The rise of Shopify, based in Ottawa, Ontario, has boosted Canada’s tech scene in recent years. But what’s it actually like raising money for an early-stage startup in Canada these days?
Zack Elias and Ross Correia, two Shopify alums, are a case study of the possibilities and challenges that lie before Canadian startups. The two cofounded their startup, Reactiv, last year and were candid about the process of raising money. It was hard, they said—day after day, pitch after pitch. Elias and Correia often felt, especially in Canada, that investors didn’t understand how ambitious they were. But they pushed forward.
“We’ve been in the ecosystem for ten years, and we had this pure conviction that this was what the market needed,” said Correia. “We believed we were the right team to do it. But, yeah, we bet the farm on it!”
Reactiv is an AI-powered platform that helps brands quickly launch and manage mobile apps. And now Elias and Correia’s fundraising perseverance has paid off, as Reactiv has raised $5 million in seed funding. The round was led by Bonfire Ventures, with participation from Foxe Capital and Anthemis, Daher Capital, and Alumni Ventures. Though none of those firms are Canada-based, the company does have some Canadian angel investors.
The startup may be Canada-based, but the company is looking to meet retail market trends that are happening everywhere. (And there’s AI in the mix, too.)
Reactiv operates right in the place where a wide swath of consumers are increasingly doing most of their shopping—our phones. According to Pew, around three-quarters of Americans report shopping online with their smartphones, a trend that’s even higher among young demographics and at the average surpassing desktops, laptops, and tablets.
The startup’s AI-powered platform handles everything from setup to ongoing updates. By personalizing customer engagement and streamlining maintenance, Reactiv aims to make mobile apps the go-to for brand interactions over mobile websites. Bonfire Ventures principal Jennifer Richard is bullish on the company’s newly-launched Reactiv Clips, calling its ability to give “online sellers the power to send free push notifications to customers who have interacted with an ad, even if they haven’t downloaded the app” a potential game-changer for customer acquisition costs (CAC).
Reactiv’s customers so far include Missouri Star Quilt Company, FragranceBuy, Top of the Mornin’ Coffee, and sneaker retailer Plus Shop.
“I think that the AI platform shift is exciting for VC because it is a reminder that every industry is subject to cyclical improvements based on emerging technologies and evolving customer expectations,” said Foxe Capital general partner Ruth Foxe Blader via email. “We’re seeing an explosion in commerce opportunities. Some will reach true venture scale. We believe that Reactiv is one of those.”
For Elias and Correia, the funding is a validation of where they believe e-commerce is heading—and not just to your phones (in 2023, mobile commerce reached $2.2 trillion), but towards increasingly personalized experiences.
“We’re going back to luxury shopping of the past—where you’d walk in, and they would open a bottle of sparkling water for you and ask you what you like,” said Correia.
Though these are global trends and the two have found investor-believers internationally, Elias and Correia remain devoted to their Canadian roots.
“We were actually pretty adamant about keeping Reactiv a Canadian business,” Elias texted me. “While fundraising, a lot of VCs asked if we’d move to be a Delaware corp. Shopify always said Canadian businesses didn’t need to ‘go for bronze’ like they typically do. We’re going for gold and keeping it here in Canada.”
ICYMI…Simbe Robotics raised a $50 million Series C round led by Goldman Sachs’ growth equity fund, as reported by Fortune’s Jessica Mathews. And if you were really under a rock, Alphabet-owned Waymo closed a $5.6 billion led by, well, Alphabet, which was joined by Andreessen Horowitz and Fidelity among others. I keep asking myself—how often do you see an in-house company raise outside capital? As always, I’d love to hear your takes.
Join us…You’re invited to Fortune Global Forum in NYC from Nov. 11-12. Speakers include seven-time Super Bowl champion Tom Brady (we will not be reenacting Netflix’s roast of the NFL legend) and Pulitzer Prize-winning composer Wynton Marsalis. More information here.
See you tomorrow,
Allie Garfinkle
Twitter: @agarfinks
Email: alexandra.garfinkle@fortune.com
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VENTURE DEALS
– Waymo, a Mountain View, Calif.-based self-driving vehicle developer and rideshare provider, raised $5.6 billion in Series C funding. Alphabet led the round and was joined by existing investors Andreessen Horowitz, Fidelity, Perry Creek, and others.
– AvenCell Therapeutics, a Watertown, Mass.-based cell therapy company, raised $112 million in Series B funding. Novo Holdings led the round and was joined by F-Prime Capital, Eight Roads Ventures, Piper Heartland Healthcare Capital, NYBC Ventures, and existing investor Blackstone Life Sciences.
– Agomab Therapeutics, an Antwerp, Belgium-based disease modification biotech company, raised $89 million in Series D funding from Sanofi, Invus, and existing investors.
– Read AI, a Seattle-based productivity AI company, raised $50 million in Series B funding. Smash Capital led the round and was joined by existing investors Madrona and Goodwater Capital.
– OneStep, a New York City-based smartphone-based motion analysis digital healthcare platform, raised $36 million in funding. Team8 and Vintage Investment Partners led the round and were joined by existing investors LionBird, Aleph, and 10D.
– Reflexivity, a New York City-based AI solutions provider for the investment industry formerly named Toggle AI, raised $30 million in Series B funding. Greycroft and Interactive Brokers led the round and were joined by Stanley Druckenmiller, Greg Coffey, General Catalyst, and SoftBank LatAm.
– Abstract Security, a Palo Alto-based security data fabric and analytics company, raised $15 million in Series A funding. Munich Re Ventures led the round and was joined by existing investors Crosslink Capital and Rally Ventures.
– DataCrunch, a Helsinki-based AI computing infrastructure provider, raised $13 million in seed funding. byFounders led the round and was joined by J12 Ventures and angel investors.
– Dash Bio, a Boston-based drug development tech-enabled services provider, raised $6.5 million in seed funding. Freestyle Capital led the round and was joined by Swift Ventures, LifeX Ventures, and others.
– Pharos, a San Francisco-based hospital quality reporting platform, raised $5 million in seed funding. Felicis led the round and was joined by General Catalyst, Moxxie, and Y Combinator.
– Hue, a San Francisco-based AI SaaS user-generated video content platform for e-commerce, raised $4.5 million in seed funding. Fika Ventures and Underscore VC led the round and was joined by existing investors Sequoia Scouts, The MBA Fund, Glasswing Ventures, and others.
– First, a San Francisco-based online prenup platform, raised $4 million in seed funding. Expa led the round and was joined by Springbank, Sarah Kunst, Springbank, Karman Ventures, and angel investors.
– Aether, a San Francisco-based rooftop solar AI platform, raised $2.5 million in seed funding. noa led the round and was joined by Y Combinator, Collab Fund, Amino Capital, and Climate Capital.
PRIVATE EQUITY
– Bridgepoint agreed to reinvest in Kyriba, a San Diego-based liquidity performance company, and will remain the majority shareholder. General Atlantic agreed to acquire a minority stake in Kyriba. Financial terms were not disclosed.
– Cumming Group, backed by New Mountain Capital, Tailwind Capital, acquired CLoSE UK, a Buckingham, England-based quantity surveying advisory firm. Financial terms were not disclosed.
– Insignia Capital Group acquired and merged Oxford Road, a Sherman Oaks, Calif.-based podcast advertising agency, and Veritone One, a Costa Mesa, Calif-based podcast advertising agency. Financial terms were not disclosed.
– Oaktree Capital Management agreed to acquire a majority stake in LED Group, which operates through ROBUS, a Dublin-based lighting products supplier for electrical contractors, and FuseBox, a Kilmarnock, Scotland-based circuit protection brand. Financial terms were not disclosed.
– Polaris Private Equity agreed to acquire a majority stake in 7N, a Copenhagen-based IT consultancy services provider. Financial terms were not disclosed.
– Simpro Group, backed by K1 Investment Management and Level Equity, acquired BigChange, a Leeds, England-based job management software provider for the field services industry. Financial terms were not disclosed.
EXITS
– Permira agreed to acquire a minority stake in K-Way, a Paris-based outerwear brand, from BasicNet. Financial terms were not disclosed.
FUNDS + FUNDS OF FUNDS
– Nautic Partners, a Providence-based private equity firm, raised $4.5 billion for its eleventh fund focused on the healthcare, industrials, and services sectors.
– Mubadala Capital, the Abu Dhabi, UAE-based alternative asset management subsidiary of Mubadala Investment Company, raised $3.1 billion for its fourth fund focused on middle-market companies in media, sports and entertainment, financial services, and other sectors.
