Written by Andrew Seale
Rubsun Ho saw the funding drought for early stage startups firsthand while running Caravel Law (formerly Cognition LLP), an innovative law firm where legal services were unbundled to make them more attractive to smaller businesses.
“There’s a bunch of companies that we worked with that went on to do really great things and we couldn't get them a sniff early on with a lot of the institutional investors,” says Ho.
But it was only when Ray Sharma at Extreme Venture Partner, a well-known Toronto venture capital fund, approached Ho about launching a platform called Crowdmatrix to help startups find capital, that he realized he could play a role in rewiring the funding industry.
The unassuming serial disruptor rubbed his hands at the opportunity.
“I told him I wanted to run it,” says Ho. Shortly thereafter he took the helm of Crowdmatrix, the alternative investing platform; going through a lengthy registration process with securities commissions in B.C., Alberta, Ontario and Quebec. Once they were on the level, they began the process of vetting deals to include on the platform.
“Traditionally, with most of these private equity type deals you’ve got to write at least a $100,000 cheque, if not more to become a partner,” says Rubsun Ho. “We’re putting it online, allowing (investors in) for less.”
Investments begin around $2,500 and Crowdmatrix aggregates these investors together into a special purpose partnership which then invests in the fund.
“The reason there are minimum thresholds for deals is it’s not worth it for them to do the paperwork and gather the signatures for small amounts of money,” explains Ho. “If there’s a more efficient way to find those people and organize them and communicate with them, then that excuse or reasoning goes away and you can take the smaller amounts.”
Crowdmatrix aims to tap into a whole other class of investors to bring new capital into the ecosystem.
“There's anywhere from 500,000 to 800,00 accredited investors in Canada so you only need a small number of them to start putting $10,000 or $20,000 a year into early stage startups or funds or private deals to get some meaningful capital employed,” he says.
The platform isn’t just focused on deals with individual startups, it also allows yield-based and overall fund investments.
“It's about capital formation in the most efficient matter possible,” says Ho. He points out that it’s surprising how many things have been transformed by the internet while capital formation has been left behind. “There's a lot of fin-tech companies trying to solve this problem,” he says. “The irony is: all these companies need the capital to start their internet companies but the internet hasn’t done a good job of using their technology to make (finding that capital) more efficient.”
Despite his Victoria, B.C. roots, Ho says after his initially building a business in Toronto he knew he had to do it again.
“Most of the financiers are here, a lot of the VC funds are here, the investors that invest in alternative assets are here – for a fintech company, you need to be connected into Toronto, that’s where all the major players are,” says Ho. “I’m never more than a phone call away from someone I want to talk to either in the financial community or the tech community.”
Photos: Cameron Bartlett (www.snappedbycam.com)