How an Angel Built a C$225M Global Ecosystem from Western Canada
Randy Stewart Thompson, a trailblazing figure in Canadian entrepreneurship and angel investing, talks about the various facets of Valhalla Private Capital.
We had a conversation with Randy Stewart Thompson. Mr. Thompson has donned various hats as a company builder, angel investor, angel group leader, and fund manager, and in 2017, he seamlessly integrated these roles into the establishment of Valhalla Private Capital.
At Valhalla Private Capital and as the Managing Partner of Old Kent Road Financial, he’s invested in 110 startup companies and funds, oversees direct investments for 125 angel members and manages 5 funds, deploying a substantial capital exceeding $225 million (CDN). Mr. Thompson's leadership has steered the collective funding of over 250 companies, amassing a significant investment portfolio exceeding $70 million since 2003. This impact extends globally, reaching 8 additional countries. His achievements led to his recognition as the National Angel Capital Organization (NACO) 2018 Canadian Angel of the Year and Startup Canada’s Investor of the Year in 2015.
Mr. Thompson is a sought-after speaker and instructor, sharing his extensive knowledge and firsthand experiences in the startup ecosystem. Over the last 3 years, he has engaged with audiences in 28 countries. He also owns 25% of Peterborough United Football Club (PUFC) since 2018.
We heard from him on:
His background and how he came to be in this space
Initial vision, strategy and evolving operating model of VA, including the overview of Base Camp, an entrepreneur training program
His thoughts on key models/businesses within his portfolio
Advice for aspiring founders and investors from Bangladesh and other new ecosystems
🔴 Listen on Spotify.
💼 Actionable insights
Here's a summary of our key takeaways and highlights from the episode:
In the early 90s, I unexpectedly transitioned from being the chief of staff for the technology minister to a pivotal role in a billion-dollar IPO. Despite my lack of a business background, I navigated the privatization of utilities and phone companies across North America. Following a hiccup, I ventured into entrepreneurship with my first startup between 1992 and 1996, experiencing the challenges of running a company firsthand. This led me to angel investing in 1996 with a mission to teach local investors about tech investing, a journey that spanned 20 years. I've learned that being a smarter entrepreneur benefits investors, and experienced investors recognize potential even in poorly run companies. This realization has shaped my approach to angel investing.
In many emerging startup economies, including Canada, a significant challenge for startups lies in the disconnect between investor behavior and their wealth preservation goals. Often, wealth is concentrated in a few families, and the second generation's focus is on preserving rather than growing it. Entrepreneurs need to navigate this landscape, showcasing how startups can align with wealth preservation objectives. This challenge is global, and the narrative around Silicon Valley's model doesn't always resonate. Bridging the gap in understanding is crucial for successful partnerships, emphasizing the unique value startups bring to both growth and long-term wealth preservation.
Entrepreneurs should structure deals that address these concerns, providing security for intellectual property and brand while aligning interests. For instance, a convertible note with a three or five-year term can be strategically designed to benefit both parties. Entrepreneur Paul Allen's experience with Ancestry.com illustrates this. He structured a deal with a deferred payment plan, ensuring the investor's first payment at the 24th month. This approach allows startups to prioritize growth over immediate payments, sharing in success as they become revenue-neutral or positive. In regions where startup acquisitions are less common, such creative approaches become essential for investor exits.
In the realm of emerging economies like Bangladesh, the Silicon Valley playbook reveals its inefficiencies. The disconnect arises when attempting to apply the standard valuation practices and rapid exit strategies to regions where wealth preservation for influential families takes precedence. It's a challenge to bridge the gap between the Silicon Valley language of massive valuations and the local context where such terms seem foreign. To address this, we need to shift our focus from Silicon Valley jargon to more relatable concepts. Crafting tailored deal structures, incorporating a mix of equity and debt instruments like venture debt, convertible notes, and safe notes, becomes crucial.
Family offices and high-net-worth individuals with multi-generational wealth operate distinctively from angels who have traversed global startups and returned to contribute to their local economies. This dynamic holds true across various countries, including Canada, the USA, and even cities like Cleveland, Ohio. The key lies in tailoring deals to the specific preferences of family offices, considering factors such as distributions, quarterly interest rates, and safer lending instruments. Investors may seek security in intellectual property and brand, with some even investing in the hope of a startup's failure to acquire it at a lower cost.
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