Canada's venture capital fundraising statistics are undoubtedly depressing, but that hasn't stopped Matt Golden from setting up Golden Venture Partners to invest in early stage tech companies.
Mr. Golden isn't simply throwing money blindly at this sector. He knows the space. Before setting up his own fund, he worked at BlackBerry Partners Fund, which invests in mobile startups. While BlackBerry is one of the major players in the mobile world, Mr. Golden wanted to set up his own venture to invest smaller amounts of money in earlier stage companies, which he says allows him to work more closely with the entrepreneurs.
Although his fund just launched, Mr. Golden is coming out of the gates with force. One of his first investments is Wattpad, an online book publishing site. While the amount of money invested isn't massive ($3.5-million among three co-investors) the deal is big because Union Square Ventures is in the mix. This New York-based venture capital shop has been behind such major players as Twitter and Zynga.
Wattpad's premise is simple: cut out book publishers by allowing authors to post their works online, for free. Call it the YouTube of books. While the company is still very young, it has had tremendous growth, reaching one million users this year. And these users are highly engaged, offering feedback to authors and some times even requesting that authors write about certain topics.
This engagement is caught Union Square's eye, but it is one of the core principles of their investing thesis. They also liked that Wattpad is connected to storytelling, which partner Albert Wenger said was a "very deeply engrained human desire."
It just so happens that Wattpad was connected to Union Square by Mr. Golden. He and Wattpad's chief executive officer, Allen Lau, got co-founded Tira Wireless about a decade ago. Although both have moved on from that company since, they stayed in close touch and now Mr. Golden's connections in the venture capital world are helping Mr. Lau.
(The third major investor in this financing round is W Media Ventures in Vancouver, which was founded by Boris Wertz who sold AbeBooks to Amazon a few years back.)
Although Mr. Golden sees some promise in the venture capital space at a time when most people are abandoning it, he acknowledges that you can't just start a fund a try to find a winner. Startups need mentoring and encouragement, he said, and he plans to devote himself to his investments.