In this studio session we sit down with Matt Cohen, the Managing Partner of Ripple Ventures which is a Toronto based early stage venture fund focused on B2B software.
Ripple takes a hands-on approach to enabling the success of the companies which they invest in and Matt explains not only why its important to him but also how Ripple has created a platform that helps their portfolio through providing space, access to health benefits, unique networking and educational experiences and more.
Matt also introduces the Ripple Fellowship – a program they’ve developed to educate the next generation of venture capitalists and startup founders alike.
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Qasim Virjee 0:04
I’m Qasim, the founder of start welling for this, the 24th episode of our podcast, we’re in studio with Matt Cohen, one of the co founders of ripple ventures. So why ripple ventures? Yeah, so
Matt Cohen 0:17
I, I started ripple ventures really just on my own. After I made my first angel investment in 2012, and a company called turnstile, which I helped start with a couple friends, which was really just my first experience in the early stage tech startup scene. And what I saw through that experience was that a small amount of capital large for me, but a small amount of capital in the grand scheme of things, had such profound impacts on people’s lives, the people that ended up working there, the people that ended up moving to San Francisco after the company got acquired by Yelp, and watching the ripples of that first investment spread throughout so many people’s lives. And the impact it had was quite profound on me, and I just had this thing about the ripple effect, the ripple effect, always coming back in my mind. And so I decided that if I was ever going to start a fund, I wanted to have it called ripple. And I will say, Yeah, I did just acquire ripple ventures.com, the domain name and for some reason that feels really
Qasim Virjee 1:15
who had that, who was was it a squatter? It fell by from an auction.
Matt Cohen 1:19
Yeah, bought it through an auction actually didn’t even know was for sale, one of our portfolio companies sent me a message like, hey, ripple, calm or ripple, ventures.com is available, you should buy it, oh my god, it’s gonna cost me like hundreds of 1000s of dollars. And it was definitely not it was quite cheap. And we just put a bid in and we bought it. So now we own.com and.ca. And it feels like it’s come full circle.
Qasim Virjee 1:39
Fantastic. Wow, we’re done the podcast that’s over. So no, I like that idea of kind of thinking larger than just the capital injection being the focus and ROI, you know, as a fund operator, I think, well, I guess let’s, let’s jump into that. I won’t preload this, I’ll just say, you know, life as an operator of a fund, a fund that, yes, has ventures in it, you know, as a quote unquote, VC fund, but it’s very personal, from what I understand. Sure. Tell us a little bit about the personality of your fund, and how it extends into the relationships that you’ve forged with the investi companies. Sure.
Matt Cohen 2:14
So when I started the fund in early 2018, I had the idea that I didn’t want to just invest in companies like an angel, I wanted to work alongside my company’s because I thought that that was the best way for me to learn how to become a better investor and operator, but also give my companies the best chances of success. And so in order to execute on that, I actually partnered up with my partner now, who is Michael Garbe, who is also a former operator himself had run his own tech business for almost 20 years, he had about 100 employees, 50 million sales exited it to a US public company. So he had been through the operator experience as well. And I felt that at the early stage VC world, there wasn’t many funds, who were investing at the kind of early precede seed stage, that were really rolling up their hands, or rolling up their sleeves and getting their hands dirty, right. And I really enjoyed my experience with turnstyle. And some of my other investments, where I felt that no matter how much I invested, I was still putting all the time I could into that company to help them succeed. And so I felt that if I could match significant capital at the early stage with that operator approach, yeah, it could be a recipe for success. And so that’s where we came at it from. And and that’s why we ended up creating an incubator space to work with them every day, instead of just having those monthly check ins or quarterly board calls or whatever thing like
Qasim Virjee 3:32
that. Yeah, because a year ago, I think when we talked to you just open the space. Yeah, we
Matt Cohen 3:35
opened, the funder officially launched in like the summer of 2018. And we took over an incubator space or an office space in downtown Toronto, it’s been in Adelaide, and created an incubator space for our own companies to work outside of alongside us. And it’s called the tank. The tank, the tank. Yeah, the holding tank, the think tank, okay, the Shark Tank, whatever you want to call it.
Qasim Virjee 3:57
Tell us a little bit about the space. We’ll try and get some photos. I’m going to come visit you there. And then we’ll put some photos to accompany this post. But yeah, tell us about the space and
Matt Cohen 4:09
it’s definitely a lot more space than we ever needed. Okay. It’s about 5000 square feet. Okay, we’ve got about 50 desk. Yeah, we have, you know, separate boardrooms. And we’ve created called pods, we’ve got a kitchen space and common areas and stuff. And it was actually Expedia Canada’s old offices. So or so we have all the murals and stuff from like their travel posters on the wall still. And we basically took on way larger space than we ever needed. And we said if our companies can come in here as we invest in them and watch them grow from five to 10 to 15, then we feel like we’ve given them the best chances of success right so that they can literally come and ask us for help all the time. So we created the space we opened it in October of 2018. We had two companies move in right away which were tread technologies and pitstop
Qasim Virjee 4:56
right move from start well to Yeah, exactly right. Yeah,
Matt Cohen 4:59
yeah. And then and then we had voice flow come in when they were called story flow first. And then they came in. And so we’ve had companies actually come and grow, like, tread got up to almost 20 employees a line, they started with us, they were only at eight, yeah. And then they moved out across the street and the invoice flow again went from about five or six to about 1213. Now, they’re almost a 20, I guess. And they are also going, you know, growing quite quickly. So it’s a great way for us to give our companies a level up, of course, without having to worry about as you know, as a landlord, you know, the headache of finding a space, managing it, setting up the infrastructure, and all that kind of stuff. So it’s a great way and they also feed off each other.
Qasim Virjee 5:39
Because what you’re saying is, is absolutely at the core of obviously what we do at Star Well, right. It’s not just about the real estate or operating the real estate, but it’s about adding value through programming and the connectivity for early stage ventures. That’s so integral in accelerating their success directory,
Matt Cohen 5:55
for sure. And it’s also has a profound impact I feel on the startups, feelings towards building culture community at their own space when they get it eventually. So we had our our second hand annual holiday party last night, and we had some of our previous portfolio companies come back to the office where we hosted it. And they were like, emotional to come back there because they don’t spend much time there anymore after they’ve moved out. And they’re like, this is where we got started. Yes, is like start well, right. Like, where are they got started? Yeah, for them as a company. And they have such profound memories from that, that they wanted to be there for a longer period. But they just outgrew it, which is great. Yeah. And that’s what we want. But I feel that it’s an important part of their journey to know they’re not on their own. Right, when they’re trying to run a business. Yeah, with every other thing going around you.
Qasim Virjee 6:40
It’s an interesting thing, because it’s something that obviously we deal with as well, right? Where we’re kind of incubating companies, we’ve changed our platform in the last year specifically to offer a lot more lasticity to our I guess I would call it our Space Platform, in the sense, then we’ll walk after this, we’ll walk over to the building that we’ve just opened around in the neighborhood. But the idea for us now is why should all the goodness stop when you hit a certain headcount. And the goodness for us is everything that not gets a company to a certain stage, because of course, our business model isn’t the same as yours in that way. You know, we actually are trying to support the life time of an early stage company to the point where hopefully, their corporate culture isn’t necessarily something that needs to exclude itself from community interactivity, and all this stuff. But fundamentally, I think, for us anyway, we’re trying to look at it like, and I think now, I mean, there’s a hard stop, I can’t support a company of 500 staff. Yeah. But the the max that we’ve done in the last year is 150 People that are resident here on campus from one company, that’s while we’re balancing it with, you know, 300 other people in different companies. So it’s really interesting to see people when the support network isn’t limited, be a real estate and kind of network, plug ability, support network, whatever, I could rephrase that better. I was more caffeinated. But what we offer if it extends beyond 3050 people, something really interesting happens where people stop thinking of that endpoint in inexperience while they’re focusing on their company, which is really interesting, I find sure if companies come in to start well, and they say, Okay, well, this is cool for six months, and then you know, we’ll be too big, we’ll get our arms race, what I find is they really have a little bit of anxiety about the exit from our campus, for
Matt Cohen 8:39
sure, companies, once they they kind of graduate even though we don’t have Demo Day and all that stuff, they still know that they can kind of come back to us. So we have a couple companies now doing their series A’s that are, you know, a big milestone in their company’s existence. But they still come back to us as if we were there pre seed or seed investors for a lot of stuff they need help with, right, we’re still on the boards, we’re still observers, but we’ve kind of seen them graduate. And so to know that there is a home base that they can come back to for anything, like I go for coffees and walks with all of our CEOs very often. Yeah. Even though we’re not involved in their day to day business anymore, because they’re on the space physically. That’s something that we think is because of the tank.
Qasim Virjee 9:21
I think it’s really interesting, because it’s I agree with this kind of line of thinking, which is, you know, some people will will poopoo this line of thinking saying it’s it’s hand holding, and you know, institutional investors may say, Well, you know, if they’re investable propositions that can stand on their own two feet and scale infinitely, they should be able to do that without interference of investors. But I think that’s stupid and it kind of like plays into the pump and dump you know, pyramid scheme VC side of things. I really enjoy working with companies as an investor or you know, otherwise, yeah, just as someone who is interested in You know, a company’s evolution, I think it’s fascinating to, to be able to lend a hand when you can. And I think that every founder and every founding team, even every, to be honest, I would say that leadership and most public companies are even in more or need of help and coaching. You know, yeah, if that’s the end goal, which I think is increasingly it’s
Matt Cohen 10:24
not for every CEO. Yeah. And we find that when we when we are meeting with potential portfolio companies, we tell them, Look, we’re not just going to be a capital investor in your business, we’re going to be in your business. Right. And and some founders really like that, and they’re open to it, and some don’t. And, you know, there’s obviously, arguments. But you know, as kind of Ray Dalio talks about radical transparency, that person at the bottom of the totem pole should be able to criticize someone at the very top. Yeah. And so we believe in that a founder, especially a lot of our founders who are first time founders, they don’t know, they don’t know. And, you know, I’ve had some experience, I’ve noticed some pattern recognition. My partner, Michael has also been around the block a lot. He’s done several m&a deals, he’s done his own exits, he’s done a lot of corporate development work, you know, he understands some things that our CEOs just never have seen or experienced. And so knowing you have a partner who’s on the same side of the tables you not across from you, right, in your day to day, you know, building is important. I think it gives our founders a lot. If you look on our website, the quotes that our founders have have said about working with us and having us a part of them. Yeah, we didn’t force them to write those things. We just said, Hey, I hate writing a quote, I
Qasim Virjee 11:29
haven’t looked at your website in a year does a great. It’s the first VC test. Oh, now so yeah, there you go. She checked. That’s why I haven’t looked at that’s why. But it’s amazing to have testimonials from your investees. Yeah. On on? Well,
Matt Cohen 11:42
I mean, some people may disagree with this comment. But I do believe that our entrepreneurs are our clients. Yeah, right. And we have investors, you know, our investors in our fund are obviously our clients. And my partner, Mike and I are a third of the capital invested our first fund. So we’re our own clients, right. But that’s in the long term, right? Our goal is to return capital to investors and provide a nice healthy return for them. But in the day to day, in the short term, our clients are our entrepreneurs, because if they’re successful, then we’re successful. And everyone is Yeah, so we really do believe in helping them get through all their challenges whenever they need our help. And obviously, you can step on people’s toes doing that getting too involved. But that’s a fine line that you have to figure out. And if you start to push, then you just have to kind of reel it in and have real open conversations. So we do believe in that.
Qasim Virjee 12:28
Now, I think it’s cool. I mean, I was just actually talking to someone earlier today. From on global, kind of an accelerator that’s coming to Toronto, and we’re talking about different angles on this whole story of early stage support, and especially on Company Formation, right. So whatever the impetus for a company coming together is and whoever has been put in the same room with the people that are going to form the team. I think there’s always these kinds of common questions that come up of like, I guess, is the team enough? What is the ecosystem around a company? And if you’re, especially if you’re pre revenue, and you don’t have relationships with customers, which normally would define a lot of the kind of, you know, can we do this? And how do we do this stuff? You need a support network. And what’s interesting is we were talking about it, and they’re asking me about kind of, what does the VC landscape in, you know, Toronto specifically look like in Canada look like, because when they surveyed all of the other spaces before coming to us, for a potential home, one thing that kept coming up was the intermingling of whether it’s, you know, institutional funding or institutional, like government backed programming. That seems to kind of offer a very sanitized, formulaic, simple, I could read it in a book support, which can skew oftentimes, you know, founder perceptions, or not act as a true sounding board. And a lot of it is rah, rah rah, you know, and I think that this is kind of a cultural problem, where a lot of early stage founders kind of get hyped up into what they’re doing. And it’s really important to have a support network that takes that gives them honest feedback from, you know, the perspective of having entrepreneurial experience. Yeah.
Matt Cohen 14:20
So I think, you know, you have to recognize that there’s going to be a lot of bad days and some really good or great days, right. But there’s going to be times when shit hits the fan more often than you think. Yeah. And you need a support system there to back you. And that’s what we think about. We don’t want to just be all roses and think that every single day of a startups life is great. Yeah, we know that there’s going to be a lot of shitty days. And so we want to be there to help them feel like they have a platform to lean on. They have a network to those advisors. We have entrepreneurs and residents who come in and physically work in our incubator with our companies. We put a fractional CFO into every business. Oh, that’s a lot. We help them take the burden off. of finance, budgeting, forecasting payroll, we have a ripple health care plan where our companies don’t have to worry about getting insurance, right, you can come and join our pool plan. And we can all do it together and know that like, we got you covered. So that’s nothing you have to worry about. And then we have, you know, helping the recruiting side PR partnerships, we’ve got a personal professional development coach. So I kind of use the comparison to the show billions, where Wendy Rhodes is the, you know, performance coach, for all the people on the team there, you have someone that does that for us, with our CEOs, because, you know, mental health is a really big thing. Burnout is real. We are first time founders have not experienced a lot of things that they are going through. And we want them to know that they’re not on their own. And sometimes they don’t feel comfortable talking with us about what they’re going through. Because we’re investors, and we’re on the board. And that could be a bit of a conflict. And so we say no problem. There’s, there’s people on our team that can help you. You should definitely go talk to her name’s Alicia gray. And she’s fantastic. Yeah. And she works with them. Pretty pretty often.
Qasim Virjee 16:04
Yeah, absolutely. So Alicia is also here. Oh, yeah. floating around our space a lot. And we’ve paired her with a few people as well. And, and she is great. And it’s funny, because I’ve also joked with her about this whole windy roads thing. Yeah.
Matt Cohen 16:17
Ginger named Wendy vizier
Qasim Virjee 16:18
easier. So the, the idea of kind of building the support network around around your investors is so fascinating. And I’m intrigued to know about the typical deal structure that you have. And the time, I guess the timeline from, you know, negotiating and investing in a company, and then holding them, you know, are not sorry that I keep saying it’s a holding tank, but it’s not keeping, you know, engaging them in the think tank.
Matt Cohen 16:49
Yeah, they’re definitely not chained to their desks. So let’s be clear about that. So so we’re early stage funds. So we do pre seed and seed is typically where we invest will invest half a million to a million dollars per check size. And we typically focus on b2b and enterprise SAS investments. So we’re not investing in consumer, we’re not investing in blockchain, cannabis, life sciences, we’ll do mostly b2b and enterprise SAS, and we do focus on the northeast. So our core cities are Toronto, Boston, New York, with extensions to Waterloo, Montreal, Ottawa, as well. And the reason for that is because of our operator first approach, we want to be very close to our companies and have that, you know, close proximity to them. So an hour flight is probably the farthest we’ll go before we say no to a company. So if you’re within that realm, in that, you know, focus for us, and that works. Now, we do have a pretty rigorous due diligence process at the stages that we invest. And I believe that for us, it works for some founders and entrepreneurs, it doesn’t work. But the reason why we like it is because we feel that by putting a company through some type of process like ours, we think if they can make it through that, then they’re definitely in a position to have better chances of making it through, let’s say, their seed or series A afterwards. So what’s the process and so, most times, we get inbound deal flow like others. And if we have a thematic approach, we’ll do a lot of outbound searching. So we just closed a deal recently in New York, which was one of our first outbound source deals, and a company called Aptio, based in New York City. And so what we do is we’ll really try to get to know the founder. So our my team of associates, Dom and Josh, and our analysts, Ryan will typically have the first or second call with the founders to get a better understanding of what it is they’re building, why is it important, and how it’s going to actually become a potential investment for us and tell them about our model as well to see if there’s a match. And then if that makes it past that filter, our team will put together a quick write up three pages on what the company is about what they’re doing, what the problem you’re solving in the team. So we focus on product marketing team. Sure. And most of it is really about market and
Qasim Virjee 18:55
team. Are these all pre revenue or no? So no, some companies will have like,
Matt Cohen 18:59
proof of concepts, pilots and stuff like that, you know, most of our companies ever have anywhere from 100 to about 500 and arr. Okay, usually around that realm. Well, yeah. So they’re, they’re not like just the ideation stage. They’re like companies that have enterprise customers traveling, and they’re still not paying their bills, definitely not paying their bills. So they need that’s why they’re coming up. Yeah, capital, right, yeah. And partners. And so once we get that, prepared from our team, we’ll invite them in for a partner meeting. So we typically host partner meetings with the team on Thursdays, and we’ll try to stack them back to back just so we can be efficient with our time. Yeah. And then once they’ve had the team meeting with our partners, so Michael, and I and the rest of the team, then we’ll decide if we want to move forward with full due diligence or not. And if we’re not interested, we tell them very quickly, we’re not interested, we do not like to waste entrepreneurs time and drag things through. If it’s a focus for us, and we’re interested, we’ll move them to the next stage. And at that point, what we do is we put together an LOI so a letter of intent to say this is our process. He’s these are the stages and the things We need at each step, it’s usually like 15 days, we need this for another 15 days you need this and so on. And then what they do is they start to give us those data points. But we are also very clear at what kind of investment we typically make the round size and the approximate dilution to be expecting. So it gives them a sense of the valuation, if that’s completely out of line with what they were hoping for. We want to be clear about that. Because we don’t want to be in this sort of asking, asking, asking in that this end say, Oh, by the way, we think your valuation is half of what you want it right, right. So we’re very clear about that. But if we do go into a company into due diligence, we go very deep very quickly, okay. And we only really focus on that company. Yeah. And then by the time we issue a term sheet, it could be about two to three weeks,
Qasim Virjee 20:45
maybe for just like financial analysis, or what else is Oh, in
Matt Cohen 20:49
terms of, well, I mean, you’re not looking for a five year forecast. For a company, really, what we care about is really get to know the team, go very deep on the market, understand their product. And then if that all makes sense, then we’ll move forward with term sheet discussion and issue a term sheet. And you have potential like, so operating budget would be the financial part, yeah, take the money and spend it,
Qasim Virjee 21:10
because these are typically how old like how young of a company,
Matt Cohen 21:15
they could be anywhere from a year to maybe two or three years old terms of like founding, right, but they don’t really hit their stride to when they want to talk to us until maybe, you know, six months to 12 months before. So what happens is, we’ll go through that operating budget, what they want to spend money on and stuff and say, Okay, we have a term sheet, here’s what we’re gonna do, we’re gonna lead the round, we typically lead all the rounds, we do.
Qasim Virjee 21:36
Okay, so the diligence is on you. You pay for it all
Matt Cohen 21:38
yet we do all of it. Yeah. And then what we do is we actually put together a syndicate of investors that want to join the round with the due diligence that we create. Okay, so we’ll do our overall due diligence with our all of our checklist will do technical due diligence. So we actually hire a third party consulting firm, okay, that we work with that goes in their team of five engineers, and they’ll rip apart their tech stack, they’ll see their data schema, their architecture, you know, if it’s machine learning, we’ll talk about how they manage those models. We talked about how they want to scale from an enterprise perspective, how big can this tech stack get, or they have a lot of tech debt that they need to rebuild, right, things like that. And then then we’ll go through legal due diligence, you know, all the other indemnities and stuff that we want to make sure we’re we’re covering off. Yeah, but in the time from term sheet issuance to closing, yeah, which could be anywhere from another four to maybe six weeks, depending on how fast the company’s data room is as prepared and all their documents are in order. You know, if they’ve issued 25 safes, wrangling up all those safe investors is sometimes pretty hard. Yeah. So we want to make sure that that process goes as fast as you can. And then we’ll put a list of investors that they want to work with, or have enjoyed the round with us, or some investors we’ve worked with, that we want to have during the round. And we’ll reach out to them on the company’s behalf and say, Look, we’re leading around, here’s our due diligence. If you’re interested, we can set up a call between you and the founders and go from there. So we try to stick handle that process for the founders to take a lot of the burden off them.
Qasim Virjee 23:06
Sure. Yeah, no, it sounds like you guys are doing a lot of work in the back end. I mean, there’s only so much information that people can give you.
Matt Cohen 23:12
Yeah, I do a lot. We do a lot of social references. We do a lot of background checks. I mean, some people say it’s over.
Qasim Virjee 23:19
Oh, on the people on the team on the teams. Yeah. That’s a lot of that. Yeah. Interesting. Well, are there any funny anecdotes that you can anonymize identity? Describe?
Matt Cohen 23:29
It is kind of crazy. Sometimes when you do background checks, I mean, Canadian background checks. And us background checks are different. Yeah. So you get a lot more information, the US versus Canadians. First of all, they all know this, right? Like we tell, they have to agree to it. And then we share the background checks with them also fit. So they know. There’s just things you get to see. It’s like, oh, okay, I mean, this person owns a house, or I didn’t know this person was married. It says their status, right? Just things like that. Oh, interesting. They didn’t mention that to us. Or you can see some of their employment history that wasn’t maybe on LinkedIn, things like that, you know, so you try to you try to make sure that the story is all aligned, right. It’s just part of making sure everything that they said, aligns with the data points that you can collect. Yeah, it’s really what it is try to avoid the blind spots. Yeah. And so we like to speak to previous employers to see what they were like as a team member. And we’re evolving this all the time, right, our first deal to our most recent deal, I can’t tell you how much change we’ve had in our due diligence process. And what we find is because we do so much, it really speeds up the round closing with the syndicate investor, of course. So if we bring another VC fund in, let’s say from the States, they don’t know the company, they’ve never met the person. They’re basically trusting us. Yeah, that our due diligence when they see how much due diligence we’ve done, they’re like, oh, wow, like, there’s not really much else I need to ask because they have it here. Even the technical due diligence, is a full report on the tech stack. Let me just speak to the founder meet them. Yeah. And that’s pretty much all they need to do. So if
Qasim Virjee 24:49
you’re putting in 500k to a million bucks, yeah. Typically, what are the round sizes?
Matt Cohen 24:54
Yeah, so typically round size would range from a million to 3 million, okay. And we would typically be targeting around 10 To 15% ownership depending on the valuation, and the goal would really be to get them to a series a within 12 months or so. So we’re trying to really grow these companies quickly.
Qasim Virjee 25:12
So you’re seeing, and that’s the idea is like, more more money, keep scaling. Are there any opportunities where you’re like, this could totally be so massively profitable as a business that will invest in it to sit with our investment for five years? Because they can pay us out in profit? Or is that a moonshot for this early stage of venture?
Matt Cohen 25:34
It’s a great question. I mean, we’re definitely not have the size or the mindset to be like, we need to only invest in $10 billion outcomes. Yeah, that’s not sort of how our model works, just because we’re investing so early and so risky, right. But I’d say that we have some companies now that are potential profitable companies in the next 12 months or so. And they can become a kind of lifestyle business, and maybe a private equity firm would come in down the road, but we have these conversations often with our founders to make sure they are aligned. Yeah. So we say, Do you want to build a profitable lifestyle business? If that’s the case, just let us know. So we can plan accordingly. So we can maybe get some venture debt? Sure. Or we can get some other forms of capital into the business. Or we can bring in some strategics to really scale this thing where the venture fund would maybe bring their own network to scale. Now, we don’t look at that we look at the strategic side. So one deal that we recently did, that we is public now is Amazon, Alexa came in as a strategic investor into one of our early presea companies, which was voice flow. And so you know, the company didn’t really need money, they just closed a great seed round with True Ventures. But there was an opportunity to bring a strategic investor into the mix, to really help the platform scale. So we are always open to all options. Yeah. But at the end of the day, we are a venture fund, and our job is to return capital to our investors. Right. So we have to plan accordingly. So to answer your question, it’s really just about keeping all our doors and options open, and not really just picking one because it’s, you know, best for the founder.
Qasim Virjee 27:09
Okay, so another thing that’s, you know, I’d love to kind of like, hear if there are any trends that you’ve been noticing in the last year since we last talked, you know, in the applications for finance, specifically in this kind of lens that you have on enterprise or b2b SaaS, yeah. Any particular sectors that people are primarily seem to be like gravitating towards, or trends that you’re seeing. And yeah, I’d say
Matt Cohen 27:33
like, the biggest thing we’ve seen, because of our investment of voice flow in the US is this codeless code block, right? So everyone’s trying to become like, the democratization of data and analytics, or the workflow automation tools for non computer scientists, right? So if you’re not a developer, or an engineer, but you want to be able to build an awesome product, you couldn’t have done that a few years ago. But now with tools like voice flow for voice figma for design, web flow for websites, a lot of these codeless code tools are taking a ton of people’s attention.
Qasim Virjee 28:07
Okay, tell me about web flow. I’ve never seen it before. But I’ve seen it if people’s websites default to the, the web flow. Yeah. Master domain. Yeah, you know, from their subdomain. So the masking the DNS masking, I guess, isn’t working that well on those sites. But is this this is kind of a Wix type thing.
Matt Cohen 28:25
Oh, I mean, so Vlad, the CEO is actually an investor in invoice flow. So that’s how we came across it through them. And it’s really cool, because they’ve basically taken like, really powerful back end tools and allowed people to build powerful websites, right, without having to know how those actually things work. Yeah. So you know, if you’re not comfortable in WordPress, you know, it could be really tough for you to build a WordPress site. So works like Squarespace. Yeah. But it’s more powerful in that. Oh, way more powerful.
Qasim Virjee 28:54
Matt Cohen 29:05
it’s, it’s not that easy, though. Like just to pick up and do it? Yeah, I’d say like, there is skill that needs just like voice flow, you have to have some training to like, go and build it. But you can do it within a day or so are our websites built on Squarespace? And we’re thinking about going to Webflow? Yeah, because it really is that powerful. But those kinds of tools is something that people are, are really gravitating towards. And then the other thing we’re seeing is the rise of the prosumer professional consumer. So someone who wants to have a side job or a startup idea, but they’re still working full time somewhere else, but they want to have tools that allow them to be more efficient with their time. Yeah, that prosumer type of platform is something that people are really gravitating towards. So with voice flow, you have two types of users. You have the enterprise customers, obviously in the businesses b2b side, but then you have like the b2b to see side the people who are just hobbyist but they can become professional consumers. So If you are a V UI designer, oh, what a voice user interface designer, okay, it’s a new word that’s come up. Now it’s kind of like, if you’re a designer for, for Adobe Photoshop. Yeah, that’s your tool of choice. Yeah. If you showed up to your new job, and they didn’t have Photoshop, what would you do? You couldn’t work? Yeah. And so now there’s those kinds of tools that people are building on, like voice flow that are coming into jobs. So saying, what is voice flow? So voice low is one of our early investments that basically came out saying, We want to help people build voice skills, voice apps, conversational design tools, for Alexa to start smarter. So if you today or let’s say a few years ago, want to create an Alexa skill, you’re humanizing
Qasim Virjee 30:44
bots, through voice. Yeah.
Matt Cohen 30:47
But the whole thing is, it’s not just about a smart speaker. It’s anything that’s voice enabled. Sure. So for you to build an app on an iPhone back in 2000 789, whatever, you need to be a developer, mobile developer, right? Yeah. And now you don’t have to do that. You can drag and drop stuff all the time and make your own app. And so voice was getting to a point where it was getting a little hard to build things in the Alexa marketplace or google assistant. And so voice will came along and said, well, let’s kind of democratize the building of voice skills on a tool or on a platform. And they switched to calling it voice flow after building children’s stories calling story flow. And now it’s one of the highest used conversational design tools in voice was fastened. Yeah, so we’re seeing that a lot, too. So the prosumer part I was just getting at is taking tools that can be used by businesses, but also by consumers that allow them to grow into a business use case. Yeah,
Qasim Virjee 31:42
that’s fascinating. So underlying this, of course, is is, you know, artificial intelligence.
Matt Cohen 31:48
Yeah, we don’t really we have companies utilizing machine learning technology. And I guess artificial intelligence. But really, we don’t call it that we what we say is the the ability to automate workflow is first part of the product that they’re solving for. Yeah. And then taking the ability to use data and analytics to build a tool that makes decisions on its own without human interference, right. And so taking that process and simplifying it for people to use in every single day’s jobs is important for us to see a tool if they’re going to be calling themselves AI machine learning. Yeah. So yeah, we have some companies like pitstop that’s helping predict car failures before they happen. And basically looking at the data that’s coming off of a car and analyzing it off of a normal car’s performance and saying this car has anomalies in its outputs off the car’s computer, and it’s going to have issues with its engine, its battery, its air filters, its brakes, whatever, before they happen. So before your engine light comes on,
Qasim Virjee 32:51
yeah, they probably do service calls it service cantos. Yeah, but
Matt Cohen 32:55
they focus on enterprise fleets. So they do with cars that are traveling all over the world over country, a lot of miles that need to be fixed, often
Qasim Virjee 33:02
interesting. Oh, large fleets. Man. We hosted an event last night called Dark futures. Yeah, very interesting stuff. There are five different speakers very kind of quick talks. But each focused on I won’t say a diss utopia, but focused on the maybe the aspects of let’s call it the the potentially negative aspects societal impact effects of new technologies that are massively transformative and being released increasingly, with every day that goes by these days, so I won’t get into, you know, kind of what was presented, because we’re going to podcast the audio from that. But are there any almost Are there any dark futures that you predict from what you’re seeing in terms of what companies are working on? And what massive scale through large enterprise could could affect in marketplaces, or use cases of technology that large corporations have massive user bases to roll out to?
Matt Cohen 34:07
Um, I’m not going to get into the whole sort of Elon Musk feud on whether AI is going to kill the world. And you know, machines and robots are going to destroy all of our lives. I think there’s other people that are way smarter on the subject that can talk about it. Yeah, you know, I think there’s something I heard, that was one of Bill Gates biggest downfalls is that he was a technophile that he thought technology could solve every single problem. And if there’s a problem, technology can solve it. And I think we are definitely going that direction with everyone now thinking if there’s a problem, technology can solve it. But the problem with that is there’s no real transparency, or authenticity in how we’re solving these things. We just look at the result, right instant gratification to get to that result is what we’re accustomed to now. And I think behind the scenes, you know, everyone was hearing the other week with Sacha Baron Cohen was saying about how Facebook and Amazon and Instagram and all these things are like controlling our brains. Or really, they are actually just replicating our brains and being able to make decisions with all the data that they’re collecting on us that we may not be able to know what the difference is in the future on what our brains are actually thinking is the right decision to make or if it’s some other third party, artificial brain that’s making those decisions. And we may lose that ability to think for ourselves to use our own conscious minds to make decisions. And we just default to what does Google think, what do we see on YouTube? What are this What does I’m personally quite concerned about? The way education today is being taught is the same way it was 100 years ago, and kids are now not even being forced, they’re just gravitating towards their own forms of education. By going on to Google YouTube. I mean, there’s just so many ways for you to get information and answers today. Right? Yeah, that to learn about the process, the process of learning, yeah, has not changed. And it needs to change very quick how to? Yeah, yeah. And for our kids, and those, you know, those peoples that are growing up today, in an environment where there’s just so much data around them, you don’t have to think for themselves, they can just grasp at it all the time. Right. That worries me a lot. Yeah,
Qasim Virjee 36:19
it’s interesting, cuz I’ve been thinking about a lot of this, you know, my daughter’s nearly two. And it’s something that we, my wife, and I constantly talk about is this, you know, question of context. Yeah. And, you know, nurture and nature and how they interplay and how context has so many layers, right? And it feels like perhaps, these days in this, you know, technocratic society, that there’s so many layers to this onion, and like, and it is difficult to face as parents kind of peel back the layers, they get closer to crying, right? Totally. Because there’s a lot of also fear of failure that I think comes with a generational gap that at least I feel like I sit in, perhaps with my daughter. But so what I always tell people, other parents, you know, people of our age set in their kind of late 30s, early 40s, is when all you consume is kind of mass media provided through, you know, major social tools, the web and shitty news outlets that are on, you know, crappy TV stations, yeah. The stories are all the same, the media becomes pretty expectable. And it’s true. Without the lens, I see how that can color someone’s sense of reality, and limit their creative potential, and their decision making capability. But what we’ve already seen in these two years with my daughter is that perhaps is the context of our household and how we speak to each other, and so on. I’m already confident in her ability to filter data, just looking at how she interrelates with other kids and other parents. Yeah. So I think the onus is definitely, it always has, since the beginning of time on parents and families to you know, form the kind of basis that allows children to learn and relinquishing a lot of the expectation that people may have had, and again, I’m weird because I grew up in Africa. So like, I feel like when I left Canada to go to Africa, and I was like, 11, we had to take a lot of responsibility for our consciousness, I felt because this is a dictatorial regime. You know, people get beaten as like bloody bodies inside of the road. Sometimes you don’t know if it’s an accident on someone got robbed. So kind of as a wake up call at that age, but I feel like perhaps I don’t know if, if, if here in Canada, and if I grown up my whole childhood here, if I, my parents would have relied on the quote, unquote, system, yeah, to educate me in a holistic way. And it wouldn’t just all be about kind of like, we’ve given you the basis, and then we’ll test against what you know. Yeah,
Matt Cohen 39:01
totally. Yes. I think that’s a problem. One other thing I think that we try to focus on at ripple is the human connection side of investing. I think a lot of people have moved to algorithmic models for investing, move to pattern recognition. And you have to remember the stage we’re investing in. I mean, it’s really it’s a wild card. Yeah, it’s human connection. Yes. I mean, when we really decide to go all in on an investment, we actually take the founding team out for a long, like out of office kind of lock conversation and just try to get to know them as people get to know them, because there’s so many things that they’re going to go through and I find that we’re missing out on that part. When looking at investments, you’re looking at the blue sky number or what this unicorn can become right?
Qasim Virjee 39:48
But really is not the now it’s the like future picture. Yeah.
Matt Cohen 39:51
So I mean, I can’t tell you how many times we talk to our founders every day on text message and phone calls and just you know, get to know them as people and I think that is really you important at the early stage, right? Yeah, when you have a company of 50, or 500, there’s a lot more things at play. Yeah. But at the stage of we’re investing and when you can make changes very quickly, having the understanding of what that person’s like, as a human, and having that trust and transparency with them is really important. And I just hope that as the generation gets older, we don’t lose that. Yeah, because no one has had to really find those connections with people. Because things are just available to everywhere,
Qasim Virjee 40:29
this is something that we work on a lot here at start well is kind of, because we’re trying to really create the strong and I think we have already got the beginnings of it. But a really strong peer to peer mentorship, kind of programming. We’re, we decided kind of about a year ago, a year and a half ago, that you know, linear narratives, top down kind of education approaches don’t necessarily work and are very exhausting to operate. So we’re not gonna like, put people in a room. I mean, we’re not an incubator accelerator, we offer a lot of value to the companies, we’re really just like you said, landlords, right? We’re landlords have awesome space where people thrive and are happy, and all are starting Awesome, cool companies. But the thing is, yeah, I basically, you know, we’d program some talks, we used to do this whole thing where like, people would come in, and we do like, breakfasts with founders right in the cafe. And they’d come and we have like croissants, and everyone would talk and someone would talk about their experience, and it’d be great. But then I learned really the watching the audience and how they’re receptive to what that guy said, they’re kind of, with every founder, there’s this, like, need to tell stories, I feel like, and it’s just about the right format for people to be able to tell them to each other and learn from each other. So this is kind of what we do now. And it’s a round table. Yeah, round table. That’s nice and round tables, and it totally works. And people love it. But that idea, again, of strengthening relationships, hopefully, carries forward. And this is what now we’re looking at with some of our companies that are growing and even leaving our campus, you’re still in touch with them. Some of our alumni is the idea of like, carrying culture forward, and keeping it alive in your company. Because like you said, I mean, as a company grows beyond 50 people, and revenues, let’s say, hopefully, for everyone listening, if you’re fitting in this model, you know, your revenues are strong enough that whether you’re subject to a funding cycle for the lifeline of your company, or you escape that, or you’re never even involved that and you’re just revenue positive, you’re making money, you got great relationships with your customers, there’s still opportunity to get kind of lazy with some of the things of course, you know, as soon as things feel like day to day, people stop doing the work to say how can we improve on this, you’ll raise
Matt Cohen 42:49
20 $30 million. That’s runway for 10 years, sometimes you can get pretty comfortable.
Qasim Virjee 42:55
Right? Right. Absolutely. And I think that’s really interesting is to look at, like, when people exist in incubators and existing kind of co working spaces as organizations, there’s not only that kind of like, you know, people aren’t just kind of looking inside of their team at where they can get, you know, help and inspiration and perspective from but they’re looking at it, you know, sideways at the office next door and down the hall and
Matt Cohen 43:20
the cultures vibe against each other. There’s competition. Yeah, if we hear a gong going off on one side of the office, and they’ll release trying to sell Oh, yeah, it gets intense, really competitions in our office. I’ll throw a bottle of scotch in the middle to say whoever has the most like sales this week, and can have the nice bottle of scotch. Well, it’s working. And not all companies in our incubator are like sales focus, right? Some are just pure dev teams that was on some strong product. So we find that the data teams can talk to each other in the same language and help each other a lot with problems, which is really cool. Uh, one thing I forgot to mention that we’re also really proud of, which goes back to the the comment about education changing for us, is one of my associates, started a program called the ripple X Fellowship Program, which is our student led program where we actually bring in eight to 10 students a semester, we run a 16 week curriculum program online, while fully online that we’ve built, we’ve got about 150 to 200 students applying every semester we choose about eight to 10, as I said, from across Canada, the US we have kids from U of T Western Harvard, MIT, Stanford, Cornell, wherever. And we teach them what it’s like to be in venture. They could be future founders, or funders, and we teach them what it’s like to source deals, talk with companies, analyze them, and then write deal memos and present them to our team at the end. And the best ones that we find that come through this process we ended up investing in. And so for for 2020, we’re going to carve out some capital to invest in these companies. And we’re really excited about that because one, the companies that we get through this and they find companies in their ecosystem at their universities. Right. So early early stage kind of pre pre seed companies. Yeah, we get to see those. And then also the, the ripple fellows that we call them. They’re also in our ecosystem that we get to follow their traction as they graduate and start their own companies. We have a Slack channel about 100 plus students
Qasim Virjee 45:20
open a venture capital brokerage. I don’t know about that. But you have, you could have regional or you’re like REMAX for VC have offices all over the world true
Matt Cohen 45:29
ripple effect. Yeah.
Qasim Virjee 45:30
Yeah. That’s fascinating that you guys embarked on this. That’s cool. Very interesting.
Matt Cohen 45:34
Our third semester now, okay. We’ll be going into our fourth in January. Yeah. And the quality and caliber of students is phenomenal. And the reason why my associate came to me and asked to do this was because he had done like Co Op terms, just like I’d done at school. But those were away from university. Yeah. And he had to fully focus on that job at at hand when you’re in that Co Op placement. And what he said was, I really want to learn about skills that I can apply in my ecosystem at university while I’m in school. I mean, you know, how much free time you have when you’re in school? Yeah. So he’s like, what if we just allow students to take on tasks and go through a curriculum while they’re still in school, but go around their own school ecosystem and say, Hey, I work as a ripple fellow, we’re looking into some startups and stuff. Can we talk to each other? And then they also get to come back to us and present it to us get feedback, build new skill sets? It’s it’s actually a quite a good given take for bow.
Qasim Virjee 46:26
Yeah, that’s super cool. Yeah. Very cool. This is the sort of stuff that actually is interesting to hear. And, and I’m glad that you’ve hoisted on the mic is the kind of behind the process, thinking of running a venture capital firm, as a business as well.
Matt Cohen 46:40
It’s a platform business, you know, it’s the same. What we kind of say is we’re a startup to Yeah, you know, our first fund was our Seed Fund, right. And our next one will be our series, a kind of stages of funding, and so on and so forth. So we’re, we’re building a brand, we’re building a platform, we’re building a team exactly the same way the startups that we invest in are doing it. So it’s really important that we think that way too, and not just as investors.
Qasim Virjee 47:04
Yeah. Well, so it keeps it fun. Yeah, for sure. I would be terribly bored, you know, wearing my blue blazer and my like, penny loafers like my he’s not wearing that right now. Listeners wearing jeans. But you know, like, that whole, like, yeah, formulaic kind of investment model is just a little boring.
Matt Cohen 47:27
I mean, we it works for us, it doesn’t work for everyone. Yeah. And a lot of people say to us, like, how can you scale this model, when you’re so involved with every company, and our answer to them is simple. We’re really focused on the pre seed and seed stage. And that’s the most risky stage where there’s a lot of things that can go wrong. So we feel like if we put the right foundation and structure in place to get them through a Series A, then there’s another investor group that’s going to come in, and they’re going to take them from A to B, and so on. So we don’t look at this as a 10 year, you know, commitment to the company, we look at it as a 12 to 18 month commitment. Yep, we’re really, really deep into this thing. And then they kind of graduate through and move up the the curve. And that’s totally fine for us, we think that’s manageable.
Qasim Virjee 48:09
So how many companies have been through, so we’ve got,
Matt Cohen 48:12
not what we have nine companies in the portfolio announced, we’ll be closing our last deal before the end of the year, which will be our 10th company. So we’ll have 10 companies in the fun one, which is what we set out to do 10 to 12 companies. And we’ve got one series A that already closed last month. And we have two more that will close as well shortly. So that will be a pretty good start for us. And then we’ll see what 2020 holds,
Qasim Virjee 48:37
meaning that those companies you invested in at seed are raising precede raising series A Yeah, within the year 2020. What does it look like for you guys?
Matt Cohen 48:46
Yeah, so 2020 is what we think will be a pretty big year for us. We, we’ve got a lot of interest from investors who want to, you know, continue to support us and continue to scale. So we’ll we’ll definitely be hopefully announcing something in the new year. So stay tuned on that. And I think we we really enjoy what we’re doing. We just want to do more of it with more of an impact. And so what we’ve done is, like I said, our first one was kind of like a prototype fund right now it’s time to kind of find that product market fit for ourselves.
Qasim Virjee 49:16
Nice, man. Thanks. Um, for anyone listening, anything that you’re looking for, to solicit people reaching out?
Matt Cohen 49:24
Yeah, I mean, we’re always interested in talking to other VCs, obviously, entrepreneurs that are in the precede to seed range of investments, and other kinds of operators that want to get involved with our companies and looking to help we’re, we’re really trying to help take people from, you know, Bay Street, Wall Street, Main Street, whatever you want to call it, and bring them into the startup ecosystem, as operators because we think there’s a ton of great value from people have built and scaled companies that can be beneficial to our companies. You know, one thing we do is we have a CEO roundtable as well, every quarter where we bring in very successful CEOs To have a totally off the record conversation over dinner and share experiences with our founders and CEOs of what they went through. And we just think getting more and more of that in the early stage ecosystem is only going to level up companies, especially in Toronto. Yeah, faster. Yes, we love that. And we host a lot of corporate events, we bring in like, you know, sponsors to host a fireside dinner table, whether it’s on AI, we had the head of Shopify as AI and data science Soma has come and do a talk with a bunch of our portfolio founders and other people in the ecosystem. And we’re looking to do a lot more of those. So anyone who wants to reach out, or students that are listening that want to apply to our ripple fellowship program, just go to ripple ventures comm and sign up for our next cohort.
Qasim Virjee 50:45
I’m really excited to keep this going through hopefully some of our programming that we’re going to have on stage here in our event space during me through 2020 will try and get you guys on stage and get some of your company’s alumni and anyone else talking about that idea of participating in an incubator. I know a lot of our listeners, you know, maybe founders that sit outside of that incubator accelerator, kind of, you know, cycle or experience and are
Matt Cohen 51:10
curious. Totally, yep. Most of our companies are alumni of your space, too. Right? Absolutely. on call and I think tread to
Qasim Virjee 51:17
here was a pleasure having you on the mic.
Matt Cohen 51:19