Venture studio bridges gap between startups, financiers

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This article was published 10/06/2022 (1433 days ago), so information in it may no longer be current.

While the province works on establishing the structure for its $50-million venture capital platform, the business development ecosystem is already expanding.

This week, North Forge Technology Exchange established an official partnership with the province’s first so-called venture studio — Datomar Labs Venture Studios.

Whereas an incubator like North Forge gives startups strategic advice and guidance and mentorship, a venture studio like Datomar will provide the actual technical assistance — writing the software, building the mobile app, building the back-office governance structure — as well as providing the early stage financial capital as well.

Dustin Refvik, Datomar’s CEO, said the company has assembled a talented team of about 14 people and hopes to double that by the end of the year.

“And hopefully we will have an exciting capital raise announcement in the next few weeks,” he said referring to the fact Datomar is in the final stages of a $5 million raise of its own that will provide that final piece to its venture studio model.

Venture studios have been around in various stages for some time, but have become increasingly popular in the last few years.

On Monday, the Federal Economic Development Agency for Southern Ontario (FedDev Ontario) announced a $10-million investment in Waterloo Accelerator Centre to launch its own venture studio.

It’s another indication of the realization that incubators can only do so much and that there is plenty of room in the market for additional expertise to be applied.

Scott McCrea, Datomar’s partner and chief operating officer, said, “That news is a fantastic validation of where the market is going with venture studios in this day and age.”

And rather than coveting the good fortune of others, Refvik said, “To me rising tide floats all boats.”

Refvik and McCrea are both serial entrepreneurs and have been connected with North Forge companies of their own. Before formalizing the venture studio concept, Datomar already was in the process of shepherding three different technology ideas through the early stages of development and hope to launch them into the market later this year or early next year.

Through that process it has built up a team with impressive talent using shared resources that they will also be able to deploy to North Forge clients.

Datomar’s relationship with the companies they work with will take many difference forms. It could develop the technology a company needs for a straight fee for service. Or it could take some or all of its fee — which Joelle Foster, the CEO of North Forge, said is “very reasonable” — in the form of equity in the company. As it works to establish its own financial fund to invest cash in companies, Datomar will also write funding and grant applications to access IRAP or provincial Innovation Growth Program funding or other funding sources, something that North Forge does not directly do for its companies.

Foster said her organization helps its clients navigate the twists and turns of starting and growing a company but it does not actually do the work.

‘We know Dustin and Scott and Datomar has been fully vetted by us,” she said. “It will be a trusted partner of North Forge.”

The financing piece is a key component of how venture studios operate, but while Datomar finalizes that the technology support it can provide can be an important boost to North Forge companies.

“I have heard nightmare stories of at least a half dozen founders where they have had to outsource online to other countries to create digital platforms or have software built where they have lost money and lost their IP (intellectual property),” said Foster. “Now they can work with someone local who has already been vetted by North Forge.”

Datomar is currently working with influencers to introduce an app called Brownie Points that encourages positive behaviour and fiscal responsibility for children aged five-to-12. With its top-notch in-house expertise, it has also developed an algorithmic trading platform for foreign exchange and futures and another digital tool to help large and medium-scale agricultural manufacturers streamline the sales and ordering process with distributors and consumers.

Datomar may acquire partners for those entities along the way or manage those businesses entirely on its own. Those companies could also become North Forge clients.

martin.cash@freepress.mb.ca