Janet Bannister is a “legendary” Canadian venture capitalist, as that term is defined by the Globe & Mail. She was previously Managing Partner of Real Ventures. But Real wasn’t able to raise a new fund last year, so Janet went on her own to form Staircase Ventures. As competition increases in VC, they have increasingly thought of themselves as service providers, not commodity capital providers. Janet’s big innovation is that she bribes founders with dental plans. My conception of a strong entrepreneur is someone who thinks that having to wear dentures at age 30 is an acceptable price to pay for having built a unicorn.
I am partly kidding, she offers “Health & Wellness Programs”, I don’t think that includes a dental plan. Here’s Janet’s official “benefits package”:
VC-funded startup governance is mediated by sophisticated, complex contractual arrangements. The interests of backers from one round can be diametrically opposed to those of another round. Janet is adding another twist, whereby a founder could be swayed by her offer of funding, since it comes with extra personal benefits. She also plans to share one fifth of her profits with founders. She has said: “I don’t know of any fund in Canada or even North America that’s doing this.” Could that be because a third-party bribing an officer of a company is frowned upon under the principles of corporate governance? Also, since GP payoffs take years to crystallize (if ever), I’m not sure it’s such a great incentive. If a CEO has a winning startup, that should be reward enough. If a startup fails, what’s the point of rewarding them? These all sound like gimmicks. Sort of like gift cards, I think most people would prefer cold hard cash.
The great business mind Jodi Kovitz has said: “Janet’s ability to see the white space strategically is unparalleled.” I don’t know what this means either. Generally, VCs (and journalists who cover them) dwell on their handful of winners (or at least firms that appear to be winning - a list that can fluctuate rapidly in startupland). It’s always very unclear what the overall track record is. A 2017 article on Janet mentions she led investments in a dozen companies including FundThrough, GymTrack, Universe, Vantage Analytics, Plooto, Kooltra, LEAGUE, Hubba and TritonWear. She also backed Dream Payments, and Vancouver-based Instant Financial. Were any of these home runs? LEAGUE and BenchSci appear to be her clear winners - for now.
Here’s one company in Janet’s board portfolio that I’m pretty confident is a zero: Delphia. Delphia started as an app where you volunteer data about yourself and they use that data to inform their stock-trading and share the rewards. In theory, instead of your data benefiting Google and Facebook, you get to profit from your own data (and that of others). It’s an OK idea that might have warranted some VC-funded experimentation. But it needed strong marketers to get the ball rolling. Delphia has been at it since 2017, but has shown very little ability to get traction with individuals. For example, I’m on their mailing list. And they rarely ever sell me anything. In contrast, Wealthsimple promotes their services every week to me. Wealthsimple is exceptional at marketing, I have always said that. Delphia just keeps pivoting, variations on their basic theme, glomming on to the latest fad. Delphia raised $20m in 2018 and 2019 to get going. But here’s what I find astonishing: it managed to close a USD$60m financing in June 2022, well after the onset of the tech market crash. It slapped a new crypto-themed coat of paint and attracted the likes of FTX Ventures. I don’t know based on what traction. The last public datapoint I can find is that they had about 30k customers who entrust them with about $6m. They also operate a hedge fund with assets of between $100m-$200m, but that can’t possibly justify a $60m Series A. People with hopes and dreams are still able to raise money from people with PowerPoints. I say all this knowing that Delphia’s hedge fund claims to be up 73% net of fees with a Sharpe ratio of 4 in its first 17 months. BTW, people are always telling me: "Klev, you've got such a big brain." And I always tell them: "Wait till you see the size of my balls." Delphia has offices “worldwide, including New York, San Francisco, Toronto, and London.” In contrast, Renaissance Technologies only has offices in Long Island and New York. Sad!
A lot of the “overnight success” types of entrepreneurial stories common in the past 20 years should be understood as “lightning-in-a-bottle” phenomenon. Which is not to say that the people involved don’t have talent. But that circumstances and luck also play a heavy role. Janet is clearly a talented person, as you can tell from her attending the best business program in Canada, working for McKinsey and having the foresight to move into tech. But her big claim to fame - building Kijiji Canada - happened under the aegis and safety of eBay. There’s an anecdote about Kijiji Canada I find revealing. Per Sean Silcoff’s telling in a Globe article, she did a lot of the early work on the project. And they launched in the Quebec market first in February 2005. (An astute choice, it turned out.). “Then she went on maternity leave that April, and when she returned in November, the business was doing so well it launched nationwide.” I am not saying that executives are completely hands-off during parental leaves. And a business that runs itself is the ultimate test of managerial competence. But generally, hyper-growth startups require absolute focus from the leaders. After her Kijjiji Canada success, she was promoted to lead Kijiji Global. In what other countries did Kijiji succeed? Janet also launched Kijiji in the US, Belgium, Switzerland and Austria. Kijiji Global was active on three continents, but was never big in any country besides Canada and Italy, where it closed in 2022. Lightning-in-a-bottle, no Midas Touch. In addition to her talents and initiative, Janet was simply at the right place at the right time. And she had the perks and resources of a large parent company. Something most founders don’t have. Unless they find a benevolent VC bearing dental plans.