Real Matters, Ten Years In

Real Matters went public today and congratulations are in order.

Jason Smith and the world class team he has built at Real Matters have successfully executed the biggest Canadian tech IPO since Shopify. The hard work that has gone into making Real Matters one of the leading players in the US mortgage appraisal market cannot be understated. Congratulations to the entire team!

My relationship with the company started in 2007. My partner, Blaine Hobson, and I were running Whitecap Venture Partners, then a division of Whitecastle Investments, a family office. Blaine and I had a long history of helping build successful early stage tech companies, but the venture capital market was very different in 2007. The 2001 bubble was still front of mind, the “seed” stage market hardly existed, and there were far fewer companies being started in Canada. Against this backdrop, my brother Mike introduced us to an entrepreneur named Jason Smith. Mike was a key strategic advisor to Jason at the time, and also became a board member at Real Matters for many years.

Jason was a well-known and well respected entrepreneur in the Canadian tech ecosystem. Prior to starting Real Matters, he was the co-founder of Basis100, which sold technology into the banking sector and had thousands of US mortgage vendors using its “automated valuation” technology. Basis100 went public and was later acquired by The First American Corporation in 2004.

Notwithstanding Jason’s deep industry expertise, and his undeniable entrepreneurial drive, investors weren’t lining up to invest in the Real Matters seed round. Blaine and I decided to invest and lead the round — we had made a successful real estate tech investment in the past (seed investment in Teranet) and our firm’s history was deeply connected to real estate so our comfort level in the space was high. That being said, the company was early into proving product market fit with fiscal year 2007 gross revenue of less than a million dollars, all in Canada. Our initial funding was targeted so Real Matters could dip its toes into the US market.

Our investment thesis at the time, which remains unchanged today, was to invest in great entrepreneurs building disruptive companies in large markets. Like any startup, the path to product market fit and market acceptance was bumpy. Soon after our first investment in Real Matters, the US housing market was in free fall and the financial markets had seized up.

As you would expect from a true entrepreneur, Jason viewed this set of events differently than most people. He believed that the chaos in the US was a once-in-a-generation opportunity. Jason approached us with an aggressive plan to expand into the US; he wanted to use the chaos and dislocation as a wedge to enter the market. We whole heartedly agreed and decided to double down and invest more capital in the company.

While it took longer than we initially expected, there is no question that Jason’s high-risk, high-reward strategic decision turned out to be the right one. Today, Real Matters has secured approximately 60 of the top 100 US mortgage lenders as clients.

In the ten years following our seed investment, Blaine and I continued to support Real Matters’ development through all the ups and downs. Blaine built a deep and trusted relationship with Jason and the senior team at Real Matters by operating as sounding board, a strategic advisor to Jason, and ultimately Chairman of the Board of Directors. We made four follow on investments out of Whitecap II and most recently, three investments out of Whitecap Venture Partners III, the $100M institutional venture capital fund we raised in 2015 with our team (Joe, Shayn, and Russell).

Looking back, Jason and his world class team taught us at least as much as we taught them. The best entrepreneurs have this effect.

It has been a great privilege for our firm to work with Jason and the entire team at Real Matters. An IPO is an important milestone in the lifecycle of a company, but it is not the end of the road. If anything, this IPO is just the beginning as Jason and his team continue building a world class technology company in Canada. We are humbled by their success to date and remain excited about the company’s future.

Sincerely,

Carey Diamond & the Whitecap Venture Partners team

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