Targeting Local Startup Excellence

Lessons Learned From Real’s Orbit Investment Strategy

Real Ventures
Real Ventures


By Isaac Souweine

Two years ago this month, Real launched Orbit MTL, a $31M early stage fund focused on the Montreal startup ecosystem. Since we closed the fund we’ve been busy, investing about $9M in 61 investments across our direct portfolio, two accelerators, and our student VC fund. In this post, I share details about those investments and the strategies behind them, as well as some of the lessons we’ve learned along the way.

Why Orbit

Every fund is a partnership between investors (LPs) and managers (VCs) but in Orbit’s case the collaboration has been especially strong. For our LPs, Orbit is part of a broader effort to strengthen the early-stage financing chain in Quebec. The largest investor in the fund is the Quebec government. Its investment in Orbit and other regional funds (eg Innovexport, Ecofuel) attempts to spur economic development by solidifying support for early-stage companies. Orbit’s other institutional investors — CDPQ, FSTQ, and Desjardins — all hold important positions in Quebec’s technology sector and are committed to its growth. Orbit is also backed by Montreal-based founders and investors, many with strong connections to Real, who believe in paying it forward to the next generation.

For Real, Orbit is an opportunity to continue pursuing ecosystem-focused investing, a hallmark of our firm since it was founded, even as our other funds move upstream in the financing chain. As in past Real funds, Orbit combines acceleration, high-volume seed investing, and community collaboration to create unique deal flow and networks of support. What’s new is the level of focus, including: dedicated partners, a separate investment process, and a hyper-targeted mandate. By forming a discrete team that hones in on a single ecosystem, we aim to do even more to catalyze startup activity — creating new platforms, building investment syndicates, and attracting outside capital.

Who we are

Orbit is led by two partners, Sylvain Carle, a serial entrepreneur with deep ties to the Quebec startup ecosystem who joined Real in 2014, and me, Isaac Souweine, who joined in 2017 following stints leading product management at Real portfolio companies Frank and Oak and Sonder. We are supported by Laura Easton, a McGill alum with a background in market research and our Founderfuel program manager, Sarah Bezeau, who joined us earlier this year from GSoft. Orbit’s investment committee also includes two external members: Pascale Audette, CEO of Carebook, and Francois Laflamme, Senior Partner at Novacap. Both have helped enormously in adding rigour and perspective to our investment decisions. Finally, the Orbit team leans heavily on Real’s back office team, especially Lauren Jane Heller on comms, Steffie Vincelli on finance and Ziyi Shi on legal.

Direct investing

Orbit’s primary investment strategy is to participate directly in early stage financing rounds. Since the fund launched, we‘ve made 21 such direct investments.

As with Real’s larger funds, Orbit prefers to lead or co-lead rounds; so far we’ve played that role about half the time. Leading rounds takes more work — in due diligence, negotiation, and syndicate building. Yet in our view, the payoff is worth it. As lead investor we find we develop stronger relationships with founders while gaining increased influence on terms and round construction. We also believe that leading pushes our investment team to think more independently.

Orbit’s average investment size so far has been ~$220K. Unlike Real’s larger funds, the rounds we join are all syndicated; the highest proportion of any round that we have taken has been 50%. The full range of round size and pricing has been wide, but most rounds have been $1M or less, priced between $3M-$5M pre-money. Investments have been equally split across equity and convertible instruments, mostly SAFEs. Our co-investors include other funds and angels from Quebec, Ontario, and the United States. We’ve also made four investments alongside Real’s main seed fund; these are typically larger seed rounds, such as our co-investment into Breathe Life, a company founded by Ian Jeffery, the first GM of FounderFuel.

Like any regionally-focused fund, Orbit MTL seeks to invest in areas of local excellence. In Montreal, AI projects are at the top of that list, and we’ve made a number of investments on that theme, for example:

  • Omnirobotic makes industrial painting robots guided by machine vision. Founded by Francois Simard and Laurier Roy, both experienced roboticists, we co-invested in Omnirobotic with Element AI, the AI solutions provider seeded and co-founded by Real.
  • Korbit AI is transforming online education using natural language processing. Founded by Iulian Serban, a student of Yoshua Bengio, we backed Korbit alongside strong Bay Area co-investors who shared our interest in investing in Montreal’s AI community.
  • InVivoAI uses machine learning to accelerate drug development in low data environments. The company’s co-founders, Dan Cohen, Therence Bois, Prudencio Tossou and Sebastien Giguere, work at the cross section of AI and computational biology. The company is backed by a strong group of Canadian early-stage investors.
  • Keatext provides AI-powered text analytics for feedback interpretation. Co-founded by Narjes Boufaden, another student of Professor Bengio, and Charles-Olivier Simard, Keatext has been in the Real Ventures family since 2016 when the company completed FounderFuel.

Orbit has also found a number of opportunities to invest in technology generated by Montreal’s world-class universities. Some examples include:

  • Sollum, which builds programmable LEDs for agriculture and beyond. Founded by Francois Moisan, Gabriel Dupras, and Louis Brun, Sollum combines unique IP and technical expertise from ETS with an experienced founder on his fourth startup. The company is supported by a strong contingent of Quebec angels.
  • Spark Microsystems, which builds short wave wireless radios that seek to replace Bluetooth. Founded by Fred Nabki and Dominic Deslandes, Spark leverages their years of research at UQAM and ETS. Orbit led the investment into Spark alongside Real’s main seed fund.

While portfolio themes like AI and deep tech have emerged, Orbit has remained sector and technology agnostic, making investments in SaaS, marketplaces, consumer, real estate, cyber, aerospace, and more.

Accelerator investing

Orbit also invests via Real’s accelerator, FounderFuel, which has been operating its three-month, mentor-driven program since 2011, backing category leaders like Sonder, Transit, Unsplash,, and Mejuri. FounderFuel is a huge asset for the fund, providing an established network and a brand that not only attracts top young startups from Montreal but also enables us to recruit companies from across Canada to participate in the local ecosystem.

So far, Orbit has made 23 investments through FounderFuel across three cohorts. You can check out all of the pitches here. Applied AI has been a strong theme in each cohort, but we’ve tried a bit of everything, including lots of SaaS, hardware, robotics, tech-enabled services, health tech, and more. We’ve also continued to use the program to develop our own expertise. For example, Sam Haffar’s posts on raising Series A and mine on building fundraising stories were both workshopped in FounderFuel.

Like all of our investment strategies, FounderFuel is designed to create reinvestment opportunities for Real/Orbit. So far we are on track, having doubled down on five companies, including Invivo AI, discussed above, and four others:

In 2019, Orbit MTL also finalized a major strategic investment in Techstars AI. Techstars is a dominant global player in acceleration, with nearly 50 programs running across the globe and one of the world’s strongest startup networks. Investing in a second accelerator was not part of Orbit’s original mandate, but when the opportunity arose to bring a Tier 1 global player to Montreal, we worked with our wonderfully supportive investors to make it happen. Orbit’s investment in Techstars AI deepens our longstanding relationship with Techstars, building off the structure created when Real co-invested in Techstars Toronto,

In late 2018, Techstars AI made its first 10 investments under the leadership of successful entrepreneur Bruno Morency, with Justine Marchand running programming. We are thrilled about the program’s ability to support strong local AI companies like Arctic Fox AI, which uses AI to better diagnose brain illnesses and to bring leading startups to Montreal from around the world, and Green-eye (Israel), which uses machine vision to reduce herbicide usage.

Student VC

Finally, Orbit has made 9 investments through Front Row Ventures, our student fund. Inspired by programs like Dorm Room Fund, Front Row seeks to inject a venture capital mindset into university communities by empowering students to invest in their peers. We met Front Row’s three precocious founders — Eleonore Jarry-Ferron, Nicolas Synnott and Raphael Christian-Roy — before our fund closed and were thrilled to partner with them, providing $600K of capital to support 24 investments over four years across Quebec. Since launching, FRV has trained more than 50 young investors across three cohorts. These student investors have built a strong portfolio with a special flare for deep tech, including: Reaction Dynamics, which provides launch services for satellites, Enuvio, which builds ‘lab on a chip’ technology for life sciences, and Nplex, which uses nanotechnology to improve protein screening in blood tests.

We believe that Front Row Ventures will be one of the next great platforms for Canadian founders and investors. Front Row Ontario kicked off this past spring; by 2020 we plan to launch chapters across Canada backed by a pan-Canadian fund.

What we’ve learned about Montreal

1. It’s a great time to be a startup in Montreal

After two years on the front lines, we are enthused by the level of startup activity in the city and the quality of talent and support for young companies. Montreal’s universities provide a powerful engine for startup growth, creating massive amounts of intellectual and human capital, especially engineers, data scientists, researchers, and creatives. Montreal founders who take the plunge are well served by incubators and pre-accelerators including Centech, D3, Next AI, CDL MTL, Founder’s Institute, MTLab, X-1, La Piscine and many more, as well as a robust calendar of meetups and a strong set of community organizers. On the funding side, Quebec and Canada both support companies aggressively with grants and subsidies (SRED, IRAP, MESI, La Main, etc.), with many companies raising more than $1 of non-dilutive funding for every $1 of equity. Low salaries and rent allow companies to extend runway even further. In addition, Montreal is starting to see both material exits/IPOs — e.g., Luxury Retreats, Lightspeed — and a growing crop of scale ups — e.g., Element, Hopper, Breather, SSENSE,, and Alaya Care. These companies help attract and train talent while providing inspiration for the next generation of founders.

2. Montreal needs more early-stage capital

The falling cost of company creation and growing embrace of startup culture have led to a global boom in startup activity — and Montreal is no exception. But while the supply of startups has never been higher, and while support from many quarters has never been stronger, local capital has been slow to keep pace. Most Canadian private wealth is tied to traditional industries like resources and real estate. For many Quebec investors, the technology sector is considered high risk and historically underperforming. Pension funds and government have made significant efforts to bridge the gap, but Montreal lacks capital depth compared to Toronto, and the difference is starker when compared to similar-sized US cities, to say nothing of the Bay Area/Silicon Valley. Things are slowly improving. In the last few years, firms like Panache, Innovexport, and Ecofuel have raised early stage funds and begun actively leading financing rounds. But in aggregate, Montreal remains a buyer’s market, with many fundable companies struggling to raise VC rounds locally.

3. Montreal founders should broaden their fundraising horizons

Canadian startups are often told to think bigger in terms of their business ambitions. While we agree with this advice, we also believe more ambition is required on the fundraising trail. Given the lack of local capital noted above, we believe Montreal founders should broaden the scope of their fundraising efforts, looking across Canada and the US to source investors. Seed investing will always have a local tilt, but Canadian startups have proven their potential for global success and, given pricing pressure close to home, US investors are more willing than ever to make early-stage bets north of the border. If Montreal founders do their homework and hustle, they can find financing partners outside of their home market. Further, engaging outside of the ecosystem is often the best way to get local investors more engaged.

What we’ve learned about early-stage investing

1. Acceleration won, and now it’s everywhere

When Real started FounderFuel in 2011, acceleration was gaining steam as a key link in the financing chain, but access to high quality programs was limited. Fast forward eight years and acceleration is everywhere! At the top of the market are a small group of global winners — e.g., YC, Techstars, SOSV — that have achieved scale. These firms invest in hundreds of companies a year, recruit and operate globally, and build powerful networks supported by large pools of capital. Verticalization has been another boon to the movement — specialist programs now exist for everything from enterprise SaaS to aerospace, with the top vertical players also building strong global brands and networks. Corporates have also moved full force into acceleration, pushing in cash and corporate attention and pulling in a new group of service providers to build their programs.

At Real, our work on FounderFuel has given us a front row seat to this evolution and we’ve embraced it, partnering with Techstars to create two programs — Techstars Toronto and Techstars AI — that combine the best of Techstars’ scale and networks with our local connections and expertise. Our partnership with Techstars ensures that we are deeply integrated into programs that will be linchpins in our key investment ecosystems. The partnership also inspires our own acceleration work, giving us a chance to learn new techniques and apply best practices from a global leader.

2. Platform thinking is on the rise

Investment platforms create unique bundles of value for founders, spurring company formation while creating structural advantage for platform creators. Real’s work on FounderFuel has shown us the power of platform-based investing and our collaboration with Techstars has exposed us to platforms at scale. But as we look across Montreal, we are impressed to see that platform thinking is becoming widespread. For example:

  • Diagram has built a platform based on Power Corp’s business networks, strong in-house support teams and access to capital
  • TandemLaunch matches talent to university IP, forming companies that it then connects to a network of corporate funders/buyers
  • Centech’s platform is based on office space, programming, corporate access and a community of deep tech founders

As venture investors, we are happy to see strong platforms generating unique companies that we can invest in. As a platform builder ourselves, the creativity of others pushes us to keep innovating and looking forward.

3. Ownership targets, even at pre-seed

When we launched Orbit, we attempted to be highly programmatic, picking an investment amount ($250K) and sticking to it no matter the pricing or round size. The idea was to keep things simple and spread risk evenly, and in that sense we were successful. But as we looked at more opportunities, we realized that being dogmatic about cheque size was constraining us. For higher priced rounds, $250K did not secure enough ownership to be meaningful for our financial model; on the other end of the spectrum, for some small pre-seed rounds, $250K was more than necessary. After some trial and error, we have pivoted to a more flexible approach. We now invest a range of $150K — $350K into each company and we set minimum ownership targets to help guide the amount we choose as well as the round pricing.

Looking ahead

As we look ahead, we feel energized to continue our work on Orbit — supporting our current portfolio, making new investments, engaging with our thriving ecosystem, and building stronger bridges globally. We are also excited to work with the entire Real team to explore new ways to support founders, especially in terms of leadership development and personal growth. Finally, we believe Orbit’s strategy of hyper-focused, highly networked early stage investing is widely applicable, so even as we deepen our commitment to Montreal, we’re looking forward to exploring other ecosystems that might be a fit for the Orbit model.



Real Ventures
Real Ventures

Canada’s leading early-stage VC firm dedicated to serving entrepreneurs and nurturing the communities in which they thrive.