Rhino Ventures: Entrepreneurship Full Cycle
Jay Rhind is not interested in living in the past. Originally hailing from Toronto, Jay studied Biochemistry at Queen’s University, which led him to work at the cleantech start-up Vertichem. It was his first experience building the future through entrepreneurship. With oil prices surging to $140 a barrel, Jay thought they were sitting on gold. That is — until they weren’t. Jay described the experience of dealing with plummeting prices in the wake of the 2009 Financial Crisis, as “a mini MBA in itself.” However, he appreciated the challenge it brought. He went on to further develop his business acumen by working at a traditional corporate finance firm and eventually attending UBC Sauder for his MBA.
After graduating from Sauder, Jay was still connected with fellow UBC Sauder MBA grad Fraser Hall. As Jay recounts, he had pitched Fraser (who was angel investing at the time) on numerous fledgeling venture ideas, all of which were turned down. It wasn’t until 2015 when Fraser was going through an exit process with a company he co-founded, Recon Instruments, that he roped Jay into starting Rhino Ventures. The fund started out with a “chip on its shoulder”; its mantra and mission statement of “being the fund we wished we had as founders” was born from Fraser’s rollercoaster journey with Recon.
The two raised a micro fund — or minimum viable fund as Jay calls it — of $14 million CAD to invest in the best and brightest entrepreneurs building venture scale success stories in British Columbia. Rhino Venture’s purpose was inspired by addressing the massive market gap between the quantity and quality of early-stage capital serving the Vancouver start-up ecosystem. Jay noted that the severe gap in the market allowed them to have relative success by simply attacking it. They quickly made notable investments in Article.com, Thinkific, and Klue, among others.
Reflecting on these investments, Jay noted that “right out of the gate, in a more healthy, robust ecosystem, there would have been tons of competition to get into those deals. Frankly, there wasn’t because no one was doing what we were doing in Vancouver. We were incredibly fortunate.”
For many years, Vancouver experienced underfunding because the majority of Canada’s capital was concentrated in the East, emerging in Toronto and subsequent peripheries like Ottawa and Montreal. However, the evolution of Vancouver’s technology scene, particularly over the past 12–18 months, has driven an upswing in funding. It has seen many large raises like Clio (largest Series D in Canada at $330 million CAD), Klue ($19.7 Million CAD Series A) and smaller ones such as Showbie and Curatio. Further, a number of prominent Vancouver tech companies are poised to enter the public markets over the coming quarters. Cymax and Abcellera — which filed for a $200 million USD Nasdaq listing — are two of the most recently publicly reported possible new issuances.
As the industry has continued to grow and is now boasting more proven entrepreneurial management, investors are holding a higher willingness to invest in Vancouver startups. This has heightened the momentum in the region and is slowly generating and increasing access to greater mentorship to help serve it. Jay pointed out that the 4 M’s — Management, Mentorship, Momentum and Money — are the leading indicators of a regional start-up ecosystems maturity. Until recently, Jay felt that it was a contrarian position to believe you could build world-class companies and a venture firm that matched founders’ level of ambition in Vancouver. However, with the 4 M’s moving in the right direction, that is fortunately no longer the case.
Moreover, Rhino also recognized that the issues plaguing Vancouver were not unique to the city. They saw the same problems prevalent in other Western Canadian cities like Regina, Saskatoon, and Winnipeg. This inspired and served as the thesis for raising their second fund of $33 million CAD. Today, Rhino is now seeing embers emerge in these other regional ecosystems, but Jay still feels that these ecosystems suffer even more than Vancouver from the imbalance of the quality and quantity of capital access. He mentioned how Rhino is “very excited” about serving these regions as they hold “highly ambitious and world-class entrepreneurs” that are poised for success.
Jay also focused on a less tangible quality that he finds is lacking in the way venture funds interact with entrepreneurs — the human element. By calling it an “asset class” it dehumanizes the working relationship and high degree of trust required in order to have a successful partnership. Venture funds invest in the potential of people who have put their life’s work into a business. Building a business from scratch is a herculean feat and is deserving of that level of respect from funders, Jay says.
When pushed on to describe what this looks like in practice, he commented that in the pre-investment stage, it means respecting founders’ time above all else; striving to avoid being “maybe” investors by giving clear direction on whether or not a company is a fit for Rhino and why that is the case. On a post-investment basis, it means celebrating the wins. Look no further than some of Rhino’s blog posts on the fun things they do with founders to celebrate the journey. Jay credits the Rhino team’s ability to connect with entrepreneurs on a personal level while having a deep respect for their efforts as a major driver of Rhino’s success.
