Boris Wertz’s career as a venture investor is less than a decade old, but he has acquired a market influence that belies that brief timespan.
Wertz was an angel investor before founding Version One Ventures, an early-stage, tech-focused venture firm, in 2012. Within a year, the Vancouver firm ranked among North America’s top seed investors. It has backed 32 startups, among them some of the hottest names in Canada and Silicon Valley.
Today, Wertz’s global networks include his role as a board partner with Menlo Park’s Andreessen Horowitz.
Version One’s debut C$20 million ($15 million) fund, almost fully invested, is so far showing a return of “at least three times committed capital,” Wertz said. Version One Ventures II secured an oversubscribed C$35 million ($26 million) in 2014.
VCJ sat down with Wertz to discuss Fund II’s progress, its recent deals, and growth in Canada’s VC market.
Q: Fund II recently reached its halfway point. How do you feel about its progress?
A: I feel good. I feel we’re one of the top seed funds people think of when they want to raise venture capital. That’s important, as being top of mind in areas Version One is interested in gives us access to lots of deal flow.
Fund II set out to invest up to C$1 million ($750,000) in companies that create large network effects of the type found in many categories, from marketplaces to social platforms or SaaS, and in products built around big data. It has made a dozen investments to date, currently valued at C$200 million ($150 million).
Version One has led one-third of Fund II deals, which is great because we’re happy to do the heavy lifting. We’re investing C$500,000 ($375,000) on average, mostly in seed financings, as Series A rounds have doubled in size.
Q: Your 2016 deals include Abstract and Trim, Version One’s first fintech investment. What drew you to these startups? What opportunities are on the horizon?
A: Our most recent investment is Abstract, a builder of infrastructure to support modern design workflow. Its founders, which include Josh Brewer, Twitter’s former design head, launched the company’s private alpha in November.
Abstract fits in Version One’s core thesis because it’s a perfect example of a creator of large network effects around people. Its design platform is collaborative; it gets people working together. The effects created will be tough to replace.
Trim’s personal finance chatbot is similar. It addresses people’s wish to get bank accounts optimized, but without spending too much time on it. The app learns and becomes smarter so it can act as a financial advisor with your best interests at heart.
I think Trim reflects a new wave of fintech because it uses data to bring more and better products to consumers. The future of banking will look more like Trim. We want to invest in more startups like it.
We’re also exploring opportunities in cryptocurrencies, augmented or virtual reality, and enterprise applications of artificial intelligence.
Q: You were among the earliest investors in Wattpad, which CIX named 2016’s top innovator. What accounts for its success?
A: Wattpad was well ahead of its time. The founders, Allen Lau and Ivan Yuen, had a vision of connecting readers and writers on mobile before mobile was well developed. It scaled with mobile’s evolution and today it’s the largest content experimentation platform out there.
At first it wasn’t obvious how to monetize it. But this is happening as Wattpad becomes a media business, helping Hollywood generate fresh ideas for shows and movies. Using Wattpad, readers will vote with their time what stories they want to see developed.
A: I began angel investing in 2007 and it was then I saw the VC mindset is very different from the entrepreneurial one. As an investor, your job is to evaluate startup teams and let them create, not project your own vision.
It was a challenge to switch mindsets, but I did it. Now my operational experience helps me to connect with entrepreneurs on a deeper level, show empathy, and give advice. That connection can be incredibly powerful.
Q: Canada’s venture market is expected to see significant growth this year, with perhaps more than C$3 billion ($2.25 billion) invested. What’s your view of this trend?
A: I think Canada’s market is moving in the right direction. There’s a new class of GPs and more institutional money coming in, partly because of Ottawa’s Venture Capital Action Plan.
There are also new tools available, such as AngelList (a Version One portfolio company), which just set up shop in Ontario, and crowdfunding. These feed a healthy early-stage scene. Canada’s tech hubs are also creating more anchor companies, such as Shopify.
It takes time to build a successful flywheel, as Silicon Valley did. It requires a long series of financings, exits and reinvestments. Canada’s market is in the early innings, but I’m bullish about the prospects.
Photo of Boris Wertz in Vancouver courtesy of Version One Ventures/Kris Krug
Photo of Wattpad’s Toronto office courtesy of Wattpad