Going Global

The venture business adapts to the game, rapidly

A few things happened this week that underlined my thinking about looking at things globally. I have always had a global perspective, but it seems the start-up industry continued to have very local characteristics. Take investing. Angels and venture funds always have fairly regional mandates, an approach rooted in the thinking that you can only invest in your own backyard. To be available to the founders and attend board meeting, stuff like that. Sure, things have widened in recent years, think about angels going cross-border or funds hopping back and forth between US and Canada, but I have yet to see open ended global mandates in the venture business. Yesterday, Version One Ventures announced that its mandate is now to invest on a global basis. Their key reason is that in the ‘working remote world’ we now live in, there are no longer any obstacles to accessing talent anywhere. This is true, but there’s more.

Firstly, good tech opportunities are rare and are also not limited to a few well-known R&D centers. At the same time the concentration in certain regions has increased competition among investors for new opportunities. So it does pay to sourcing deals in areas where the playing field of competing investors looks different from what we see here in North America today. In accessing global opportunities as an investor, we are operating in a similar manner as large scale enterprises that also look globally for corporate development: the very companies that venture is funding and building will need to be truly global in order to be successful and get to the size to deliver the returns that most investors want and need to see. Furthermore, if you invest in a certain sector it is almost illogical to not look at a sector globally. Do you invest in agri-tech, drones, health tech ? What is happening in each area in Europe and Asia? And if you start researching that and you come across great opportunities you would love to invest in but your mandate restricts you from doing so, would that be palatable? Of course not.

At the same time I see founders thinking outside the box in a similar fashion when running their businesses. A local SaaS company here in the Vancouver area in which I invested a few years ago has two founders. One of the two decided, for personal but also business reasons, to pack up and move back to his native Europe and continue to co-run the business from there. Not only would it give him and his family access to a certain lifestyle they had been missing here in Canada, it will also enable him to build out the European pipeline of the business while being closer to some of the dev resources the company was using in the old continent. It will organically grow the European side of the business while maintaining a seamless operation across two continents. I am actually excited for both him and the business, it will open up new growth trajectories, talent recruitment and overall create a much stronger company.

Look, these things seem intuitive and nothing all that new to most of us. But it feels we have been constrained in not really thinking through what could happen if we let talent and capital move across borders freely. It will create more and far better success stories. Now if we could only travel as freely as before …