Hosted by Rich Adam, Managing Director, Technology Sector, Raise delves into the remarkable journeys of Canadian tech startups and their approach to successfully raising capital.
Mallorie Brodie and Lauren Lake decided that together, they would build a software company after only just meeting. That same day, they agreed on a company name, an industry--construction, and set things in motion to become incorporated. Six years later, the rest is history. In this episode of Raise, PwC's Rich Adam sits down with Mallorie Brodie, CEO and Co-Founder of Bridgit Solutions to learn more about the company's unconventional start, raising over $9M in capital, and how preparation helped this young founding team attract initial investors.
Rich Adam: This podcast has been produced by PricewaterhouseCoopers LLP and is for informational purposes only. Content discussed is for general guidance on matters of interest and should not be taken as professional legal, business, or investment advice. Welcome to Raise, a new PwC podcast series where each episode showcases a Canadian tech entrepreneur and takes a deep dive into their fundraising stories. I'm your host, Rich Adam, Managing Director of the technology sector here at PwC Canada. We're excited to have Bridgit Solutions on today's episode. Bridgit is a Kitchener-Waterloo based SaaS company in the construction tech space where their mobile and web solutions are being used by contractors in the lake to help manage their products, excuse me, their projects and resources in real time. Bridgit has raised roughly nine million dollars to date through different grants and funding rounds. Co-founders, Mallorie Brodie and Lauren Lake met in 2013 at Next 36 Young Entrepreneur Program and started Bridgit together. Most recently, they were named to Forbes Manufacturing and Industry Thirty Under Thirty. Please welcome co-founder and CEO of Bridgit Solutions, Mallorie Brodie.
Mallorie Brodie: Thanks for having me.
Rich Adam: Alright, I gave a little bit of background on what Bridgit is, but I'd love to hear, in your words, how Bridgit came to be and how you and Lauren came up with the idea.
Mallorie Brodie: It was a definitely a non-traditional beginning to starting the company. Most companies when they're founded involves, you know, two or three people that grew up beside each other and they've known each other for twenty years and, you know, they have a technical background and all of these things and we were none of that. So we met the same day we incorporated through the Next 36 program, we didn't have a technical person on our team, but we were founding a software company. And then actually came up with the name Bridgit that night and decided we would focus on the construction industry that night, given both our family backgrounds and Lauren's Civil Engineering experience. So, it was a bit of an odd beginning but ultimately a match made in Heaven for Lauren and I who have now been business partners for about 6 years. And that very first night we decided to start a construction software company and we now have two products, fifty people, and, as you mentioned, we've raised over nine million dollars in capital.
Rich Adam: That's fantastic, congratulations. So, let's talk about the fundraising journey. I know within the nine million dollars there's some different pools of capital that have come out regarding grants and things. Let's focus more on the VC and the equity raising. Love to hear you share your experiences, perhaps from one of the earlier rounds, an angel investment, and then we can change focus and look at more of the institutional side, the 6.25 million dollar most recent raise you've done.
Mallorie Brodie: When we first did our initial angel round of financing there was a lot of unknowns to say the least, we were shocked that people would even consider giving us capital at that point. We didn't have a product we had built yet. We had done a lot of research in the industry, so we knew what we wanted to build, and we had also just graduated so there wasn't a ton of credibility that we necessarily going into the round with, but despite that what our initial angel investors saw to be unique was that we had done so much market research and they had seen so many founders jump right to building a product without really taking the time to understand an industry. And so, when we went out to pitch some of these angels that we got connected to through the Next 36, they were really impressed by that, and it just took getting one person to say yes, initially, for what was a ten thousand dollar check and a total of a two hundred fifty thousand dollar initial angel round, and then, as soon as they said yes, they, of course, have a couple of friends that they can then send an email to and get us connected to, and then it just really snowballed from there. I think the biggest thing that we did, aside from the research, to get that round done, was we were really clear with what milestones we were going to hit with that two hundred and fifty thousand dollars of funding. We had a very specific timeline that needed to achieve those milestones in. I think it just gave them the confidence that we knew what we were doing, we knew what the next most important step for the business was and they were willing to take a chance on us.
Rich Adam: So, you credit your extensive preparation for allowing you to accomplish what you wanted to with your angel investors, is that correct?
Mallorie Brodie: Yeah, absolutely.
Rich Adam: That's great, so, again, let's focus on the most recent kind of institutional round where you've got U.S. and Canadian investors that have come to the table. Love to hear a little bit more about that and the experience of talking to investors from both sides of the border.
Mallorie Brodie: It's definitely a different ballgame when you're more established, you have, you know, a long list of customers, you have revenue, you have credibility in the space that you're working in and so, this round actually came together probably even faster than the two hundred fifty thousand dollar round, even though it was six and a quarter million, just because of the connections we had been able to build up. So over the years, we really did a good at staying in touch with a number of potential investors, and so they knew of Bridgit, they knew what we were working on and it was a matter of really just getting to the right stage and having an opportunity that fit with their over-all investment thesis. And so, we actually decided when we went to raise the six and a quarter million that the VC's we talked to in markets outside of San Francisco seemed to be a better fit for our business, and so we focused the raise on Chicago, New York, D.C., some of these other markets to get early interest then ended up getting a Canadian lead, which helped kind of confirm the interest of the U.S. investors, and then the last investor we got in was Salesforce to kinda top off the round because of, again, sort of the interest we had-we had received to date. In terms of the difference between pitching U.S. and Canadian investors, construction's definitely a well understood market in both Canada and the U.S., I think they both see that it's a huge opportunity. So, there wasn't too much of a difference in their process, I think, in general, the U.S. diligence can be a little bit faster, they're willing to close deals a little bit more quickly and sometimes the Canadian market can just be a little bit slower paced in terms of getting the round done.
Rich Adam: Interesting. Two things that come out of that comment round being able to maintain relationships with different investors over time, between the rounds, and we've had other founders talk with that as well, is be discoverable so that investors can find you, but then also the importance of maintaining that communication with them because you want the outreach to investors to be a continuation of those previous relationships and conversations. Rather than having it to be you're starting fresh each and every time. Correct?
Mallorie Brodie: Absolutely.
Rich Adam: And then, the second point on that was around due diligence, and that's an area that, again, we always spend a little bit of time focusing on because it can be, some cases, a make it or break it aspect of the financing journey and you talk about U.S. investors perhaps being a little more quick, not loose on due diligence, but maybe prepared to go through it more quickly.
Mallorie Brodie: Yep.
Rich Adam: Would you expand upon that a little bit in terms of did it go slower than you thought in Canada relative to the U.S. it sounds like, and if so, why?
Mallorie Brodie: I think the initial commitment happens faster in the U.S.. So, there were a couple investors, in Canada that we had known for, you know, a really long time, but it still took them a lot of work up front before their commitment. And then in the U.S., I think they were faster to commit and then there may still be more diligence on the back end. So, I think it's, overall, it can maybe take the same amount of time, it's just how much work goes into a potential deal before you, you know, give a term sheet, versus how much work is going into the deal after the term sheet. So that seemed to be sort of the main difference between Canada and the U.S.
Rich Adam: Interesting. Any surprises on either side of that coming out of the due diligence?
Mallorie Brodie: I think the biggest thing that was new in the most recent round that we did was just the number of lawyers that were involved, and that's something that can definitely slow down a deal a little bit, so historically, with some of the smaller rounds, there's just one lawyer on our side and one lawyer on the investors side representing the group of investors. And I think because we had some bigger names in this round everyone wants their own representation to the extent that they can rather than sort of piggy-backing on legal. So, that can definitely slow things down a little bit, and it's important for everyone to feel comfortable in the deal so it’s not a massive problem, or anything, but it can definitely make things take a little bit longer.
Rich Adam: Any other differences that you found as it relates to the Canadian and U.S. receptivity to the pitches. Right? Again, something that we're hearing very often is that maybe Canadian investors are a little bit more cautious in their approach. You eluded to that fact that the U.S. were quick to make their commitment. Any other differences that you got in terms of talking to multiple investors versus the ones that, uh, you did end up partnering with.
Mallorie Brodie: So I don't think this necessarily applies across the entire U.S. market, but there's definitely a lot more flexibility on valuation for west coast VC's. So, VC's that are in the San Francisco area, in particular, versus the east coast VC's in the U.S. and Canadian. So, I think there's just, there's been enough of a track record for San Francisco companies really winning big, and so in the earlier rounds, they're just willing to give up term sheets with a higher valuation. They really take on the mentality that one in ten of their investments is going to work out, the other nine will fail, but the one that works out is going to win big for them. Whereas my observation, at least was on the east coast and Canada, there's a bit more of a balanced approach. It's not all the way to the side of being P.E. where they need every company to succeed and get, you know, a 3X multiple at the end, but I think they do want more of their portfolios to, portfolio companies to ultimately have success, even if it's not quite as massive as some of the big uh larger companies in San Francisco.
Rich Adam: Interesting observation. Thank you very much for that. Numerous founders will speak to us about their desire for smart money, meaning, investors who bring more to the relationship than simply capital. What were you and Lauren looking for from your investors beyond just their money?
Mallorie Brodie: Yeah, so, I totally agree that you are definitely looking for more than the capital and part of the reason we were staying in touch with all of these investors over the years was, not just so they knew about us, but so we had the opportunity to get to know them as well. Because it's not, you know, a three month relationship you're going to have with them, it's over many years. And so, we got to understand which of those investors were really aligned with what we were able to do, and which of them had, you know, really helped us over the years, and started making introductions to other investors or potential customers or things like that that could actually help drive the business forward before they were even our partners officially. So it was a great way to see who could be a good partner for Bridgit and now that we have the final group of investors, there's a couple different things that I think they bring to the table. On the Salesforce side of things, they're just very well connected throughout the entire tech ecosystem, but in particular, San Francisco, which is helpful for future investor introductions. We also integrated with their CRM Solutions, so there's a good strategic fit on the product side that made a lot of sense, and with the launch of their new Canadian hundred million dollar fund, they're really motivated to kind of get to know the Canadian ecosystem and introduce us to more people here as well. Then on the-the other side of the equation, so BDC, they're obviously very well connected in the Canadian market, so anything from customer introductions, investor introductions, they've been there to help us along the way, they've been a partner for a long time, and so yeah, there's kind of different ways that these-these investors can support, but I think the biggest thing is just them being aligned with the business, and if that's the case, then I think it can be a successful relationship.
Rich Adam: Excellent, thank you very much. On to some rapid fire questions. Ready?
Mallorie Brodie: Ready.
Rich Adam: What's your go-to resource for all things fundraising and venture capital?
Mallorie Brodie: Our angel investors are still the go-to resource on that. I know it's not an online resource.
Rich Adam: What's your biggest learning from your fundraising experience?
Mallorie Brodie: Staying in touch with investors throughout the years has definitely been the most helpful thing in getting a successful round together.
Rich Adam: Excellent, that goes back, I said, heard that from multiple different people. What would you do differently if you were to redo the process today, or if you look ahead to a future round?
Mallorie Brodie: I would send out a consistent email update to a much broader group of people. I think we kept a pretty tight circle of people that we kept in the loop, but I think there's always people that are interested in following our company. So, I would, you know, keep the updates going, but really just like expand that group of people that we were keeping up to date.
Rich Adam: What advice would you share with your peers, other co-founders, that are considering or currently doing fundraising?
Mallorie Brodie: I think if they haven't started a fundraising process yet, they should just really make sure that it's the right step for their business. There's a lot of hype around fundraising, and it has been the right choice for Bridgit, but I definitely think every company should consider that very carefully. Once you're on the train it's hard to get off, so, just making sure it's the right fit for your business.
Rich Adam: Excellent advice. Thanks very much, Mallorie. Congratulations to you, to Lauren, and the entire Bridgit team, and definitely wishing you much success and certainly will be following along from the sidelines.
Mallorie Brodie: Awesome, thanks for having me.
Rich Adam: Thanks for listening to Raise. You can get more details at pwc.com/ca/raise. If you enjoyed this episode and want to hear more, please subscribe on iTunes, Google Play, or your preferred podcast platform. Until the next time.