Lee Silverstone was at the Montreal International Startup Festival last year when a chance meeting changed the trajectory of his business.
Silverstone, the co-founder and co-CEO of Ottawa-based Gymtrack, says he was telling a stranger about his business, which sells a system of sensors and software that automatically tracks users’ workouts at the gym.
The man he was talking to “was swarmed with people, there were just people all around him pitching him ideas and I didn’t really understand why, we were just trying to talk,” Mr. Silverstone says.
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The stranger gave Silverstone his card and asked to see his pitch deck.
It was only after walking away that Mr. Silverstone looked at the card and realized whom he had been talking to: Dave McClure, the founding partner of 500 Startups, a well-known Silicon Valley startup accelerator and venture capital fund that invests in early-stage companies.
“We sent him our deck, met up with him for a drink later that evening and he was like, ‘Do you want to move to San Francisco and be in 500?’” Silverstone says. “It was Friday at this point and he’s like, ‘It starts on Monday.’”
Silverstone says he didn’t even have a passport at the time. But the next Wednesday he was on a flight to San Francisco, where he would spend the next four months.
“Every batch at 500 Startups, I think about 1,500 or 1,700 companies apply and they take 30. We didn’t even apply. It was the opportunity of a lifetime,” he says.
For Gymtrack, the first Ottawa firm to be selected for the accelerator program, it would open doors that the company’s co-founders didn’t even know existed.
“We had heard of venture capital but never thought it was a realistic option for us – it was always a pipe dream,” says Silverstone.
In February 2015, three months after Gymtrack completed the program, the company closed a $2.5-million investment round.
Silverstone and Pablo Srugo, the firm’s co-founder and co-CEO, say 500 Startups changed the way they thought about growing their business.
“It was a frame-of-reference change for us,” says Silverstone.
Srugo says that in Ottawa, “the message around (venture capital) is yeah, some people raise VC money and some people don’t and it’s a hard thing.”
He says that attitude change started on day one.
“You walk into 500 Startups and the first talk they have, the first thing I see, is this guy going up there being like, ‘Every single person here has a startup worth $6 million and every single person here is going to raise hundreds of thousands of dollars over the next week,’” he says.
It was a big switch.
“A lot of times, unfortunately, we got very small-minded and closed-minded advice here in Ottawa,” Silverstone says. “When we got to the Bay Area, we saw it was all wrong.”
The 500 Startups accelerator program is described as a “buffet,” offering talks by industry experts every day and frequent visits by venture capitalists. Every startup is also paired with a partner at the company who acts as a sort of mentor.
At the same time, “you’re still running your business,” says Silverstone.
The program also comes with some cash – 500 Startups invests $100,000 in every company it accepts.
For Silverstone and Srugo, the experience gave their business more credibility, landing them meetings with some of the largest gym chains in the world, something that might not have happened so early in the life of the company without the backing of such a program.
As with many Canadian endeavours, success in the United States led to recognition at home. Montreal-based Real Ventures was one of Gymtrack’s lead investors, along with White Star Capital, which has offices in Montreal, London and New York.
The program also gave them a chance to meet other entrepreneurs and build a strong network.
“When you go through a selection process and you’re weeding 30 companies out of 1,500 from around the world, you’re going to get serious people,” says Mr. Srugo. “Literally every single person there was, in their own way, spectacular. You’re learning things from everyone.”
Silverstone does have some advice for Ottawa-based companies that want to apply for a program like 500 Startups.
“Do something that people care about and do something that people buy or are going to buy. I oftentimes see people building stuff because they think it’s cool,” he says. “But if the customers don’t care, then no one’s going to care … build something that’s going to be big.”
WAVING THE FLAG
Gymtrack was the first Ottawa company picked to attend 500 Startups, but it wasn’t the first Canadian company to attend the prestigious accelerator program. Of the more than 800 companies to graduate from 500 Startups, just over a dozen have been Canadian. (The 500 Startups venture capital fund has also invested in some companies that weren’t part of the accelerator.) Here are some of the most notable Canadian companies to attend the program:
Rewardli: Founded by two Montrealers, it was a member of the very first “batch,” or cohort, at 500 Startups. Initially, it was a group-buying site for small businesses. It later changed its name to PerkHub and now helps companies such as American Airlines and Google manage customer rewards. Its co-founders recently launched an app to bring back doctor house calls.
Pinshape: Originally from Vancouver, it’s a marketplace for products that can be printed on 3D printers.
AgFunder: Founded in Toronto, it’s an equity crowdfunding platform focused on the agriculture industry. Accredited investors can use it to invest in agriculture companies and agriculture technology firms. More than $20 million has been invested through the platform.
Fuzzy.io: This Montreal-based company is one of two Canadian startups currently in the accelerator program. It helps developers easily add machine learning to websites and apps.
Remitbee: A Mississauga firm, it has developed an app that allows people to transfer money between devices and convert currencies at the same time.