Impression Ventures III: Background
Announcements about fund closing, like the one we announced this Tuesday, are the culmination of months, if not years worth of work. Our fund III announcement was no different. Ultimately, Impression Ventures III came together because of the hard work the entire team at Impression Ventures puts in each and every day to build what we, and our investors, believe is one of the premier fintech portfolios in North America. We considered writing about the lengthy fundraising process — but in reality, it’s the years ahead of all those meetings that mattered. So that’s what we are writing about.
We officially launched in 2014 with our first investment into Wealthsimple, we were the company’s first institutional investor. We are incredibly proud of what Mike and his team have built since. Even though we exited our investment in WealthSimple in 2019, we remain immensely optimistic about the future of the company!
Post our initial investment, we continued to evolve and tweak our investment thesis which today involves investing in businesses that enable the digitization of financial services. We firmly believe that digitization is essential in making financial services more accessible and convenient to all. To that end, we are agnostic to whether we invest in disruptors or enablers!
Since 2016, our investment strategy has been largely unchanged:
Each fund is comprised of no more than ten companies with high concentrations in each. We enter each investment as the lead (or co-lead) investor with an initial check of $1M to $2M into $2M+ rounds. We prefer investing in companies that have already built the first version of their solution and have acquired their first customer. In the VC industry lingo, we invest in late Seed and early Series A rounds. There are two reasons for this philosophy:
- We are highly engaged partners to each of our portfolio companies. This means taking board seats and having multiple touchpoints, on a weekly basis, on subjects ranging from strategic to tactical initiatives. Most importantly, we provide guidance and feedback rather than telling founders what to do. We have war stories and are happy to share them. The feedback from our portfolio founders has been that our advice unequivocally helps them make better decisions (go ahead, ask them!)
- We price the equity investment and provide a founder-friendly term sheet. With experience as founders (see below), we are highly allergic to financial engineering. We know first-hand they just lead to constrained valuations in the future. We want to position our portfolio companies for successful future growth without complicated strings attached.
Likewise, our fund size is built from the ground up from this philosophy:
- We use half the funds for initial investments $15M (10 investments x $1.5M )
- The second half of the fund is used to double down on our investments at their next stage of fundraising, again $15M.
Which sums up nicely on why our target funds are $30M.
Our investment mandate is pretty flexible — we invest in companies enabling financial transactions in developed economies. As a guide, our prior investments include Wealthsimple, Sensibill, Brim Financial, Symend, Finaeo, Owl, FlexPay, Avesdo, Afficiency, Zoocasa, Honk and Elefant. These investments span all sectors of financial services including wealth management, credit & lending, retail banking, capital markets, insurance, regulatory technology and payments.
Maor and Christian, our two Managing Partners, are both engineers by training and have that roll-up-your sleeve mentality that Canadian engineers are renowned for. On the financial side, Maor gained extensive global financial service experience at UBS and Bank of Montreal. This experience provides poignant insights into how financial institutions and institutional investors operate and what large companies are missing in their current offerings. Maor is based out of Montreal.
On the technology side, Christian worked as a software engineer in the San Francisco Bay area for the first part of his career, turning to entrepreneurship in the mid-2000s with two startups: Millions of Us and Virtual Greats. His entrepreneurial experience brings a founder’s insight into how to build high growth businesses. Christian is based out of Toronto.
The combined expertise of our Managing Partners in “fin” and “tech” is what differentiates Impression Ventures from other seed-stage fintech VC firms and why we are positioned to be high value-add partners.
A year ago we were sitting at well over 1,300 fintechs evaluated (we are now at 1,700!) Many of these fintechs were too early for us, but we were following them closely. We went back to our advisors and investors and asked them if they thought we should continue investing based on the performance of our thesis (our funds have consistently been above industry benchmark top quartile results). The resounding answer was yes!* Thus Fund III was born.
If you are a #fintech founder, whether we are following you now, as per above, or we have never met, and you are looking for VCs that share your team’s mix of Fin and Tech and share our values, come see us — we are here to roll up our sleeves with you. Please reach out to any of us Maor, Christian, Valerie, or Muneeb or all of us at info@impressionventures.com
PS: A word about COVID-19 and fintech. With the COVID-19 backdrop, we strongly believe the current financial services will embrace the digitization of solutions. Digital solutions that enable financial services institutions to maintain social distancing and offer safe, efficient solutions to customers and businesses are very much in high demand. We are already seeing early evidence of this acceleration among several portfolio companies and strongly believe that these new, highly efficient adoptions will not be abandoned in a post-COVID world. We anticipate that remote, flexible payment, work and retail arrangements will, in almost all cases, be maintained. We are especially interested in investing in companies who are leaning into this acceleration of financial services digitization.
* Funny story, and a first for us. One investor didn’t return our call for well over a month. Any sane fundraiser assumes that’s a pass. Nope! When we finally did connect the conversation went something like “We’re in. Did we forget to tell you?” They know who they are, and they are awesome!
