Nearly 20 years after finding success helping startups build products, Canadian interface design firm Metalab it has started Metalab Ventures to invest in many of these product-led startups.
Serial entrepreneur and investor Andrew Wilkinson started Metalab in 2006, a company that has gone on to support product innovations from companies like Slack, Coinbase, Uber and Tumblr.
Metalab often works with startups, acting somewhat like co-founders, to help them get a product off the ground. Metalab then “sets them loose” to grow, CEO Luke Des Cotes told TechCrunch. Metalab had a record year in 2023 and was involved in the development of 40 products that came to market last year.
Venture capital has emerged over the past decade as a steady source of capital or when startups have something Big Tech wants.
With Metalab Ventures, the venture arm will play the role of a long-term value investor, essentially “putting our money where our mouth is,” Des Cotes said.
“We want to take a journey with them for the next 10 to 12 years,” he said. “We’ve been asked time and time again by founders when we’re going to invest, and sometimes we have, but it’s been very ad hoc in the past. Today, we are making it an official process.”
Metalab Ventures has raised $15 million in capital commitments for its first fund to invest in startups where strategy, design and technology are key differentiators.
“Product-driven” is how a product will be the differentiator for the business, Des Cotes said. Most businesses have some major component of success around how well a product is created and how well it connects with the user. Metalab Ventures is looking for founders who “believe in the power of design as a tool to be able to connect with users in a different and special way,” he said.
Des Cotes and David Tapp, head of partnerships at Metalab, are Metalab Ventures’ general partners and will invest in 25 to 35 startups at the pre-seed, seed and Series A stages. So far, the firm has made a handful of unannounced investments, he said Des Cotes.
The limited partnership composition of the new fund includes institutional, funds to fund, angel investors and founders of companies with which Metalab has worked in the past. Metalab is also an LP in the fund.
The company sifts through thousands of founders each year to determine who to help, and the same process has carried over to Metalab Ventures in how it evaluates investments, Des Cotes said.
When determining who to invest in, the process includes getting to know the founders and whether the company can add value. Metalab often draws on its 160-strong workforce for design, technology, product and research leadership.
“We’ve already operated very much like a venture fund,” Des Cotes said. “Now we’re working through that process to figure out what the product is, what the opportunity is, what’s the value that can be created here. When we believe in that business, we see human capital as our scarce resource that we can then deploy in those businesses.”
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