The Velocity Fund Finals at the Tannery Event Centre Wednesday will look much like those that have unfolded three times a year since 2011.
Four winning companies will walk away with tens of thousands of dollars that they didn’t have the day before, based on pitches made in front of a live audience. Those same companies will earn a two-year residency at Velocity’s 40,000-square-foot incubation space operated by the University of Waterloo.
But look more closely. This edition of the event amounts to something new.
For the first time since its inception, the winning companies won’t receive a $25,000 grant, but rather $50,000 in investment from a venture fund that Velocity recently established, a fund that reflects the evolution and maturity of the Velocity brand.
“Absolutely, I think it’s an expression of how far we’ve come as an ecosystem and then materializing that into this new structure,” says Velocity Director Jay Shah, whose organization celebrated its 10th anniversary last September.
Powered by the AngelList Investment platform, the fund is a vehicle for angel investors to obtain equity in early-stage startups. The structure of the investment is what’s known as a “post-money SAFE,” or Simple Agreement for Future Equity. As the Financial Post described in January, “the startup takes the money, and then the investors get equity at whatever valuation is established at their next funding round.”
The shift from grants to investments was largely driven, Shah says, by the steady evolution and calibre improvement of Velocity companies over the past seven years. The Velocity Fund Finals event, established with a grant of $1 million from Kik CEO Ted Livingston, has seen Velocity award $2.3 million in prizes to 91 companies. Past Velocity companies include North (formerly Thalmic Labs), Reebee, MappedIn, Maluuba (acquired by Microsoft), BufferBox (which was acquired by Google and co-founded by Shah) and Kik.
“The startup calibre continued to rise and rise and rise,” says Shah. “What we were finding was investors showing up to our $25K pitch competition. And the genesis of [ the VFF was for it to be] a student pitch competition, but really the calibre grew so far along, thanks to the talent here in Waterloo and the entrepreneurs, that it really became more of a startup, commercial-investment-focus competition.”
And so the shift from grants to investment. In addition, this edition of the VFF has been split into two days. Tuesday, Velocity hosted 10 early-stage, University of Waterloo student startups, which pitched for four prizes of $5,000. Wednesday, it was the more mature companies pitching for the $25,000 in investment.
