t’s a trap that many founders fall into. They’re so focused on research and development or building out a product that they fail to properly organize their new business venture. Important documents like shareholder agreements get misplaced. They also fail to track and protect valuable intellectual property. Two female founders from Ottawa have a possible solution. It’s called Fortress.Legal. In this episode of Techopia Live, OBJ publisher Michael Curran speaks with Natalie Raffoul about the SaaS startup. This is an edited transcript of that conversation.
OBJ: Tell us about yourself, Natalie.
NR: The community knows me as an IP attorney, a patent attorney here in Ottawa because I've been in that space for over 20 years. But this is a new foray for me into the tech sector these last couple of years with this launch of Fortress.Legal with Jen Raoul.
OBJ: As you indicated, you're quite well known in Ottawa and probably on a global basis for a lot of the IP work you do, but let's dig a little bit more into Fortress.Legal. Tell us about the business problem that you're trying to solve fundamentally with this startup.
NR: Well, it flows out of a passion of mine to work with innovative small and medium-sized companies. Fortress.Legal is an affordable multi-sided platform that helps innovative companies build and manage their IP, their contracts and their data and have instant access to them. A lot of that is not traditionally organized for the SME. So, we’re providing a platform where they can look at that information, gather insights on that information and build their data rooms for due diligence events. So many small, medium-size and scaling innovative companies are looking for funding. They're fundraising and grabbing those all-important tax credits. In order to do that, they need to be able to show that important IP and corporate information, particularly if they're an innovative deep tech company but also whether they're in the high-tech sector or the biotech sector.
OBJ: It reminds me that a lot of tech founders can get so focused on what they're doing that they might be missing some of the real fundamentals in creating their business that might drive long-term value. One of those fundamentals is IP, right?
NR: Well, that's it. So they're a deep tech company and they've got trade secrets or algorithms that they're keeping within a black box. Where does that information sit? How do they maintain that as secure? We know in such a competitive job market that key employees are coming and going. So, how are you managing that intellectual property? Downstream, you may want to evolve from a trade secret strategy to getting some patents on some of those key aspects. If you haven't been carefully curating that information and managing it properly, then how do you properly protect yourself years from now? And then also you get those questions from your investors and downstream from maybe those you're collaborating with: what's your IP policy? How do you protect your core technology? So being able to really manage that in a way that is scalable for the company is what we're here to do. We want to provide a platform that makes it easy for companies to have insight into that information without having to go through their attorney all the time. Because for the most part, if you are working with an IP attorney or a corporate attorney, a lot of that information is sitting with your attorneys for a very long time. How big do you generally grow before you hire that first lawyer in your organization? We often see that first lawyer getting hired when the company is about 100 in size, even more sometimes.
OBJ: I can imagine a startup might be building up to hiring that first attorney and professionally looking after the IP. If they're taking those notes and tracking things in Fortress.Legal, then it's going to be a lot easier when you phone the IP lawyer. They're going to have everything kind of documented.
NR: That's it. The ability to collaborate with the attorney right there in the platform so that when the CEO or the CTO has to now report to their investment advisors that information there is at the ready. You can run a report and find out, okay, you know we have a couple of patents, we have a couple of trademarks. You know, this is a line item in our budget. You know, the board's going to want to understand a little bit more about that. What about those all-important contracts? I mean, a form of intellectual property for the company is those contracts. And when you're talking to investors, they want to see those top five customer agreements. Where are those sitting? And where are the executed versions of those agreements? All too often, we have contracts, but we don't know where those signed versions are. It is about having an ability to manage those intangible assets of the business properly and that's what Fortress.Legal helps you to do.
OBJ: Absolutely. It's a very real world problem. Let's talk a little bit about the company itself. It was founded about two years ago, but give us a sense of when it was founded, how many employees you have, if you've secured any customers, and any past or future funding?
NR: We started early in 2020, hired our first employee that year and started to develop and actually build out the product. We released our first version of the product this past fall. At that point, we had two developers on staff and now we've grown to a team of seven. We ended up fundraising this past fall and raised just over $1 million of seed funding, which was exciting for the company. And we are also leveraging support from IRAP so that's been great. So all told, we're north of $1 million in terms of funding, which is fantastic. In terms of customers, we're proud to say that we've got a couple of law firms using the platform already with a number of companies. Now, we’re at about 10 companies on the platform and we've secured a number of other partnership deals to bring on other customers. It's early days for us, but we have a lot of exciting plans in terms of the way we see our company growing, is through a partner strategy. It’s about working with law firms to help them onboard the companies they work with to have a more seamless working relationship with them. Same thing with incubators and venture capitalists: those that are working with companies where they really want to be able to assess those companies quickly, look at those data rooms and make sure they're managing their IP properly. We want to be able to partner with those organizations.
OBJ: That's a great overview of Fortress.Legal. Natalie, I want to dig into something that I know was important for you. Recently, it was International Women's Day. I think one of the things that makes Fortress.Legal unique is that it has two female founders. Is that an important differentiator for you, Natalie?
NR: I think a core principle, a core strategy, is really diversity. We want to have a diverse team, diverse perspectives, diverse backgrounds, and of course being two women at the helm we want to have women within the organization and we are hoping to have at least 50 per cent. In fact at this point, it's more like I think 80 per cent women, which is great. Our executive team, our head of finance and our head of operations are women. I think that's really important. That's really what all of this is about in terms of encouraging women in executive roles and on boards and getting those diverse perspectives.
OBJ: Natalie, you've overcome some gender barriers or obstacles over the course of your career. You're trained as an engineer and you’re educated as a lawyer, of course. When we think of the local tech sector and, quite frankly, the global tech sector, we see an under-representation of female leaders and female founders. Do you feel that enough is being done to support this diversity of founders in the local tech sector?
NR: I think we can always do more. Shout out to Invest Ottawa, which is doing great work with the SheBoot program. We were part of that this past fall, and I think that was a big factor and such a successful early stage raise for us. But the numbers for female founded organizations in terms of VC funding is down. It's down from a high of 2.8 per cent of VC funding going to female-led companies, now down to 2 per cent. So, there's a lot of work to be done in encouraging women to step up to the helm. You don't need to come from a tech background to be at the executive level of a tech company. We see folks coming from very diverse backgrounds getting into the tech sector and we want to continue to encourage women to be in this sector because it is growing.
OBJ: I want to peer into the future of Fortress.Legal. What types of milestones is Fortress.Legal trying to achieve this year?
NR: We're looking forward to really rounding out our partner strategy. We're really looking for those relationships with incubators, accelerators, law firms, funding organizations that want to help the SMEs, the startups, the scale-ups that they're working to grow their business, increase their value. Intangible assets are really at the core in terms of the value of a business, and we really want to be at the core of that. We can really help companies scale in that way.
OBJ: That's never more true than when it comes to intellectual property. In Ottawa's tech history, you've seen some firms unfortunately that have gone under and yet the value of their IP assets has been in the tens of millions, hundreds of millions right now.
NR: They've lived on. We see that with success stories at Audible and Kinaxis and they're fantastic. There are other local stories like Mosaid and WiLAN who are in the patent licensing business, but certainly IP is a core component and it's not just about patents, but other forms of intellectual property as well that you need to manage properly.