2021 was an incredible year for venture capital and tech. Canadian companies raised a collective $11.8B CAD by the end of Q3 2021, nearly three times the total raised in all of 2020. As of 2020, Canada had four unicorns (two of them Velocity alumni). Now, we have 16.
In 2021, Velocity alumni hit three important economic milestones – $3.6B cumulative capital raised, 5,000+ jobs created, and the Embark Trucks IPO – which drew increased focus from investors locally and globally, adding to Velocity’s position as Canada’s most productive early-stage incubator by capital raised.
Velocity residents also had an extraordinary year. We invested in 16 exceptional companies in a variety of industries like healthtech, cleantech, agtech, media, edtech, SaaS, and deeptech. The current portfolio is cumulatively capitalized more than $30M. Two of our residents joined YCombinator, one joined IndieBio, one received a Thiel Fellowship, and two joined CDL. In 2021, we received ~200 viable applications to Velocity and we anticipate an even higher number for 2022.
With Velocity’s support, our residents are breaking records
In 2019, we launched the Velocity Fund and Velocity Health Tech Fund, two of the first some of the earliest pre-seed venture capital funds in Canada. We invest at a very early stage and often invest in industries traditionally considered riskier bets by venture capital, like healthtech, cleantech, and deeptech. And yet, start-ups that the Velocity Fund invested in have an 83% survival rate (100% since 2019) and received over $25M in follow-up investments so far. Our ‘despite-the-odds’ incredible success can be attributed to 4 key components.
I. Velocity helps early-stage founders achieve capital-efficient growth
“Velocity’s knowledge base and mentorship has been pivotal to laying a strong foundation for our company’s continuing growth. From market discovery to raising initial capital, the Velocity mentors have played a key role in pushing our company to move faster and focus on what matters most to building a product people want to buy.”Danielle Rose, Ceragen, CEO and Co-Founder
“Velocity has given us access to a world-class laboratory and the space to grow our emerging biotechnology company. It’s secretly the best place in the world to start a biotechnology company without hundreds of millions of dollars in the bank.”Cody Shirriff, Serenity Bio, CEO and Founder
Since its inception, Velocity has focused on supporting startups during the riskiest and earliest time of business building. 14 years of experience helped us hone on the most effective ingredients for success: supplying founders with connections, practical and authentic business expertise, product development know-how, space to build a team and develop products, and risk-tolerant capital. We designed our flexible programs and space to help Velocity residents achieve fast, capital-efficient growth, placing our founders and their early investors in a stronger position during future raises.
According to AngelList, UWaterloo founders offer the 2nd highest returns for investors in the world (higher than founders from MIT or Stanford).
II. Velocity can derisk the riskier bets
“For the university graduates with innovative ideas, Velocity is a wonderful opportunity to bring the ideas to life. The prototyping tools and additive manufacturing equipment and machine shop facilities pave the path to proof of concept. On the other hand, the in-kind resources available to Velocitizens are invaluable. The advisory on different aspects of business growth plays an important role in the future success of the ventures.”Atefeh Zarabadi, AiimSense, CEO and Co-Founder
Often overlooked for startups is space to build products from prototypes. We are resolved to support business building from both sides of the challenge: business development and building product. With ‘full-stack’ facilities and expertise in house at Velocity and through our connections with the University of Waterloo, founders gain perspective and can productize technologies faster and with less capital. Our unique structure also allows Velocity to offer early support and risk-tolerant capital to ventures with the potential for massive positive fallbacks, including healthtech and cleantech startups that often face difficulties gathering capital from traditional early-stage investors.
III. High levels of connectivity and a strong community
“Joining the Velocity community was one of my top priorities when I moved to Kitchener-Waterloo from Berlin (Germany) last year to start Scispot. Speaking to Velocity advisors, connecting with bio companies in its portfolio, and attracting talent from the University of Waterloo are valuable opportunities that I didn’t want to pass up.”Guru Singh, Scispot, CEO and Founder
Founders with high levels of connectivity grow revenue twice as fast as those with lower levels. While in the incubator, Velocity residents are part of a tight-community of founders at similar stages of development. Velocity residents and alumni also benefit from close access to University of Waterloo’s resources.
And Velocity is located in Kitchener-Waterloo, Canada’s most collaborative tech ecosystem. The Waterloo region is 2nd only to Silicon Valley in terms of start-up density, one in ten companies of the 2021 Deloitte Technology Fast 50 are located in Waterloo, and Google, Faire, and Shopify all have offices in Waterloo. Velocity residents are surrounded by experienced founders and tech talent. And even as in-person events disappeared, online events and private Slack groups kept the tech community actively connected.
IV. Velocity is located in Canada’s top tech ecosystem
“I was living and working in Berlin when we founded GroundNews. It was so clear that Velocity was the right place for us to build a company that I moved continents to join the incubator. The Canadian ecosystem is thriving. And being connected to the University of Waterloo gives us incredible access to talent”Harleen Kaur, GroundNews, CEO and Co-Founder
Centrally located with business friendly laws, strong infrastructure, and an extremely well educated workforce, the Waterloo region provides startups with a pool of expertise and talent to draw from. After all, Waterloo is the highest quality tech talent market in Canada and the fastest-growing tech talent market in North America. Canada also boasts a tolerant, open, cosmopolitan culture and an extremely high quality of life.
Beyond these fundamentals, the region offers particular benefits for startups. The small local market forces companies to think globally from the outset, while budding startups also benefit from a strongly collaborative tech community, recognized supports , — such as Velocity,, Communitech, Accelerator Centre Medical Innovation Exchange—, and proximity to the University of Waterloo: one of Canada’s top STEM university, the #1 university for founders in Canada, and largest source of co-op students.
It is no wonder three in four Velocity alumni companies elect to stay in the Waterloo region after launching.
Looking at 2022 and beyond
The combination of local investment in infrastructure combined with the attractiveness of the Waterloo region, will drive the continued growth of the local tech ecosystem.
The Innovation Arena, which received $28M in funding from the Region, the University and local donors so far, is conservatively expected to add 75 startups and 50 scaleups to the Waterloo region by 2028. The Southwestern Ontario Health Innovation Partnership, which recently received a $10M grant from FedDev Ontario, will help us build and scale a robust pipeline of health tech companies, linking the Waterloo and London ecosystems. The University of Waterloo, Canada’s leader in attracting and developing entrepreneurial talent, and the Velocity on-campus team built strong co-curricular programming that supported over 2,000 entrepreneurially-minded students last year.
And we will continue to endeavor to create the conditions to maximize founders’ success so they can focus on solving the greatest challenges in our world.