Q&A With Kevin Swan: Partner at iNovia Capital

by Bianca Bartz 2 years ago

HIGHLINE investor iNovia Capital is a cross-border VC investment firm that is passionate about backing great entrepreneurs, including founders who have come through HIGHLINE’s accelerator programs. While iNovia Capital’s core offices are in Montreal, New York and Calgary, the firm partners with entrepreneurs across North America, with a focus on seed and early-stage investments in digital media and SaaS companies. Their portfolio includes over 50 companies, including Beyond the Rack, Chango, AppDirect, Babble (acquired by The Walt Disney Company in 2012), Basis (acquired by Intel in 2014), LightSpeed, Collective, CoolIT Systems, Luxury Retreats, Top Hat, TripleLift, and Vidyard.

“As entrepreneurs ourselves, all of us have experience as founders or operators in early stage technology companies in the industries we seek to invest in,” iNovia’s profile explains. “In addition to capital, we bring these experiences as well as our respective domain expertise and networks with us to help the entrepreneurs we back succeed.”

“We manage relatively small venture capital funds, so that means we make our money when entrepreneurs and our investors make money (not on massive fees). We are not afraid to lead deals or invest alone. We like to make relatively small investments in seed stage companies that require limited capital to reach value creating milestones. Once these milestones are reached, we have the capability to follow-on in later rounds and offer capital to scale businesses and accelerate their growth.”

About Kevin Swan, Partner at iNovia Capital 

Kevin Swan fits iNovia’s entrepreneurial profile well. While his LinkedIn reads: “Followed the common path of beekeeper to tech VC with a few stops in between,” there has been nothing common about Kevin’s path. His entrepreneurial journey began at age 10 when he started a sports card business. At age 12 he began as a beekeeper at a large commercial apiary in Alberta, a job he kept for 15 years, operating over 3,000 beehives and producing up to a million pounds of honey per year. That gig supported him through his B.Sc. in Mechanical Engineering at the University of Alberta and M.S. in Engineering at Stanford University. He enrolled for an MBA in 2007, but dropped out because he “honestly, was just learning too much by doing.”

Prior to joining iNovia Capital’s Silicon Valley office, Kevin worked various roles in product management and operations, including a role as CEO of Nexopia.com, a pioneer in the social networking space and Canada’s largest youth social network. Actively involved in the startup ecosystem, Kevin has sat on the board of directors of Startup Edmonton, Accelerate Okanagan, Mitre Media Corp., Allocadia, and GrowLab.

Q&A with Kevin Swan

On Trends, Entrepreneurship, Moving to Silicon Valley, and Scaling Internationally

Are there any particular trends you have your eye on going into 2015?

There are a few trends interesting to me in 2015:

  • Connected Devices (IoT): We have hit a saturation point with connected devices. We can track and gather so much data, yet other than for some dedicated devices (ex., Nest) it is not yet apparent what will make it actionable. Our thesis is that an application layer on top of all of this data will emerge that may not be developed on the device itself. For this to happen, we would need to see some standardization across the data to enable the development of a few core APIs / platforms.
  • Enterprise SaaS: This is still a huge market opportunity. Cloud software still represents a single digit percent of the overall software market. If this isn’t a large enough opportunity itself, the emergence of mobile is accelerating adoption and creating new categories. They are also growing faster than any previous enterprise software companies have (ex., Slack, Domo).
  • Payments: While there is a lot of activity and some big players competing in the electronic payments market, we think what’s happening in the layer above is even more interesting. Retail experiences are evolving and this is being driven by technology. Current point of sale (POS) systems are being replaced by cloud-based solutions that are mobile, customizable and talk to other SaaS systems that companies depend on to run their stores. We have made a big bet in this market on LightSpeed. There is also the convergence of offline and online commerce towards an omni-channel approach that all retailers are approaching.

You’ve been entrepreneurial since childhood when you sold sports cards, and have since met countless entrepreneurs from industries that range from beekeeping to tech. Are there any particular traits you look for in founders before backing them?

As VCs, we’re in the people business first and foremost. I generally get excited when I meet an entrepreneur who is driven by something larger than building a company. Rather, a company is just the vehicle necessary to see their vision through. I think this is why business plans are a turn off to VCs. It shows the kind of approach to building a company that is more economically-driven rather than mission-driven. Now, don’t get me wrong, you need to build a solid business and have sound economics, but this is not the core focus at early stages. Rather, entrepreneurs need to identify a problem they want to solve, or a product they want to build, that doesn’t exist. It is a very personal endeavor and becomes the core of who that person is. This is necessary to attract other talented people, get through the hard times, and ultimately succeed.

Why is mentorship important?

I think a personal mentor is extremely important, but even more valuable if it’s in the form of a working relationship. Setting up a structured mentoring relationship is generally not fruitful.

I have been fortunate to have key mentors in different stages of my working life. The real value of these relationships developed because the mentors were willing to give me a chance to pursue something I was not really equipped to do at first. They became personal champions who were committed to my success and also had skin in the game. It’s through this alignment that real value is received.

For startups, I’m actually not that big on having advisors or mentors. I think that entrepreneurs can get a lot more value from their customers and target market. Your most significant mentors should be those who have skin in the game: your investors. Early on, there are generally a few key angels you develop a strong relationship with. This is why it’s so important to pick your VC wisely. Don’t partner with someone you wouldn’t hire, and make sure it’s someone you want to hang out with. I also think it’s significant for entrepreneurs to have a couple other entrepreneurs to stay connected with, as it can be a lonely journey.

What inspired you to make the move from Alberta to Silicon Valley?

This move was many years in the making. We lived in the Silicon Valley while I was attending Stanford, and while we came back for family reasons, the plan was always to head back. Once the situation and timing aligned for both iNovia and my family, it was time to make the move.

As a firm, we realized that the majority of our co-investors, company acquirers and partners were in the Silicon Valley. It is the mecca of the technology industry and I am not a believer that you can ignore that, nor think you can develop it somewhere else anytime in the near future. All of these factors combined with the observation that our portfolio companies spend significant time there moved us to open a Silicon Valley office.

We have also had a very good track record investing in the Silicon Valley. Basis and Vizu were both great outcomes for us, and our largest active portfolio company, AppDirect—which we first partnered with at the seed stage—is in San Francisco. We also have the distinction of not being seen as competitive, but rather complementary, to Sand Hill Road VC firms. Through these relationships we can access unique deal flow and partner with Tier I firms.

What are the advantages of Canadian startups having connectivity to markets like SF and NYC?

I don’t think it is anything unique to Canada, but rather any city outside of SF and NYC in North America. While I very rarely advise any company outside of these two markets to move there—given the crazy wars for talent—it is important to have a presence and build relationships because partners, customers and investors are all there. It’s also a very good measuring stick for your startup. In smaller markets, it’s easy to get complacent when you look around at other startups and see that you are one of the top dogs. Like a friend of mine once said, being the top hockey player in Kuwait is not that impressive. Obviously that analogy is a bit harsh, but you get my point.

As a successful startup CEO turned VC, what advice can you offer founders that are close to product/market fit and ready to scale internationally?

I never like to refer to myself as a successful startup CEO because, ultimately, we were not successful. However, I definitely learned a lot and came out of that experience much stronger. Most of this I credit to the people I had around me, both on the team and on the board. One of the cool things I’ve been able to witness is the success so many of the team members have gone on to have. We had a great team and investors who believed in us and continued to support us through tough market conditions.

Getting back to your question, there is a massive change in a company that goes from finding product/market fit to scaling. The team is going to drastically change. As an entrepreneur, you have to surround yourself with people smarter than you who are going to take over roles you were intimately involved in. You are likely going to raise money and have a ‘real’ board to deal with. Recruiting is going to become a core competency you will have to develop and scale. I could go on, but the crux of this is that you need to find partners (investors) who understand this process and the expected bumps along the way.

On that note, it is at product/market fit where you really need to understand the market opportunity and what it will take to capture it. This should define your fundraising/capitalization strategy.

On HIGHLINE

What excites you about HIGHLINE?

I am excited about the renewed energy around HIGHLINE. It is a bigger vision, has more resources, and is setting the bar higher as to what Canadian entrepreneurs and startups can achieve. I am also very supportive of the cross-border approach being taken. In order to be successful, entrepreneurs have to focus on the broader technology markets and realize that competition and partners can come from anywhere.

What advantage(s) do you see HIGHLINE offering over other accelerators?

HIGHLINE has, in a short period, received a lot of visibility and is quickly being recognized as the top accelerator in Canada. I think this is important as the only secret to success with accelerators is to attract the best talent. Being positioned as ‘the Canadian accelerator’ and having the support of entrepreneurs, investors and other eco-system stakeholders is an envious position.

The other big advantage is the connectivity with the US, specifically to Silicon Valley and New York. These are the two biggest markets in North America, and they can’t be ignored. It will raise the game of any entrepreneur who chooses to measure their company with this bar.

What impact do you foresee HIGHLINE’s accelerator programs having on the Canadian and/or global ecosystem?

While we all want to see an economic return from HIGHLINE—given that will lead to a sustainable model—a big impact HIGHLINE can have is on community and entrepreneurial development. I have already seen entrepreneurs from early GrowLab cohorts who may not have realized success with their companies, but who grew immensely on a personal level and are now thriving in other roles, most notably in other startups.

This is what we need more of in Canada: people who have the skills and experience to step in to startups and have an impact. We expect some of these people to become founders again, but behind every successful entrepreneur is a large group of talented, entrepreneurial people.