By Ashwin Shingadia
Mistral Venture Partners, a unique enterprise nestled in the Glebe since its inception in 2012, provides seed and early-stage investment for start-up technology companies related to cyberspace.
Venture capital is a risky business, but Code Cubitt, the chief executive officer of Mistral, knows all about taking risks – he once took his wife and two young kids sailing for a full year. Lured to Ottawa from the Silicon Valley, Cubit now lives in the Glebe and his business is based in a new building at 854 Bank Street.
In 2011, the Cubitt family went sailing for a year in the Atlantic and the Caribbean on a 36-foot Beneteau named Why Knot. Cubitt’s wife, Janet, wrote in her log about the biggest risks of the trip – “no itinerary, no income, no formal school, no family friends and no house. . .people said we were crazy.” Their two sons, Aethan and Graeme, also wrote their own logs. The love of sailing caught on – Aethan, now 19, is training for the Olympics in Laser-class sailboats. His home club is Britannia.
Cubitt was recruited from California by Bruce Lazenby, then head of Invest Ottawa, when the local technology scene was reeling from the collapse of Nortel Networks. Cubitt graduated from University of Alberta in engineering in 1996, then worked in radio-frequency design for IBM in Toronto. In Washington D.C., he obtained an MBA from University of Maryland, then worked for Ciena and Motorola. He has 25 years of experience as a founder of companies, operating executive and investor.
Mistral “invests in start-ups that solve critical business problems, regardless of business model – enterprise software, B2BSaaS (business-to-business software as a service), marketplaces, etc. We partner with founders who value experience, commitment and the highest standard of integrity and respect. We look for clear value propositions that drive meaningful utility for end customers.”
Investopedia outlines how risky a business it can be. “For every 10 start-ups, three or four will fail completely,” it says. “Another three or four either lose some money or just return the original investment and one or two produce substantial returns.” But Cubitt insists he has a good formula for seed investors that is highly profitable.
His formula includes support from his investment team, 25 executive fellows, angel investors, the Business Development Bank of Canada (BDC) and other venture-capital investors from the US. His investment team includes managing partner and Glebe resident Bernie Zeisig, Pablo Srugo, entrepreneur in residence at Invest Ottawa, and Tiapeng Wang, an Ottawa-based venture partner. The executive fellows include executives from Shopify, Google, Nortel and IBM.
So far, Mistral has provided funds for some 32 start-ups worth $100 million and involving 120 investors. Among those are seven Ottawa start-ups: Better Software, CENX, FOKO, KLIPFOLIO, Rare.10, RELOGIX and REWIND.
When searching for founder entrepreneurs, Cubitt looks for what he calls coachability – people who are willing to listen and learn. “The vision of the future is what we buy into,” he says. “It separates the good entrepreneur from the bad. The ideal is a passionate individual, humble enough to take advice but able to find opportunities in the market.”
In deciding which start-ups to back, Mistral reviews from 600 to 700 companies each year and chooses to invest in four or five. “Integrity, trust, rapport is integral to a successful relationship,” say Cubitt.
At the initial meeting, Mistral decides whether it likes the team, its technology and the market. It then does due diligence on the product, the potential customers, the company’s structure and its business plan.
Typically, Cubitt invests from $250,000 to $500,000 in early-stage companies. “Our cap is $750,000, but the average is $500K.” As enterprises grow and attract other investors, Mistral invests $1 million to $1.5 million. More than half of the chosen start-ups have reached this stage and six have been sold. The companies get help along the way. “We are partners with the entrepreneur,” says Cubitt. “We roll up our sleeves and help them.”
Cubitt reads a lot – history, biography, non-fiction, business models and innovation. He has read Marcus Aurelius and even Donald Trump – “one has to balance and see both sides of the coin,” he says. On the question of “meaning of life” or “motivation,” he follows the Japanese IKIGAI teachings, which profess happiness through self-realisation by a balanced approach between the physical/sensual and the intellectual/spiritual, leading to the ultimate happiness of “contributing to society by giving back and teaching.”
Ashwin Shingadia is a long-time Glebe resident, a contributor to the Glebe Report and a former member of its board.