Real Ventures is there and they do a lot of great work and we’ll be working closely with them. There’s the IAF out of MaRS. They operate at the same stage but we’ll be doing a lot more deals and we’ll be working together wtih them on everything.

One thing that hasn’t come up in the press to date is that you are one of the few POC to head up a Canadian investment fund. Do you think this will influence the diversity of entrepreneurs in your portfolio?

You are right than there aren’t many people of colour in Canadian VC. And interestingly so many successful tech entrepreneurs are Indian so there is not a lack of diversity from that group. 500 Startups as a global organization has an incredible commitment to diversity. 40% of our partners are female, 50% of all of our staff are female. That’s unheard of in venture. Within our organization there is a self-identified LGBT group. We have the first black partner. It certainly enhances our profile in those communities and will accelerate our investment in those communities.

What does the year ahead look like?

I have 2 more months of raising the money for the fund, to bring in individuals and both corporate and governmental institutions. The way it works is we do $15 milion up front and then we have another 6 months to a year to raise the other $15 million. That’s been going extremely well.

And then it’s going to be investing in what Dave McClure calls a shit ton of companies. So we’re going to be doing about 50 investments a year, which is close to the number that the rest of the country does all together. A lot of that will be co-investing but some companies will get funding who wouldn’t have gotten funded otherwise.

We will also be expanding our profile. I have to build out an organization across the country which means Vancouver, Waterloo, Toronto, Montreal for sure but we are also going to put associates in smaller cities like Calgary and Fredericton to demonstrate the national commitment.

How competitive is it to get funded by 500 Canada?

It’s pretty competitive. We do a lot of investments but that doesn’t mean that we are not selective. We are probably going to look at 5,000 companies.

Ok now for some fun questions so we can get to know you better. What apps can’t you live without?

Let me look at my home screen...Slack, which is amazing! My Tesla app, for controlling my car. I have a crossword app. I see lots of movies so I can’t live without Flixter. Uber. And of course, the Audiobooks.com app!

What technology trend(s) are you excited about?

No question, it’s VR. But I don’t think it’s happening soon. I think the current rush towards VR for investment is like cleantech 10-20 years ago. It’s just too early. But we’re going to start seeing some interesting work being done on this front. We are at the Atari level of development in VR. It will be 10-15 years before we are at the PlayStation level.

Who is an entrepreneur that you admire?

The first names that come to mind are Elon Musk and of course Dave McClure.

For more information check out 500.co and @500Canada on Twitter.

Amrita Chandra is a Toronto-based writer and startup marketer, and former Board Chair of Open Studio, Canada's leading printmaking centre.
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