Why Maple VC’s Andre Charoo is all in on Canadian founders and the opportunities he sees in early-stage investing during this year of survival 

What was your path to founding Maple VC?

I was born and raised in the suburbs of Toronto. After studying economics at the University of Toronto, I started my career in investment banking in the US and the UK. It didn’t take long for me to realize that I was far more interested in what the founders and entrepreneurs I was talking to were doing than in banking. So in 2007, I went to Silicon Valley to start my own company — a digital recruiting platform focused on democratizing access to talent. Unfortunately, with the Global Financial Crisis just around the corner, things didn’t work out. 

Still, that experience taught me that I love building companies at the earliest stages when you’re starting with a blank piece of paper. Fortunately, I also realized that I didn’t necessarily need to be the one with the idea and that I could get the same satisfaction from finding other ambitious founders and helping them on their journey. Over the next decade, I worked with founders at the seed stage of four companies, including being among the first 25 employees at both Uber and Hired.

At that point in my career, I was effectively jumping ship every couple of years to go find the next early-stage company that I thought would make it big. In 2016, I was about to leave Hired when the founders made me an offer I couldn’t refuse. They knew how much I liked working with early-stage companies and saw from my resume that I had a good track record of picking great founders to work with before anyone knew who they were. They thought I might enjoy venture capital as a way to scratch that itch and offered to seed a small fund for me to invest out of if I’d stick around a while longer. Maple VC was born with that first $1.2 million fund. A second $16.5 million fund followed and today we’re raising a third $35 million fund.

So what’s Maple’s investment thesis? 

Our thesis is born out of a couple of important insights. First, I recognized that two early-stage companies that worked out in a very big way like Uber had one thing in common: They all had at least one Canadian founder. And that’s not just a coincidence. Many of the biggest companies in tech — think DataBricks, Shopify, Slack, RoBlox, Binance, Cloudflare, and Notion — also have Canadian founders. In fact, if you look at the winners in any given category, history has consistently shown that you’ll usually find a Canadian founder in at least one of them. In addition, I noticed that none of these great companies had a Canadian investor on their cap tables at the seed stage — not even Shopify which is based in Canada. 

If you look at the winners in any given category, history has consistently shown that you’ll usually find a Canadian founder in at least one of them.

It was from those two insights that I began to see an opportunity to create a fund that at the start would exclusively back Canadian founders. More importantly, I decided to build it in Silicon Valley rather than Canada. That’s critical because it means that Maple can serve as a bridge to founders based in Canada, most of whom want to have a connection to the Valley to help secure future rounds of funding. At the same time, it makes Maple more attractive for Canadian founders building companies in the US because we have access to a local network of talent and other resources that traditional Canadian VCs typically don’t.

Maple invests in seed-stage companies backed by Canadian founders. We’re industry and geography agnostic and believe that we’re well-positioned to invest in some of the world’s most compelling companies because of our unique niche and investment thesis.

Beyond that focus, what else differentiates Maple?

One of the reasons we win deals is because of the operational experience I have from my time at the earliest stages of Uber and Hired. Those experiences are unique and incredibly valuable, which means that founders are happy to get on the phone with me to talk. 

Of course, there’s a limit to that experience. So I built a bench of a dozen or so other operators who are among the first 25 employees at other category-defining companies like HubSpot, Airbnb, Stripe, and Instacart. Collectively, they have deep experience in scaling businesses in virtually every functional area and probably put Maple in the position of having the best tribal knowledge at the earliest stages of any VC out there. The fact that founders can tap into their expertise to help them navigate the challenges of building an early-stage company is incredibly compelling and a huge differentiator for us.

What do you look for in founders when deciding whether or not to back them?

In addition to them being Canadian, I generally look at three things. The first is their ability to attract a wide range of top talent. I know that sounds trivial, but it’s critical. To build a great company, you need to be able to attract an army of great people — not everyone can do that. So I’m looking to see that they have already assembled a great founding team and that they have the vision and leadership qualities to bring on the very best people. 

Next, I want to know if they’ve got the timing right. Are they facing headwinds or tailwinds? One example of that is whether there’s cultural buy-in or not. One of the reasons why Uber took off when it did was because as a society we were already starting to become comfortable with the notion of the sharing economy thanks to companies like Airbnb. Thirty years ago, it would have been crazy to get in a stranger’s car to go to the airport. By the time Uber was founded, it really wasn’t that big of a leap because, culturally, we were already coming around to that kind of thing.

Finally, I want to know what their unique insight is. What do they believe in that other people don’t? When I talk to a new founder, I want to hear ideas that sound totally different than everything we’ve come to expect. Ideas that most people think won’t work because they’ve never heard of anything like them before. It’s ideas like these, usually based on unique insights, that have the greatest chance of leading to true disruption. 

Can you tell us about a couple of your favorite investments?

Sure, we recently invested in a security intelligence company in the cybersecurity space called Anduin. Both founders are Canadian, one of whom is also a Thiel fellow and has been able to attract an absolutely stellar group of former CIA, national intelligence, and cybersecurity experts to his team. They’re building what you might think of as the AWS for cybersecurity. At a time when there’s more digital infrastructure tied to the internet than ever before, and more and more third-party vendors with access to sensitive data, that data is increasingly at risk. So the tailwinds are very strong. They also have a differentiated product relative to the other cybersecurity companies in the market. Plus, they’ve created a holding company called Blacklake that’s being used to attract capital and talent across a myriad of products and services that a pure play security startup wouldn’t be able to achieve.

Another favorite investment based in Canada is Neo Financial, a company that aspires to be the country’s next big bank. That’s important because Canada’s biggest market opportunity is banking, and it’s an industry where there’s still a lot of innovation to be had. The founders’ previous endeavor was SkipTheDishes, an incredibly successful food delivery company based in Winnipeg of all places. In addition to having the benefit of that experience, they have significant tailwinds at their back, with more and more neo-banks disrupting traditional banking. Not only are these guys bringing a digital-first approach to financial services, they’ve also created a unique merchant-based network system that positions them to attract customers via large merchants for virtually no customer acquisition costs. 

What’s your outlook for early-stage VC investing in 2023?

2023 is the year of survival for founders. We saw a little change in valuations in 2022 and I think we’ll see more this year. That’s because most companies that raised capital in 2021 at crazy valuations were sitting on a lot of cash — often 24 months of runway or more — and as a result didn’t have to come back to the markets in 2022. That’s no longer going to be true this year, so they’re going to have to raise capital. With so much uncertainty in the markets, particularly in light of recent bank collapses, later-stage deals have effectively frozen up. And while that’s not yet been the case with pre-seed and seed deals, I think we’ll start to see valuations for those deals change dramatically, maybe going back as far as to 2016 levels.

The pendulum is definitely swinging back toward investors, who no longer have to deal with constant feelings of FOMO. Ultimately, that’s a good thing because it means we can take our time and really do our diligence before making an investment. That may lead to fewer companies in the end, but those that make it will be much better as a result.

Given all of your experience, particularly helping companies like Uber and Hired at the earliest stages of development, what advice are you offering early-stage founders to help them navigate this year of survival?

The first question I ask founders is what survival looks like for them. What if they couldn’t attract another dollar of investment? What would the business need to do? How creative would it need to get? I always try to work through that with them and brainstorm different ideas. I also encourage founders to keep their heads down and stay focused on building their product. That way when the economy normalizes, they’ll be ready to come out with a highly differentiated product. 

I also remind founders that cash is king and push them to try to make money now, even if that means going down a slightly different path than they initially intended. That might result in deploying a product without all of the bells and whistles they had planned in order to monetize what they’ve got today. It may require going after a different target customer — maybe smaller less appealing ones — and adjusting their go-to-market strategy accordingly, but that’s ok. In this environment, growth isn’t being rewarded. Demonstrating you’re nimble and able to generate revenue is.

The other point I’d make is that talent is more available now than it was before. It would be a missed opportunity if you didn’t find a way to attract some great people in this market to ensure that your bench is even stronger coming out of it. 

Thanks for your insights, Andre, we appreciate it!