Montréal-based seed investor TandemLaunch is unique in North America’s venture community. Founded by General Partner Helge Seetzen in 2010, the firm builds synthetic startups that respond to emerging tech trends.
Company creation is grounded in intelligence received from TandemLaunch’s partners in the consumer-electronics space. Correlating this intelligence with ideas and patents found in the world’s top universities, TandemLaunch forms an enterprise, staffs it, and prepares it for follow-on financing.
The result of this mammoth effort is a portfolio of fascinating Canadian startups. They include Landr, an audio post-production platform that last year raised US$6.2 million in a Series A round led by Warner Music and joined by a group of VCs and strategic investors, including American rapper Nas.
In May, TandemLaunch initially closed its third seed fund. PE Hub Canada sat down with Seetzen to talk about the fund, investment strategy, and the portfolio.
Q: TandemLaunch Ventures II has so far secured $12 million in commitments. What is its target?
A: The fund’s upper cap is $15 million, but the first close will likely be the last. We expect to collect additional money from people we’d like to bring onboard.
BDC Capital is our sole institutional investor. The rest are angels and entrepreneurs who are involved in the portfolio, such as Guy Laliberté (the co-founder and former CEO of Cirque du Soleil), who invested in Landr, and YUL Ventures’ Pascal Pilon, Landr’s CEO.
Limited partners tend to be part of the family. We rely on their contributions to the portfolio. That includes everything from investing and sitting on boards to providing advice and access to networks.
Q: TandemLaunch Ventures I also raised $15 million (2013). Why not raise a larger fund?
A: There was LP demand for a larger fund. For us, however, the fund isn’t about how much money we can raise, but how many startups can be credibly launched.
TandemLaunch is doing what every other seed fund says is impossible: creating attractive companies at a negligible cost. We invest about $750,000 to fund a venture’s progress from incubation to follow-on investment. The economics haven’t changed much. But turning a prototype into a fully-fledged business is time-intensive and requires skill. There’s a limit to how many companies we can effectively build in parallel.
Q: Earlier this year, Wrnch, a computer vision tools startup, closed a $1.8 million Series A round led by Mark Cuban’s Radical Ventures. Is it your most recent graduate?
A: Wrnch is one of several companies in graduation mode.
Sportlogiq (a sports analytics provider) graduated last July. Airy:3D (a 3D machine vision specialist), Irystec Software (a visual display engine), SensAura (a bio-signal emotion recognition device) and Sensing Dynamics (an electronic nose platform) have or will soon join Wrnch as 2016 graduates, which means that almost our entire portfolio will have moved on by year’s end.
That’s why we’re fundraising. It was time to recapitalize so we could go out and build a dozen more ventures.
Q: How does feedback from consumer execs drive TandemLaunch’ startup process?
A: Talks with our partners often generate laundry lists of good ideas. There are also big-trend discussions about the next Holy Grail that could really unravel or disrupt an industry. The feedback we get has led to some pretty magical companies.
A good example is Airy:3D. It offers a passive single-sensor 3D machine vision solution that we think can revolutionize camera technology. We found the IP at Cornell University two years ago, built the prototype, and hired a technical team. All of the pieces are now coming together.
Next month we plan to begin the roadshow for Airy:3D’s Series A round.
Q: What inspired you to found TandemLaunch? What’s your assessment of how it has evolved?
A: TandemLaunch’s genesis came from my experience as a founder of companies that tapped university IP. There is enormous innovation potential in universities, but very little of it comes out.
I felt that a venture firm that specialized in leveraging that potential, and that was operationally involved and ready to take technical risk, could get a great return. TandemLaunch has done what it said it would. Everything is now on target. We’ve achieved multiples in follow-on financings and increased the portfolio’s value.
We’re not liquid yet, but from the perspective of our LPs, the math is in our favour.
Photo of Helge Seetzen courtesy of TandemLaunch