Understanding how different venture capital funds operate is unnecessarily difficult for founders. We know because we've been on the other side and had to ask the same questions. In an effort to be more transparent and open, we're sharing the qualitative and quantitative data around how we invest, operate, and hold ourselves accountable.
Summary
- Golden Ventures is a seed-stage and sector agnostic venture capital fund
- We are headquartered in Toronto and invest throughout North America
- We are currently investing out of Fund IV, a $100M USD Fund
- We are targeting 20-25 core investments out of our current fund
- A portion of the fund is allocated towards angel investments in companies that may not meet our core investment criteria but where we have a strong belief in the founders and the opportunity.
- We target initial commitments of $500K - $2M for between 7-15% of a company, and we reserve capital to follow on into companies based on progress.
- We are comfortable leading, co-leading, or participating in rounds
- Get to know us:
- We are motivated to move quickly and maintain transparency during the pre-investment process
- How we promote D&I internally and externally
- Our D&I Data
- To support our portfolio companies, we focus on the initiatives we believe have the greatest overall impact: talent, down-stream capital, and support with company building
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Mark (Finance)
Ana (Operations)
Fund Overview and Strategy
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Our core investments are in seed stage companies. This includes pre-seed, seed, seed extensions, seed plus or however else the market chooses to describe it. This is where we're best suited to add value and we partner with founders anywhere from inception, to exhibiting early signs of product-market fit to those bridging to the next inflection point
The definition of seed has changed over the course of the years, and can create confusion for founders. We think that Steve Blank summarizes it well. Over the years, it's become more common for companies to raise multiple rounds of seed capital before hitting Series A milestones. Our fund is willing to invest during any of those stages.
Number of Deals by Financing Stage
On the rare occasion, we will invest in later stage companies where we have a close connection to the founder and/or where we can be a strategic partner to the company.
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We're largely focused on businesses that use technology or the emergence of new platforms to disrupt the status quo. We've invested in everything from temporary tattoos, productivity tools for SMBs, mobile gaming studios and photonics-based quantum computing machines. In terms of business models, we've invested and developed expertise in consumer, SaaS, marketplaces, enterprise, and payments based businesses.
We're truly sector and business model agnostic, but skew towards software differentiated solutions.
Investments by Sector
Investments by Business Model
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Since the creation of the fund in 2011, we have always invested in multiple geographies across Canada and the US, and pride ourselves on the founder, entrepreneur, mentor and co-investment network we've built. We leverage these relationships on behalf of founders, helping facilitate connections between communities, entrepreneurs, and capital partners. Our strong network across multiple tech ecosystems is one of the things we are best known for locally and abroad.
Investments by Geography
Core Canadian locations we're excited about include: Toronto, Kitchener/Waterloo, and Montreal. We're also expanding our scope to other developing ecosystems in the country.
Core US cities we're active in include: San Francisco / Bay Area, Los Angeles, New York City, and Boston.
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Since 2011, we've grown our fund size in response to the changing seed landscape. We're currently deploying new capital out of our latest funds, Golden Ventures IV and the Opportunity Fund.
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We target 20-25 core investments per fund, which is made over the initial commitment period (the time period under which you make new investments) of 3 years. Our fund models ~8 new core investments per year, over that duration. Being relatively concentrated allows us to dedicate the requisite time and energy to work with portfolio companies in meaningful ways. For us, this is the best strategy as it allows us to help portfolio companies through a combination of systematized and boutique manners.
We will also allocate a portion of the fund to angel investments in companies that may not meet our core investment criteria, but where we have a strong belief in the founders and the opportunity.
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Our valuation targets are informed by the current seed stage market, including the location of the company.
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We target initial commitments of $500K - $2M for between 7%-15% ownership of a company. Our reserve model is fluid and adjusted regularly.
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Given we have a concentrated strategy, we generally like to lead or co-lead investments. For investments in Canada, we are likely to lead or co-lead. For investments in our other active geographies, we are likely to co-lead or be a participant in the round.
Golden Ventures Role at Time of Investment
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Yes. Our willingness to invest earlier is largely driven by having conviction in the team, the market opportunity and alignment around the strategy to get to the next set of milestones.
Company Revenue at the time of financing
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We reserve additional capital for each investment and apply those reserves based on the progress of the company. We usually look for a new lead investor to price the next round, but on occasion, we will price it ourselves.
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We do not invest in real estate, restaurants, films, medical devices, life sciences products where FDA Approval is still required, firearms, and/or anything considered illegal.
As referenced earlier, we cannot invest outside of Canada and the U.S.
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We discover companies through a wide variety of sources including our personal and professional networks, local and international investor community, local tech ecosystem, and service providers we work with.
As a fund, we're taking additional steps to increase the diversity of our deal flow sources.
Sources of Investments (Fund IV)
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We endeavour to make ourselves accessible, and everyone in the fund is highly networked, providing multiple connection points to our team. That said, we also understand that many underrepresented founders may not have the same access or network, so we actively monitor inbound channels as well.
For cold outreach, please be sure to email us (info@golden.ventures) with as much info as possible so someone on our team can review the opportunity, and engage if it's a potential fit.
Where possible, we strongly recommend a double opt-in, warm introduction which acts as a great first filter. In the past, some of the best references have been provided by other entrepreneurs, co-investors, operators, service providers, friends, and advisors of the fund.
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We spend a lot of time working with companies around milestones, perfecting the pitch and connecting founders with the right partner, at the right fund at the right time. As a reasonably concentrated fund, this is an important metric for us to track.
Additional Capital Follow-On Rate for Golden Ventures Portfolio vs. Industry average
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We are fortunate to have long standing relationships with some of the top institutions and family offices across North America. We feel equally lucky to have many operators and founders from the startup ecosystem, including previous and current founders in the Golden Ventures portfolio.
Some of our current institutional partners include:
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Post investment, there will be a mutually agreed upon lead from the fund, but we encourage entrepreneurs to leverage the collective strength of the fund where appropriate. For some certain initiatives, our operations team will lead efforts and interactions directly with the company.
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We're continuously taking steps to improve D&I within the fund and the companies we partner with. See the page below for our latest initiatives.
Promoting Diversity and Inclusion
Working With Us
Pre-investment
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We like to move quickly! Our end-to-end process is typically 2-6 weeks, but we can move faster if there is a need. The first three stages of the investment process are managed by one Golden Partner, however, the rest of the team is kept informed of the progress. We love when founders are upfront and transparent about their process as well.
Our typical investment process & timelines
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Team:
* Product visionaries and strong technologist(s), with big ambition
* Domain expertise and/or a strong rate of learning
* Belief in the founding team's ability to attract high-quality talent required to build and scale the company
* Read more under founding teams
Market:
* Large markets capable of delivering venture size returns and/or emerging markets with significant growth potential
* Founders display conviction and unique insights around the opportunity and 'why now?'
Product:
* Offers significant improvement on existing solutions
* Sufficient technological and/or business model innovation, with potential for long term defensibility
Traction:
* Potential for non-linear/scalable organic growth.
* Early signs that show increasing growth velocity (customers, revenue, usage, etc).
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The founding team is one of the most important factors in our investment decision. Here's how we think about the teams we back.
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- Relevant experience and/or unique industry insights
- Evident customer development
- Strong connection to the problem
- Great product instincts
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- History of working together
- Demonstrated commitment to the company
- Are team members in the right roles
- Fair equity split between team members (fair equity doesn't necessarily mean equal split)
- Displays alignment on vision, exit potential and roles over time
- Team is attracted to the hard stuff about the business
- Have had tough/difficult conversations with each other and reached resolution
- Low/medium overlap between founder skillset
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- Team exhibits ability to test and then iterate quickly
- Thoughtful, yet scrappy in their approaches and allocation of resources
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- Capable of recruiting world-class talent (or willing to invest to learn how)
- Understand the importance of talent and recruitment functions, processes and investment
- Understand the importance of D&I and why it's needed to scale
- Knows how to place appropriate value on great talent
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We take potential conflicts very seriously and usually flag it to prospective portfolio companies as well as our existing portfolio companies as early as possible. This is to ensure all parties are treated fairly. If a portfolio company deems a potential investment as too close for comfort, then that's usually sufficient for us to pass on the potential opportunity.
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Any one of Ameet, Bert, Jamie or Matt can lead a deal for the fund. While one investor may be a lead for an opportunity, founders have access to the entire team and can expect multiple touch points based on expertise within the fund itself.
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We are extremely thoughtful determining which investor engages, diligences and ultimately works with companies. The internal decision is made based on the below three factors, however, we are always open to your thoughts and feedback around potential fit.
- Domain Expertise
- Relevant Network
- Connection With The Founder
We encourage founders to speak up if they feel a specific person would be great fit for them.
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We encourage founders to do their homework on us. Ask around your own network and those with a wide lens on the industry. This includes other founders, investors, service providers and mutual connections.
We believe current and past Golden Ventures portfolio company founders and co-investors and the company we keep are the best representation of the fund. When the time is right, we're also happy to connect you to other founders inside (you pick!) and outside of our portfolio to get their honest take on us as well.
Term Sheet
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We strongly prefer priced rounds, but also invest via SAFEs or convertible notes.
Historically, the reason for notes/SAFEs was to minimize the cost and time to close a financing, as well as defer a discussion around valuation. Today, a priced round based on a founder-friendly/market term sheet with standard market financing docs is fast and reasonably priced which has greatly wiped out many of the pros related to SAFE investing.
Fred Wilson has written a great piece on the issues that may arise on a SAFE round that are detrimental to the founders and investors and we strongly recommend reading it should you prefer to leverage SAFEs for your financing round.
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Pre-money and post-money differ in the timing of valuation. It is important to know which is being referred to, as they are critical concepts in valuation.
Pre-money valuation refers to the value of a company not including external funding or the latest round of funding.
Post-money valuation includes outside financing or the latest capital injection.
We generally try to speak in post-money terms, as it simplifies the math around potential ownership (ex: $1M invested on $8M post-money, implies 12.5% ownership).
If you're ever unsure always ask us to clarify!
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We believe in founder controlled boards especially at the early stages of a company. At the right time, we often recommend the addition of an independent board member that serves as a strategic voice to support the company and help them achieve the next set of milestones.
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This provision always seems counter-intuitive until you realize that founder vesting protects founders from each other as much as it protects shareholders in the company. Because of this, you can find it in virtually every venture investment. Given the fact that we are investing extremely early in the life of the company with often little traction, we are over-weighting the investment on the founder's amazing capabilities and promise. As you could imagine, a founder's departure would be horribly detrimental to the prospects of the company on multiple levels and so founder vesting helps to protect other founders and all shareholders from such an event. While we completely understand and are comfortable with the risks of investing (it may not work out), we do ask founders to put their equity at risk to demonstrate their commitment to the company. We are often asked, "well, what if you fire me?" The easy answer to that is that the founders by design (and not the investors) control the board and therefore can't be fired unless the other founder(s) vote to make it happen.
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Post-closing of the investment, the service providers that you select will be representatives of the company. You will want to make sure you have an attorney who regularly advises other startups on financings with other top venture capital firms and has the depth of knowledge and experience to grow with the company. We encourage founders to do their homework on the service providers they choose, including asking for startup founder references and investor feedback. We're also happy to connect you with multiple vendors that have represented portfolio companies in the past.
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We love collaborating with existing investors (angels, funds, etc) as well as leveraging our extensive investor/advisor network to help you fill the round. This is usually a balance between funds and strategic angels, all of whom can provide more than just capital in service to the company.
We also encourage founders to diversify their capital sources across geographies, investor backgrounds and expertise.
Post Investment
We understand that founders and their teams are the driving force behind the transformational companies we have the privilege to partner with. We spend a lot of time thinking about how best to support our portfolio, and have developed programs with that in mind.
To learn more about our platform, take a look at our Post-Investment page.
Post Investment Support