Why we’re seeing the rise of the venture capital A-list.
Deep-pocketed actors, artists and athletes are putting their funds and creative genius into Canadian startups
Investment from some of the most famous celebrities has been flowing into Canada’s startups, with entrepreneurs eager to add the allure of the rich and famous to their roster of investors.
Some of Canada’s most famous celebrities and athletes — Toronto rapper Drake, Vancouver-born actor Ryan Reynolds and NBA Houston Rockets player Kelly Olynyk — backed online Canadian bank challenger Wealthsimple Technologies Inc.’s funding round on Monday, which is believed to be the largest private technology investment in Canada. The celebrity-studded deal is the latest in a string of raises in recent years that featured investments from deep-pocketed actors, artists and athletes.
Early stage companies tend to seek out investors who can offer expertise and advice on the growth strategy. While some celebrities and athletes passively park their money, a growing number of others are adding more than just their star power to venture capital deals — they are lending their creative genius.
Wealthsimple’s oversubscribed round, led by U.S. venture capital firms Meritech and Greylock, clocked in at $750 million, propelling the online financial services company to a $5-billion valuation. It garnered interest from some of Canada’s best-known talent, including Drake, Reynolds, Olynyk, as well as Edmonton-born actor Michael J. Fox, NBA player Dwight Powell and NHL player Patrick Marleau.
When promoting its funding earlier this year, Wealthsimple approached Canadian celebrities and athletes to invite them to invest in the round. Wealthsimple cofounder and chief executive Mike Katchen was eager to bring on investors who share a passion for supporting and developing iconic Canadian brands.
“We were fortunate that when we got introduced to some of these folks they had heard of Wealthsimple, had heard of the brand, and had an affinity for what it is,” Katchen said. “And when we explained the mission of what we’re trying to achieve, it was pretty inspiring for them.”
With the celebrity investors on board, Katchen is hoping to leverage their social capital to promote Wealthsimple’s brand and tap into cultural shifts that could help inform its products and services. The startup markets its products to millennial-aged customers seeking out digital-first platforms and new ways of approaching their finances. Wealthsimple has expanded its services since its early days as a “robo-adviser,” launching stock trading without commissions, cryptocurrency sales and peer-topeer money transfers.
“A lot of these celebrities, if you think about what they’re good at, it’s tapping into the zeitgeist and knowing how to build a brand and be culturally relevant,” Katchen said.
“Being able to tap into that know-how knowledge of these celebrities as we think about how our products will evolve, how our marketing strategy will evolve — it’s quite exciting to us. Money is this unbelievably important thing that people don’t like to talk about, and that needs to change. We need to create new norms and new ways for it to be relevant in the cultural conversation to help people make better decisions.”
While celebrity and athlete investors are not new to Silicon Valley, funding rounds featuring famous backers are on the rise. The trend, cultivated by the likes of actor Ashton Kutcher and basketball star Michael Jordan, has seen Hollywood stars, professional athletes and social media influencers flocking to early stage ventures.
In 2019, celebrities and athletes invested nearly US$2.3 billion in startups, an all-time high, according to a report by Tide.co.
In the past year, several startups have garnered investments from NBA stars including Brooklyn Nets players Kevin Durant and James Harden. Wealthsimple backer Drake invested in Jeff Bezos-backed sports media company Overtime, and NBA star Al Harrington partnered with Toronto-based cannabinoid biopharmaceutical startup Avicanna to sell his Viola cannabis brand in Canada.
In March, Vancouver’s Dapper Labs raised US$305 million from a group that includes former NBA star Michael Jordan and more than a dozen current players, and Toronto’s Trufan, an audience engagement platform, raised $2.3 million in March, including investments from NBA Utah Jazz’s Derrick Favors, and Chicago Bulls’ Thaddeus Young.
Social media influencers are also jumping in on startups. In December, 17-year-old Charli D’amelio, Tiktok’s most-followed star with more than 114 million followers, invested in banking app Step as part of its $50-million funding round. In April, Tiktok star Josh Richards, a 19-year-old with more than 24 million followers, joined former Goldman Sachs investment banker Marshall Sandman and two fellow Tiktok influencers to launch venture capital firm Animal Capital.
One of the earliest Canadian startups to capture the attention of a household name was Toronto-based Snapcommerce Technologies Inc. (formerly known as Snaptravel), which helps travellers find hotels and flight deals through text message or online chats such as Facebook Messenger and Whatsapp. In 2018, two-time NBA MVP Stephen Curry backed the company as part of a Us$21-million funding round — one of his first investments through his fund SC30 Inc.
Snapcommerce chief executive Hussein Fazal, who co-founded the company in 2016 with chief technology officer Henry Shi, wondered how much involvement Curry would have as an investor in the company.
“I was obviously a little unsure of how involved Steph would actually be, and I have been blown away,” Fazal said. “When I talk to other entrepreneurs and they mention how other celebrities are involved in their startups, a lot of the time it’s just to include it in the announcement and nothing else.”
Since the basketball star bought into the company three years ago, Curry has been an active member among Snapcommerce’s investors. After the deal was announced, Curry visited the startup’s Toronto office while he was in the city with his team, the Golden State Warriors, to play against the Raptors. He took part in a discussion with employees and learned about Snapcommerce’s mission.
Since then, Curry has put the spotlight on the startup, wearing a Snapcommerce cap during the NBA finals when the Warriors played the Raptors. He also invited Fazal and Shi to join him onstage at San Francisco’s tech conference Disrupt SF to promote the company, and hosts regular summits and conference calls with SC30’S portfolio of companies, where entrepreneurs work through challenges and share ideas.
And being able to say that Steph Curry is an investor helps Snapcommerce stand out with potential investors and partners, Fazal said. In March, the company raised US$85 million led by Montreal-based Inovia Capital and British-american private capital firm Lion Capital.
“We work quite a bit with companies overseas and in China and Japan, and that gets them really excited — that Steph Curry is an investor in our company,” Fazal said. “It brings up some unique attention and opportunities.”
Canada’s tech ecosystem wants a piece of the celebrity allure. More than 16 professional athletes, 25 startups and 40 investors attended the first Athlete Tech Summit in 2019, which rebranded as the Athlete Tech Group after the pandemic forced live events to move online.
Randy Osei, founder of ATG and a former NBA player-manager, launched the summit to connect Canadian startups and entrepreneurs with athletes interested in investing.
“We’re seeing this rise of the athlete-entrepreneur, where athletes are not only putting in capital, but also putting their time, brand, network and resources into these investments so that they can grow,” Osei said.
The venture capital game is still dominated by men, even among the celebrity ranks. More than 400 people attended the summit, but only 22 per cent were women.
“I’ve been trying to connect with more female athletes, but it’s been hard,” Osei said. “(NBA player) Russell Westbrook makes $41 million a year, but no WNBA player will make that in their entire career. Female athletes are not afforded the same opportunity to invest because they don’t have the same resources.”