Allied Venture Partners

Hello Partners,

As a current or prospective partner, this newsletter provides exclusive insights into our investment strategy, portfolio companies, and industry trends.

Thank you again for your continued trust and support,

Matt Wilson, MBA

Founder & Managing Director | Allied Venture Partners

Team Updates

• Our core team, including Steve, Melinda, Brendan, and Colton, is finalized.

• The Scout and Advisory programs continue to expand with several new members each week, providing quality diversified deal flow from across Canada and the United States.

New Deals

• We closed our investment in Ediphi. Their growth velocity has been exceptional as they pioneer a new category with over 80 enterprise customers and 13,000 users worldwide. Thanks to all those who joined the deal.

• Two investment opportunities are currently available via your investor dashboard. Please log in to access the respective deal pages.

• As we enter the summer slowdown, I'm dedicated to maintaining our H1 momentum and continuing to share outstanding investment opportunities. Stay tuned for more details on our pipeline deals.

Portfolio News

• Fonbnk continues to dominate the African payments and fintech landscape, with the team posting another strong quarter of near-triple-digit growth.

• Tiliter has successfully implemented its AI in Woolworths stores nationwide, enabling over 25 million interactions annually across thousands of retail locations.

• Bavovna AI had an exceptional start to the year. For security purposes, I cannot share details in this newsletter, however, participating investors can access complete information via your investor dashboard.

• Thank you to everyone who participated in our packed session at Inventures 2024, and thanks to the organizers for hosting such a fantastic event. I hope to return next year.

Industry Insights

The fundraising market remains challenging for founders and equally so for fund managers. In recent conversations with fellow GPs, I've noticed a concerning trend: managers are altering their investment mandates to satisfy institutional limited partners (LPs).

For instance, in an effort to appeal to local institutional LPs, I’ve noticed some managers adopting an overly narrow geographic focus. While this may satisfy LP mandates (who are mandated to invest locally), it can significantly compromise performance.

Instead, to achieve top-quartile returns, I believe VCs must maintain a broader aperture. For example, in smaller ecosystems outside major startup hubs, if only one (maybe two) companies are started each year that eventually yield venture-scale outcomes, the VC absolutely cannot afford to miss that deal over their 3-year deployment period.

Additionally, even if the VC sees every possible deal in the ecosystem, there’s no guarantee they will correctly predict and pick the winner at such an early stage (or get an allocation). Quite literally, missing a single deal can make or break the fund and firm's success.

Therefore, since a healthy and self-sustaining startup ecosystem requires the distribution (and subsequent reinvestment) of profits, I believe that the smaller the ecosystem, the broader the geographic focus must be for VCs (and LPs) to be successful.

Consider the LP

From the VC's perspective, it's essential to consider institutional capital holistically. For instance, what percentage of the LP's portfolio is allocated to venture capital? Typically, it's only a few percentage points. Therefore, I would next ask: based on what I know about the LP, are they investing primarily to drive returns or to satisfy a particular mandate?

If the latter, I would caution against skewing my investment mandate to qualify for an LP cheque, as this may limit my investment edge and subsequent returns.

Protect the Flywheel

Distributing and reinvesting profits are the driving force behind a healthy and self-sustaining startup ecosystem. To maximize ROI, managers must invest where they have an edge, and just like founders, VCs need LPs who align with that edge. Otherwise, if we handcuff the VC, ROI suffers, and the ecosystem stalls.

In my experience, family offices and high-net-worth individuals understand the importance of aligning with a VC's edge. In contrast, larger government-backed institutions are more prone to missing the mark.

As we navigate the complex landscape of venture capital, it's crucial to prioritize returns and avoid handcuffing VCs with narrow mandates.

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