New Leaders Fund just what Canada needs

We all meet a bunch of people in our lives. Through work, hobbies, public service, swimming meets, cold GTHL rinks, blogging and the like.

Sometimes, those people are plain fabulous, and have all of the qualities that you admire. Dave Stein, founder of the new Leaders Fund, is one of those people. The Leaders Fund recently announced the formation of a new $100 million Evergreen Venture Capital fund. Given the team’s collective background, the focus is naturally on Enterprise SaaS companies. Joining him as a Venture Partner is Howard Gwin, a savvy, experienced member of the Canada/California ecosystem and someone who our firm has shared many a file with over the years.

As founder and co-CEO of Rypple (acquired by Salesforce.com) and co-founder of Workbrain (acquired by Infor), Dave understands what it is like to start a company. Of this there is no doubt. The hard part is knowing what to do next, and his two excellent local experiences put him in the class of folks such as Greg Kiessling, for example, in terms of good growth with multiple great outcomes. That’s excellent company. And not a dime-a-dozen in Canada, either.

Rypple was a straight trade sale, as most successful Canadian tech stories end up. Workbrain, however, first went public on the TSE circa 2004 well before that company joined the long list of global Infor targets. The Workbrain team, including Dan Debow and David Ossip, survived that not-always-perfect public company experience before going on to even greater things in each instance. That Dave and his network have personally been through both experiences will serve investee portfolio companies well.

Equally important, entrepreneurs will find, is his bedside manner.

Dave is the kind of person that people want to be around, and when married-up to the broad array of experience that Howard, Steve DeBacco and Gideon Hayden bring to the new fund, the team is going to be very competitive on the “soft” stuff when things come down to brass tacks in the 11th hour of term sheet discussions. There hasn’t been much regional VC competition over the past 10 years, and software Founders are going to appreciate having another call to make.

The fact that, I’m guessing, a substantial amount of personal capital has been invested in the new fund will only add to the appeal. Entrepreneurs want a good deal from their VCs, and they naturally need experienced people around the table, but if your VCs have a bunch of their own capital at risk, too, then all the better. The Leaders Fund isn’t the only group that fits this bill, but it represents another important box being checked off. And, if I’m not mistaken, there’s no VCAP money in this fund, which is an entirely different badge of honour and a positive development for the Canadian venture capital system as a whole. It demonstrates that high net worth investors don’t necessarily require a government lead order to have confidence in an investment strategy.

The challenge for the new firm will be the need to be patient on building the funnel of names to track. Firms such as Georgian Partners and OMERS have already backed many of the best SaaS stories across the land, and there aren’t legions of underfunded world class, “Series A-ready” Toronto-based software firms available at the moment. That’s why having a footprint in Atlanta, and experience in California, will be so useful to Dave and his colleagues over the next couple of years.

Congrats to the entire Leaders team from all of us.

MRM