Canadian VCs have pushed Clio for discounted terms. Newton argues it should be the other way around.\u00a0<\/p>\n
<\/p>\n
Clio CEO Jack Newton believes Canadian VCs should be willing to pay a higher price than US competitors to invest in Canadian companies.<\/p>\n
The news: Newton made the remark during a fireside chat with RBC senior vice-president John Stackhouse at the Design Exchange in Toronto on Wednesday, where Clio was hosting a luncheon to celebrate new additions to its platforms, including Canadian case law and accounting capabilities.<\/p>\n
As Stackhouse and Newton discussed the state of AI, investment, and legaltech in Canada, Newton recounted the difficulties of raising money as a young Canadian company, when Canadian VCs thought they could get a \u201chometown discount.\u201d To spawn the next Shopify or Clio, Newton said every level of government and every Canadian investor should instead think about how to create a \u201chome-field advantage\u201d for Canadian companies.<\/p>\n
From the source: \u201cBecause we know these founders,\u201d Newton explained. \u201cBecause we know the ecosystem we\u2019re in, because we know that we can help bridge deals within Canada, we\u2019re willing to give a higher valuation than the US VCs.\u201d\u00a0<\/p>\n
\u201cI think that\u2019s one macro-level change we need to see if we\u2019re going to see Canada being more self-sustaining, especially in that early stage,\u201d Newton added.<\/p>\n
The context: Newton has spoken before about his company\u2019s struggles to raise in Canada, including at the 2024 BetaKit Town Hall<\/a> in Vancouver. At Wednesday\u2019s event, Newton said Canadian term sheets were so uncompetitive compared to the likes of Clio\u2019s Series C<\/a> lead investor, US-based Bessemer Venture Partners, that he didn\u2019t even return calls. Clio\u2019s struggles to find Canadian investors extended all the way to its $900-million USD ($1.3-billion CAD) Series F round<\/a> in 2024, which was backed entirely by US investors.\u00a0<\/p>\n Canadian VC does have its structural problems, including a thin base of limited partners, as some investors noted on an April episode of the BetaKit Podcast<\/a>. The general lack of exit activity<\/a> in the country has also led to a lot less capital available to be deployed.\u00a0\u00a0<\/p>\n Final thought: Stackhouse noted Newton\u2019s challenges with the pressure to accept hometown discounts, and forwarded another concern he\u2019d heard from founders: speed. Stackhouse said Canadian VCs often take too long to get offers back to companies. Both speakers agreed that the most important asset in the age of AI is velocity.\u00a0<\/p>\n Newton added that Canada needs its entrepreneurs to decide that their home is the best place to start a company. He said the Canadian home-field advantage he spoke of should include updated tax policy that incentivizes founders to start companies in Canada by giving them more upside if they \u201ctake off.\u201d\u00a0<\/p>\n Feature image courtesy of Alex Riehl for BetaKit.<\/p>\n","protected":false},"excerpt":{"rendered":"Canadian VCs have pushed Clio for discounted terms. Newton argues it should be the other way around.\u00a0
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