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Second chance hiring: A win-win strategy for startups and talent

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Second chance hiring: A win-win strategy for startups and talent

Startups, here’s how you can fill talent gaps and foster inclusivity in the workplace with Spotwork


In the startup ecosystem, we can all unanimously nod our heads to one truth: there’s just not enough talent to go around. 

Finding talent is fundamental to startup growth, yet many startups are missing out on qualified talent without realizing it. A staffing marketplace and workforce management solution, DMZ Innisfil startup Spotwork connects companies to reliable and qualified talent. By helping startups think outside the box, Spotwork can help your company champion diversity and inclusion while filling crucial talent gaps.  

Due to workplace bias, individuals who are justice-involved have historically been an underserved talent pool. However, criminal records can often result from petty offences and are not always an accurate reflection of a candidate’s ability to deliver. This can include traffic violations, disorderly conduct and narcotics — all non-violent crimes that were done without the intention to harm a person or property. 

Today, many Canadian companies remain unwilling to hire people with a record, even if they have the skills and qualifications for the position. The result? We’re overlooking roughly four million Canadians who have a record.

We sat down with the Co-Founders of Spotwork, Darren Perlman and Daniel Copeland, to learn more about how they provide second chances, how startups can tap into overlooked talent pools and the benefits of seeking out these candidates. Here’s what they had to say:

Let’s address the stigma around hiring people who are justice-involved. What biases and misconceptions exist, and why are they harmful to companies and talent?


“The prejudices that arise from hiring justice-involved individuals typically stem from misconceptions linking their past actions to current behaviour. This is harmful to not only the company but the applicant as well, as it undermines their potential for rehabilitation and growth. 

By embracing better hiring practices that are more inclusive to a diverse audience, companies can unlock a hidden pool of skilled individuals seeking a second chance.” 

Tell me about the moment that made you realize the need for Spotwork. What inspired you to create a platform?

“We noticed how our previous employers faced significant difficulties recruiting and managing a large workforce. Additionally, we saw a lack of support for marginalized Canadians to find meaningful work opportunities. This led us to create a solution that provides employers with a labour pool that fills in-demand frontline jobs.” 

How does Spotwork differentiate itself from traditional hiring solutions, and what inspired you to focus on connecting businesses with talent who have a history with the law?

“Unlike traditional staffing methods, which are usually biased, expensive and time-consuming, Spotwork is a cost-effective solution with cutting-edge technology and a streamlined hiring process. Our platform facilitates seamless matchmaking between skilled individuals and businesses. 

We offer a wide range of employment options, understanding the importance of flexibility in building a tailored workforce. Unlike agencies specializing in specific roles, our platform accommodates workers from diverse industries, career stages and skill levels to ensure a strong fit for the talent and business.”

For startups that may be on the fence about giving individuals a second chance, what would you say to them?

“These individuals bring unique perspectives, resilience and a strong desire for redemption to the workplace. Providing such employment opportunities fosters inclusivity, demonstrates corporate responsibility, supports rehabilitation and, above all else, creates a positive societal impact.”

Startups should consider expanding their horizons by hiring justice-involved individuals — it offers a chance for talent diversification, social impact and breaking the cycle of reoffending.” 

What steps are taken to ensure a fair and inclusive hiring process on Spotwork? And how can a startup use Spotwork to start the hiring process?

“Our platform has been designed with fairness and impartiality in mind. It utilizes algorithms that select the best candidates for job opportunities without bias. 

When using Spotwork as a startup, the hiring process is simple. All you need to do is create a company profile, and in just a few easy steps, you can post various job openings and view a vast pool of potential candidates to join you in your success.”

What’s the broader impact Spotwork envisions when fostering diversity and inclusion within the workforce? How do you see this benefiting startups and talent in the long run?


“Spotwork has a vision of creating a world where everyone has an equal opportunity in the workforce, regardless of race, age, gender identity or background. By promoting diverse and inclusive workplace environments, startups and talent benefit as it expands talent pools, guarantees equal opportunities, and demonstrates a commitment to inclusivity, ultimately attracting top talent.”

Any success stories you’d like to point to?


“2nd Time Around Tires operates one of the largest winter tire operations in Etobicoke and has successfully employed six workers through Spotwork’s Second Chances Program. 

Despite initial skepticism, hiring manager Rob Altbaum praised Spotwork for the effectiveness of its program and the quality of its workers, who showed genuine enthusiasm and commitment to their roles. He noted, ‘The workers who were coming out wanted to be there. This was more than just a job for them — it was an opportunity to establish a career.’”

Ready to transform your startup’s workforce and champion inclusivity? Click here to explore Spotwork today and connect with their diverse community of dedicated and talented workers.

 

If you’re inspired to follow in Spotwork’s footsteps, check out how DMZ can support your business to the next level. Incubator applications for the March 2024 cohort are now open. Apply here

Introducing DMZ’s new cohort of Incubator startups

Out of hundreds of applications from around the world, we’ve hand-selected 13 tech startups to join us for the next 18 months.

Some highlights of this cohort include:

  • Representation from diverse verticals: FinTech, EnterpriseTech, GovTech, Smart Automation and more
  • More than 30% of companies are women-founded and over 30% Black-founded
  • AI-enabled technology comprises over half of this cohort
  • Startups from Peru, Nigeria, Iran, India, the United Kingdom, Italy and Canada
  • A new selection process called Deep Dive sessions – where subject-matter experts undergo rigorous assessments with startup founders to evaluate each company’s focal areas, ensuring top-tier selection.

Throughout the program, startups will receive comprehensive support to execute their go-to-market strategy, acquire lighthouse customers, gain media exposure, explore global expansion, prepare for the next round of funding and much more. DMZ will be with them every step of the way, giving them hands-on coaching, access to our world-class community, professional services, business savings and more.  

Just when we thought we had seen the best of the best, our newest cohort has seriously raised the bar, leaving us in awe of their track records and potential. 

Keep reading and join us in extending a big DMZ welcome to Cohort 6!

Cleanster logo
On a mission to make quality cleaning services more accessible, Cleanster connects property managers and homeowners with professional cleaners. Their solution matches users with locally vetted service providers to clean their spaces at an affordable price and integrates with leading property management software for users to manage their property care operations.

Flowjin logo
Flowjin is an AI-powered tool that empowers content creators and businesses with the tools to drive social media growth. With Flowjin, users can easily identify high-performing content and quickly create customizable clips for social media, ensuring users maximize content and save time.

Handy.ai logo
Handy.ai is an intelligent SaaS platform that provides AI-powered virtual specialists to drive customer and employee success. Offering tailored solutions to clients, Handy.ai can be leveraged for customer success, employee engagement and partner success.

Hilo logo
HILO is at the forefront of revolutionizing Customer Experience (CX) in buildings with a one-stop, user-configured, personalized, and AI-enabled platform to improve and simplify people’s lives where they work and live. HILO empowers building operators to retain current tenants, attract new ones and streamline operations.

Loopify logo
Loopify360 is an all-in-one marketing and sales hub for small and medium-sized enterprises, offering a range of solutions and tools designed to find and retain customers. Their AI-powered marketing platform provides tailored solutions, delivering optimal return on investment.

PoliTraq logo
PoliTraQ combines stakeholder profiles, meeting notes and briefing materials into a single, all-in-one advocacy management system. Their solution helps public affairs professionals implement and manage advocacy campaigns, monitor legislation and track advocacy impact.

ReInvest Wealth logo
ReInvestWealth offers a cost-effective solution for small business accounting needs. Their professionally trained AI accountant provides daily bookkeeping and expert financial advice, addressing common pain points like slow processing and overlooked tax refunds. 

ShipVista logo
ShipVista streamlines multi-channel order management and fulfillment for online retailers. By offering real-time carrier rates, automated label printing, and integration with multiple carriers, it saves time and money while enhancing sales.

Subskryb logo
Subskyb is a premium vehicle-as-a-service solution that offers high-end vehicles for a monthly fee, covering insurance, maintenance and roadside assistance. Users can effortlessly select their luxury vehicle of choice and have it delivered, all while car owners earn by listing their vehicles.

Sugar security logo
Sugar Security makes advanced cybersecurity testing easy and affordable for small to mid-sized businesses. Through their cloud-based software, Sugar Security empowers businesses to identify security vulnerabilities in their organizations through enhanced vulnerability scanning.

Syzl logo
Syzl is revolutionizing the food industry by transforming idle commercial kitchens into bustling hubs for culinary entrepreneurs. Their platform enables food makers to find compliant, safe and flexible workspaces and empowers kitchen owners to leverage unused stations to earn extra revenue.

Vidboard.ai logo
VidBoard simplifies video production by creating AI-enabled avatar models. Their platform offers a cost-effective and scalable solution, eliminating the need for studio visits, multiple professionals, equipment and third-party costs.

Zagitas logo
Zagitas serves as a digital assistant in the office. Their solution automates manual business processes through the integration of AI, robotic process automation, chatbots and business intelligence technologies.


Want to join the next cohort of changemakers? DMZ is now accepting applications for its March 2024 cohort. Apply
here

 

 

 

Basecamp 2023: Unveiling this year’s winners

8 weeks, 36 students, 44 workshops, 4800+ hours working on startups and $30K in grant prizes


And just like that, DMZ’s favourite time of the year has come and gone. Seeing a new group of talented young entrepreneurs complete DMZ’s Basecamp program is always inspiring.

Basecamp serves as a nurturing space for innovation, allowing up-and-coming entrepreneurs to turn their business ideas into reality. After witnessing the growth of this cohort, we are confident that the future of innovation is bright and in capable hands.

Basecamp serves as an 8-week tech incubation program for students to unlock their potential, and collaborate alongside other youth innovators, industry experts and accomplished entrepreneurs.

Participating teams had the opportunity to pitch their startups to a panel of judges for the chance to take home one of six grants worth $5,000 to put towards taking their business to the next level.

DMZ was honoured to sit down with the winners to learn how the Basecamp program fast-tracked their startup’s trajectory.

DMZ Basecamp 2023 participants, ClearCardio, pose with their $5000 cheque

Clear Cardio

Clear Cardio is an affordable, accurate, wearable machine that instantly detects heart issues. Before starting Basecamp, the pair had no experience in the startup ecosystem. Basecamp provided them with the tools to nurture ClearCardio from concept to reality.

“[Basecamp] is the perfect way to get into the startup world, especially if you’re high school students like us, as the program is a beginner’s guide to everything business-related you need to kick start your journey, ” said Nima Vasigh, Co-Founder of Clear Cardio.

The PilotASD team poses with their $5000 cheque

PilotASD

Founded by two Toronto Metropolitan University students, PilotASD is a platform that simplifies finding tailored resources to make the future more accessible for autistic youth. Given their computer science background and experience with product development, the pair partook in Basecamp to better understand entrepreneurship and how to start a business.

“Basecamp set us up to thrive in Toronto’s entrepreneurship scene, and we’re delighted to be a part of it. We’re excited to see the journey ahead with PilotASD and where our future will take us, ” explained Cindy Fang, Co-Founder of PilotASD.

A group of students from startup NearMe pose with their $5000 cheque

NearMe

After years of isolation during the pandemic, three students came together to tackle the loneliness epidemic. NearMe is an innovative app that uses geolocation to connect post-secondary students based on interests and promotes in-person interactions. Looking back at their experiences in Basecamp, the trio found that the program served as a launching pad, equipping them with skills to tackle pitching, marketing and finances.

“The connections we made with Basecamp mentors gave us strategic insights on how we can elevate our startup. They helped us navigate topics that we aren’t necessarily getting taught in school,” said Rayan Ahmad, Co-Founder of NearMe.

DMZ Basecamp 2023 participants, Aidify, pose with their $5000 cheque

Aidify

This sibling duo is fighting for student success and academic integrity. Aidify is a typing analytics tool to help teachers detect plagiarism and assess student effort. Aidify highlighted how the mentors stood out as a remarkably influential part of the program. They were able to absorb startup fundamentals and found themselves inspired by their success.

“Starting a business was never a serious option we considered for our futures, but that’s changed now that we know the ins and outs of running a business. Basecamp has given us a ton of confidence knowing that it’s a real possibility for us,” said Charlie To, Co-Founder of Aidify.

PocketClass smiles upon receiving a $5000 cheque

PocketClass

PocketClass is a platform for extracurriculars that simplifies the interaction between parents and instructors through their integrated search, scheduling and payment features. CEO and Founder Lisa Huh plans to join DMZ Masterclass workshops to continue elevating her business.

“Basecamp is the go-to program for early-stage and aspiring founders. It acts as your compass in the unpredictable world of entrepreneurship, with resources, mentorship and a supportive community for your journey from idea to success,” explained CEO and Founder of PocketClass, Lisa Huh.

DMZ Basecamp 2023 participants, Capable, pose with their $5000 cheque

Capable

Although she didn’t reach the final pitching round, Jazel Dela Paz was selected by her fellow Basecamp peers as the lucky recipient of the Peer Choice Award. Her startup, Capable, aims to make adulthood easy by helping young adults confidently prepare, manage and navigate the responsibilities of adulthood stress-free.

“Basecamp allowed me to expand my network, introducing me to a strong network of startups and mentors. Their support, motivation and accountability were invaluable, especially during critical moments when I needed it the most,” said Founder of Capable, Jazel Dela Paz.

These students and their startups are shining examples of the innovation that spurs when passion, hard work, and support intersect. As we draw the curtains on yet another exciting Basecamp chapter, we’re confident these startups will make their mark in the entrepreneurial ecosystem for years.

Cheers to their success and a summer filled with learning, growth and success!

Looking to join Basecamp in 2024? Subscribe to our TechTalk newsletter and stay informed on program applications here. Until then, we invite you to check out DMZ Masterclass to master your business skills at dmz.to/masterclass

Rewiring co-creation: Learn how to become customer-obsessed 

We had the pleasure of chatting with Pat Sathiensamrit, the Founder of Lightster, to learn more about the startup, its global mentality and carefully crafted process that helps companies become customer-obsessed. 

Keep reading to learn more about Lightster, and Pat’s top tips for how companies can become customer-obsessed and build better products.

Can you tell us about Lightster and its mission?

Empowering companies to create better products for their target users, Lightster (Fall ’23) is a platform that connects tech companies with their intended customers to help guide their product development in 60 seconds. These 60 seconds represent our impressive ‘time to insight’ capability, eliminating the need for weeks of waiting to obtain actionable feedback. Our platform empowers companies to swiftly gather essential information, enabling them to make informed decisions and optimize their products quickly.

We aim to increase collaboration between companies and users while benefiting both parties. The benefits are twofold. Customers who sign up can share their insights while earning rewards, and companies create a direct channel of communication with their target audience to refine their products through surveys, chat messages and live conversations.

Despite being an early-stage startup, you’ve already set up shop with multiple partners worldwide. How has your experience been working across global markets?

By exploring new markets worldwide, Lightster has opened up untapped customer segments that allow us to unlock new avenues for growth. This has been made possible by securing strategic partnerships with organizations in countries like Brazil, Jamaica and Switzerland. Our partners have opened doors for us by providing us with connections, market exposure, and, most importantly, insights on the problems that tech companies globally face in their mission to become customer-obsessed. 

Given we work with startups and partners across the globe, we’ve found timezone differences can be both a benefit and a challenge. With our co-founder working remotely from Asia, we understand that finding meeting times that work for all parties can be difficult, but operating in different time zones can often give us additional time to complete deliverables. 

When one office closes, another one opens up, which allows work to be completed around the clock globally. With teams located across different time zones, we have the advantage of having our offices open around the clock. This enables us to promptly address any issues that may arise when our customers are asleep, ensuring efficient resolution and minimizing any potential delays. By having all hands on deck, we’ve made things happen even faster than before. 

For any founder who’s hesitant to open up to new markets, I’d encourage them to go for it. We’ve expanded our reach significantly by working with trusted global partners. Startups might be pleasantly surprised to discover how many companies are eager to tap into the North American market, actively seeking partnerships in the region to unlock new opportunities and expand their reach.

How exactly do you work with your clients? What is your solution offering them?

Lightster empowers companies to connect with their users, by allowing them to create instant communities of their target users based on who is available to provide input on their product while it’s being built. Companies connect directly with their target audiences to involve them in the co-creation process of products that were built for them.

Our clients get to connect with their users directly, providing them with an opportunity to voice their genuine opinions. We’re proud to enable companies like Nobul, Ecowiser, Between.co, Referral Candy, and incubators that support startups like DMZ to become customer-obsessed and build their best products yet on Lightster.

Lightster has grown its user base to almost 7,000+ users. What does this reach mean for your companies, and what’s next?

A more extensive user base translates to better success for our clients as they can connect to a broader set of target audiences faster. Companies that join Lightster instantly match with more users who fit their criteria and target audience.

Companies on Lightster will soon have more ways to connect with their users through a pre-launch product ‘feed’ where they can invite their users and potential users to join and co-create the product as it’s being built.

Could you share your top 3 tips for how companies can better serve their customers? 

  1. Involve them in the co-creation process. As soon as your idea sparks, founders should seek user input. Stats have shown that early involvement increases customer loyalty.
  2. When looking for customer feedback, ask open-ended questions and focus on past behaviours and events instead of asking “what if” questions. This approach produces richer responses allowing you to pinpoint and improve on real, proven challenges, rather than hypothetical scenarios. 
  3. Utilize the vast array of potential users on Lightster by experimenting with different types of representative behaviours and characteristics. You might be surprised; what you discover could lead to your next big idea.

Head over to Lightster’s website to learn more about how they are creating customer-obsessed companies. Want to learn more about how you can help Lightster on its journey? Reach out to their team at welcome@lightster.co.

Introducing DMZ’s new cohort of Incubator startups

Six startups who are transforming the tech ecosystem 


DMZ is thrilled to unveil its latest Incubator cohort of startups
. Of nearly two hundred applications submitted from around the world, we’ve chosen the top six ventures joining us for the next 18 months and will graduate as the Incubator Fall 2024 cohort.

These founders hail from a range of industries, including health tech, moving and logistics, insurtech and AI, but are all driven by the same common goal — wanting to grow and scale their businesses.   

Our newest cohort will receive comprehensive support to execute their go-to-market strategy, acquire lighthouse customers, gain media exposure, explore global expansion, prepare for the next round of funding and much more. 

This competitive program is for venture-backable pre-seed and seed-stage startups with a full-time founder, early traction and proven product-market fit.

Scroll to learn more about how these high-impact startups are pioneering new innovative solutions. 

Introducing our Fall ‘24 Incubator cohort:

 

Approva is an all-in-one home loan solution that makes the home loan process simpler and faster by providing users with the best deal on their mortgages in real time.

Compass is a holistic mental health platform that provides users with personalized mental health resources based on their unique needs, wants and identities.

 

MoveMate provides on-demand moving services that aim to disrupt and integrate the archaic and fragmented moving and delivery ecosystem by building a more comprehensive, connected and tech-driven moving and delivery marketplace.

 

Robbie Restoration Technologies partners with insurance companies to save on unnecessary claim costs in water-related property and casualty claims. By providing data-driven analytic insights, adjusters and claims departments can be in complete control of the water restoration process.

 

Sensaiotech is an end-to-end fire risk assessment solution. Using AI-embedded devices and cutting-edge transmission technologies, their solution monitors and predicts where and when a wildfire will occur and flags at-risk areas up to 5 days earlier.

Vaultt is a collaborative information management and communications platform that uses a B2B SaaS model and multi-channel approach for family caregivers. Vault helps patients, families and caregivers securely organize, store and share vital information within their circle of care.

 

Get to know more about our Spring ’24 cohort of startups by visiting DMZ’s Current Startups page. Are you an early-stage tech founder interested in growing your business? Discover how DMZ’s Incubator can help here

Meet Marcelo Noronha: The brain behind Mr. Turing’s AI business assistant

How Mr.Turing’s AI business assistant is saving companies time and money


Meet Marcelo Noronha, the unstoppable force and brain behind Mr. Turing, an AI (artificial intelligence) business assistant revolutionizing how companies work with their data. In an increasingly AI-driven world, Mr. Turing is a true game-changer, providing companies with a powerful tool to unlock the full potential of their internal data to save time, knowledge and money. 

Like Alan Turing, the trailblazing mathematician and computer scientist who laid the foundation for modern computing and artificial intelligence by cracking the German Enigma code during World War II, Noronha is pushing the boundaries of what’s possible with AI.

What sets Mr. Turing apart from the competition is its unique ability to manage all of a company’s information in one place. With its innovative Alan technology, Mr. Turing helps companies process, interpret, and manage the knowledge generated from their internal data more effectively than ever before.

So, who is the mastermind behind Mr. Turing, and what inspired him to create it? We sat down with Noronha to discover his inspiration, the unique benefits of their AI-powered business assistant, Alan, and the measures they have put in place to safeguard sensitive information. If you’re interested in the intersection of entrepreneurship and AI, read on to uncover Noronha’s insights and discover the next big thing in business technology. 


What inspired you to build Mr.Turing? 

As a tech entrepreneur for 20+ years, all the companies I worked for used image processing for document management. However, every company had a gap in delivering value to its customers; we would process the documents but only deliver 20% of the value from all the information contained within them. This always bothered me because it was a lot of work for very little delivery. At the time, the technologies weren’t ready to process, interpret, and generate knowledge. When I came across the AI technique of Language Processing, I realized that this was where I could change the game.”


Tell us how your AI-powered business assistant (Alan) works.

Imagine needing information across different types of media: documents, videos, audio, websites, meeting minutes, and other sources. Now, imagine all of this scattered across multiple platforms within a company. How would you access and leverage it to improve your business processes? It would be practically an endless search, wouldn’t you agree?

This is the challenge we addressed with Alan, a tool that can manage and generate knowledge for companies, integrate with any system and process any type of media. After processing, interpreting and integrating where the information is, Alan is ready to respond naturally to the needs of those looking for information. And the best part of all of this is that this knowledge is secure within the company, so they can make informed decisions on how to use it.


How does Alan differ from other data management solutions on the market?

Our differential is the ability to manage all knowledge produced by company teams in a single platform, Alan. We can make connections between meeting videos, emails, projects, dialogues, and communication platforms.


With the increasing focus on data privacy and security, how do you ensure that Alan adheres to data protection standards? What measures have you put in place to safeguard sensitive information?

At Mr. Turing, we place great emphasis on data privacy and security. To ensure that we comply with data protection standards, we have implemented a range of measures to safeguard sensitive information. These include encryption, regular security audits, access controls, and user authentication. We are committed to staying up-to-date with evolving data privacy regulations and continuously improving our security practices to protect our users’ data.


How have you leveraged natural language processing to develop Alan? Can you walk us through your approach to training?

We utilized natural language processing (NLP) techniques and cutting-edge AI models to create Alan. Our methodology for training and refining the model involves several stages:

  • Data collection: We obtain a diverse set of data from multiple sources, including text, audio, and video content, to ensure a comprehensive understanding of a company’s information;
  • Data preprocessing: The collected data is cleaned and preprocessed to eliminate irrelevant or redundant information; 
  • Model training: The preprocessed data is employed to train our NLP models, with a focus on comprehending context, semantics, and relationships between different pieces of information; 
  • Fine-tuning: The trained models are refined using reinforcement learning techniques, which enable Alan to enhance its performance by adapting to the specific needs and preferences of each client; 
  • Evaluation and feedback: Alan’s performance is continually assessed against predefined benchmarks, and any insights gleaned from user feedback are utilized to further improve the model.


With the recent advances in natural language processing and conversational AI, how do you see your assistant evolving? Are there any new features or functionalities you’re excited to roll out?

The recent advancements brought by OpenAI with ChatGPT have given Mr. Turing the missing piece of the puzzle. We expected this to come around mid-2025, and it has been accelerated, which is great news!

We believe that we operate at the process layer of companies, with the capability of integrating, processing, and interpreting all the information that flows within them. With this, we can more precisely control what the conversational part of GPT models can synthesize without attempting to fabricate any information from non-existent data.


How do you balance the need for automation and efficiency with the importance of maintaining human oversight and control over data management processes?

Finding a middle ground between the need for automation and efficiency and the importance of maintaining human oversight and control is crucial. 

This can entail utilizing automation technologies such as Artificial Intelligence to boost the efficiency of data management processes while also keeping a check on human oversight and control to ensure the accuracy and quality of the managed data. 

Furthermore, it is crucial to ensure that data management processes are well-documented and that policies and procedures are adhered to consistently to uphold data integrity and regulatory compliance.


Can you discuss future plans or goals, such as expanding into new industries or integrating new technologies?

We plan to expand into new industries such as healthcare, finance, law, and education. To remain at the forefront of AI and NLP technologies, we are enhancing collaboration features, developing advanced personalization features, and incorporating environmentally-friendly strategies into our operations and product offerings.


What advice would you give an aspiring entrepreneur in the AI space?

No matter the industry, the first step is to assemble a strong team with a common purpose. Then, it’s important to understand that building AI applications requires time, effort, and a great deal of persistence. Success cannot be guaranteed simply by utilizing AI technology, and it’s crucial to be ready to adjust and improve your ideas as you progress, given the rapidly evolving nature of the field.

Ready to save your business time and money with Mr. Turing? Click here to discover more >

The trickle effect: what the collapse of Silicon Valley Bank means for early-stage Canadian founders

Now that the initial shock has settled from the second-biggest bank collapse in U.S. history, we can start to process what the demise of Silicon Valley Bank means for the Canadian startup ecosystem. And while a majority of the Canadian tech sector will come out of this relatively scot-free, there will undoubtedly be a trickle effect that will impact founders north of the border.  

The downfall has created an environment of uneasiness for the startup community, and founders are concerned that this will spook investors. 2022 was a challenging year for startups, and while there were small glimpses that we were on the up-and-up, an event of this magnitude does not help the perception of the space. Just from a mere 2 weeks ago, founders are feeling an increased sense of uneasiness. 

It’s important to remember that the ecosystem has been fighting inflation and rising interest rates. In an industry where cash is king, founders were already hanging on for dear life.

So, what’s at stake? Stunting the growth of early-stage founders. In times like this, investors become more risk-averse and want to make safe bets, meaning funding supply at the top of the funnel becomes rare. While many Canadian founders may not have dealt with Silicon Valley Bank directly, losing a key player in the space translates to less funding to go around overall. 

Now is the time to double down on high-potential early-stage founders and their businesses to fuel their growth. Supporting startups when the ecosystem is on a high is one thing, but helping them through bad times is a whole new ball game. 

Early-stage companies are the lifeline to Canada’s startup and innovation ecosystem. At the DMZ we’re doing everything we can to equip our founders to be the next camel startup –  resilient, resourceful and balanced.

If you’re an early-stage tech startup looking for tangible support, learn more about our programs here. 

Mining a recession: how tech startups can strike gold

The reality is, being a startup founder is no longer sexy. Today’s economic climate is dramatically shifting across industries — especially in tech — from layoffs and inflation to rising interest rates and a looming recession.

We all know a recession produces a range of negative impacts. However, it also presents opportunities to revolutionize and transform for those who look. The key is to be resilient, adaptable, and innovative through changing market conditions. Think Microsoft, Airbnb, Slack, and Zoom, all hugely successful companies that started during recessions. There is no question that new problems will arise, but with that, new industries, products and services will come to life — and for an entrepreneur, that’s gold.

For a long time, a startup’s ultimate goal was to achieve unicorn status, characterized by rapid growth and high valuations. In today’s climate, operating with this mindset isn’t realistic nor sustainable — inflated company evaluations do no favours to startups, especially on the heels of a recession. Instead, companies need to embody the camel, a future-orientated animal that conserves its resources to endure harsh conditions and adapt to any environment. This concept was originally coined by venture capitalist Alex Lazarow, who encourages startups to focus on building resilience and flexibility to survive and prosper long-term.

Want to strike business gold? Here’s how to embrace the camel mindset to set your company up for long-term success.


Be bullish.

Problem: Startup originality is rare. As the number of tech businesses grows, it is increasingly more work for startups to differentiate from the competition and offer truly innovative products, services and value. A more saturated market means increased competition for funding, customers and talent, leading some companies to replicate already successful business models.

Opportunity: With a recession comes new consumer needs and new problems. Now is the time to be proactive and address these needs. Stand out to investors and tap into new customer segments with a unique offering.

  1. Look for untapped needs: Be more obsessed with the problem than the solution. Identify problems that still need to be addressed or solved effectively. Unique problems = unique solutions.
  2. Seek out diverse perspectives: Look beyond your industry and sector; connect with people with varied backgrounds and experiences to gain fresh insight.
  3. Experiment: Don’t be afraid to take calculated risks and experiment with different approaches.


Optimize your human capital.

Problem: Layoffs and financial insecurity may hit your company – a recession is the time to feed the winners and cut those who are underperforming. It’s easy for team members to feel discouraged and disconnected from a company’s mission. Your company is your community; nurturing your culture in challenging times is more important than ever.

Opportunity:

  1. Prioritize honest communication: Be transparent about your startup’s position; open communication is vital to trust. Involve all levels in finding solutions to create a shared sense of purpose and belonging.
  2. Recalibrate your team: Build the right data systems, structure and practice to improve quality assurance, program execution, and team communications. This also means a smarter team to help deliver what is needed now.
  3. Remove silos: Encourage cross-functional collaboration and create opportunities to connect through events, lunches, team-building exercises, etc. Measure success and failure as a collective.
  4. Show appreciation: Recognize and reward your team for their contributions. Boosting morale is key to culture, motivation, and productivity.


Get scrappy.

Problem: Funding has always been challenging to secure as a founder, especially with the recent boom of tech startups. Throw economic uncertainties into the mix, and you have a recipe for dry capital as investors like Venture Capitalists (VCs) and Angels become more risk-averse to investing in new startups.

Opportunity: Finesse your business strategy and get scrappy.

  1. Focus on your competitive edge: Execute a clear, well-defined value proposition that demonstrates your startup’s advantage in the market.
  2. Showcase your adaptability and leadership: Investors are interested in companies that can adapt to a changing economic environment. Highlight your leadership skills, from navigating the recession to making smart business decisions.
  3. Build relationships with investors: Establish relationships before seeking funding to understand their criteria better and increase your startup’s visibility.
  4. Consider alternative financing options: Now, many financing options are available for startups with lower barriers to entry and greater flexibility. These include crowdfunding, grants, revenue-based financing, debt financing, and incubator and accelerator programs like the DMZ.

Facing a recession as an entrepreneur can be daunting, but you don’t have to do it alone. Join a startup incubator like the DMZ and participate in a community of diverse startups, mentors, and industry experts. Access resources like office space, funding, mentorship, and networking opportunities to refine your business with expert guidance.

Check out how the DMZ can help propel your business forward, even in the most challenging times here.

Want to stay up to date on the latest tech news? Sign up for the DMZ’s Tech Talk newsletter.

What Startups Need to Know about SAFEs

This is a guest blog by MT>Ventures.

Fundraising is a thrilling time for any entrepreneur, especially early-stage founders. But with it comes numerous questions and challenges – most commonly, does my startup need a valuation before I can collect investment?

A SAFE (Simple Agreement for Future Equity) is a founder-friendly financing contract for startups in early financing rounds as an alternative to a convertible note. Rather than pricing the round, companies give investors the right to receive shares at a valuation set by future equity financing. 

While equity financings trigger the SAFE to convert into equity, other triggers, such as a liquidity event or dissolution, allow investors to receive their money back in cash. This flexibility makes SAFEs a beneficial funding strategy for early-stage founders like you, who are still determining how to value their company. 

Before we dive into specifics and must-know items about SAFEs, it is important to note that SAFEs are not the only vehicle used for pre-seed fundraising. Despite SAFEs being, as the name suggests (simple), not all investors use SAFEs as investment vehicles. SAFEs are still a relatively new legal invention with fewer guarantees which may result in some apprehension in the investor community. Utilized well, SAFEs can be an alternative to the Convertible Note that is more beneficial for founders and easier to understand. This article intends to teach you how and how not to use SAFE.

Why are SAFEs an important equity fundraising option for founders?

SAFEs simplify early-stage financing by

  1. Enabling you to raise capital when your company’s value is not certain.
  2. Using a standardized form that does not require significant modification.
  3. Minimizing the need for expensive and extensive negotiations.

SAFEs are a form of equity financing: As a founder, it is important to consider how much of your company you may give up with each SAFE you enter into. This is because the rate at which a SAFE converts to equity depends on several unknown factors. For example, if a SAFE converts to shares at a low valuation/share price, then the SAFE holders may end up with more shares in the company than the founder may have anticipated. As such, you must be aware of how future equity rounds will impact your cap table. 

The number of shares a SAFE holder receives on conversion depends largely on the structure of the SAFE. A SAFE can have a valuation cap, a discount rate, both or neither. If both a discount and cap are present, a SAFE will convert under the option that provides the biggest discount, not both.

How to negotiate a valuation cap

While a SAFE is mostly standardized, one of the few negotiable terms is the valuation cap. Setting a post-money valuation cap determines the minimum level of ownership that a holder will receive at a priced round of financing. You can calculate ownership using the following formula: 

As a founder, you may strive for higher valuation caps to retain more equity. However, investors may negotiate a lower valuation cap to ensure they receive a bonus for investing early. You should strive to find a balance to keep investors incentivized while ensuring you don’t dilute your ownership more than intended.

How to negotiate a discount rate

The discount rate is another common negotiable feature of a SAFE. It gives investors a direct discount on the price per share the SAFE will ‎convert at relative to the price that the priced round investors will receive. 

The discount rate for a SAFE is generally between 75-90% (reflecting a 10-25% discount). As a founder, you will want to negotiate a lower discount to retain more ownership. If you need urgent financing, the discount may be higher as the investor will have more bargaining power. However, keep in mind that an excessively high discount on SAFEs (30%+) can dissuade potential investors from investing in future rounds because the SAFE holders may be overrepresented in the capitalization table after a priced round of financing.

How to determine the SAFE conversion price on a pre or post-money basis

When the company closes a priced round of financing, a SAFE converts into company shares for SAFE holders. The number of shares a SAFE investor is entitled to is determined based on the conversion price (the valuation cap divided by the company capitalization, i.e., the total number of shares and options). You can do this on a pre or post-money basis. 

What is the difference between a pre-money and a post-money calculation? 

  • Pre-money SAFE: the company capitalization excludes the shares that would be issued to the holders when the SAFE converts. This makes it more difficult to determine your ownership dilution as each conversion price is calculated independently. 
  • Post-money SAFE: the company capitalization includes all shares issued to holders when the SAFE converts. You will better understand your ownership dilution as all SAFEs will have converted into company shares. 

The conversion price should be the same whether you calculate it on a pre or post-money basis. It is also important to note that pre and post-money only refer to the exclusion or inclusion of the shares subject to the company’s SAFEs, not the shares subject to the equity financing trigger.

Example: Post-money vs. pre-money valuation caps

ABC Inc.’s only outstanding securities are common shares comprising $6,000,000. 

ABC Inc. wants to raise $4,000,000 through a SAFE round. 

John gives ABC Inc. $2,000,000 on a SAFE with a Post-Money Valuation Cap.

Sara gives ABC Inc. $2,000,000 on a SAFE with a Pre-Money Valuation Cap.

John’s ownership:

John’s minimum ownership of ABC Inc. will be 20% before the equity financing.

Sara’s Ownership:

Sara’s minimum ownership of ABC Inc. will not be 33% before equity financing as the pre-money valuation cap does not consider John’s or Sara’s equity in ABC Inc. once their SAFEs convert. Sara will not know what her ownership % will be when she invests in ABC Inc.

SAFEs vs convertible notes

It is also common for startups to secure pre-seed or seed funding using convertible notes. A convertible note is a short-term debt that converts into equity. Investors loan money to the company, and instead of being repaid with interest, they receive preferred shares. Like SAFEs, convertible notes may have a valuation cap and discount rate. 

A key difference between a convertible note and a SAFE is that a SAFE does not have an interest rate or a maturity date (the date the loan must be repaid if there has not been a conversion into equity). The interest that accrues on a convertible note must be repaid if the shares do not convert by the maturity date, or the interest rate can increase the number of shares the noteholder receives when the note converts.

SAFEs are not debt. Under a SAFE, the company is not obligated to repay the investment unless a liquidity event or dissolution occurs. There is no guarantee that the SAFE will convert into company shares. Therefore, with SAFEs, the pressure to repay the investment as a maturity date approaches is not a concern, as it may be with a convertible note. SAFEs provide an alternative to convertible notes when a company is averse to debt. 

Interested in discovering more on SAFEs, Convertible Notes or all things startup? Email MT>Ventures at info@mtventures.ca.

The content of this article is provided for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. Readers of this article are advised to seek specific legal advice by contacting members of MT>Ventures (or their own legal counsel) regarding any specific legal issues. Neither McCarthy Tetrault nor the DMZ warrants or guarantees the quality, accuracy or completeness of any information contained in this article. The information in this article is current as of its original date of publication but should not be relied upon as accurate, timely or fit for any particular.

Your 2023 Manifestation Guide to Founder Success

This is the sign you’ve been looking for.

If you’re an avid social user — or even an occasional scroller — you’ve likely heard of manifestation. What is believed to have started as a Hinduism practice has now turned into a worldwide phenomenon trickling into the world of business.

So, what is manifestation? Simply put, manifestation is the practice of turning thoughts into reality. It requires you to be intentional with your emotions, beliefs, habits, and of course, actions. But it’s not as easy as it sounds.

Whether you believe in manifestation or see yourself as more of a goal-setter, there’s no denying the power of positive intent followed by disciplined action. Dreaming is one thing, but the day-to-day grind of a startup can be dark and challenging.

If you’re ready to hustle, keep reading to discover your 2023 manifestation guide to founder success.

Let your mind wander

Ever catch yourself daydreaming about your startup becoming the next big thing? What about securing a million-dollar funding round or landing your next big client? Don’t stop! Exercising your brain to get excited about the future is key to manifesting. Take a few moments each day to sink into your daydreams and discover what truly fuels your passion.

“When you’re passionate about your dreams, it doesn’t feel like work. Organize your life around your passion, turn your passion into your story and use that story to leave a legacy.” — Ahmer Rafiq, CEO, Souqh

Be intentional with your goals

How can you map your aspirations? Goal-setting looks different for everyone — but whether you create a detailed Excel sheet, draw up a mind map, or jot down notes in your journal, being intentional is key. Set SMART goals (Specific, Measurable, Achievable, Relevant, and Time-Bound) to achieve your desired outcome, and don’t forget to stay disciplined.

Fail quickly, learn fast

As a founder, there’s no question you’re going to fail — we all do! While it may seem like the end of the world, failure truly is the secret ingredient to success. Think of failure as a tool that helps uncover next steps by telling us exactly what’s working and what’s not. After all, Yin doesn’t exist without Yang.

“With every failure, I’m one step closer to success.” — Kelly Emery, Founder & CEO, Troop

Stay positive

Turn “I wish” phrases to “let’s do it” and “what if I fail?” to “when I succeed.” Focusing on the negative is easy, especially as a founder who inevitably hits what feels like every bump in the road. When you catch yourself drifting to that place of negativity, shift your mindset to practice gratitude and confidence. There’s nothing more powerful than believing in yourself and your business.

“Success is not defined by the end result – within every initiative, you will find an opportunity to grow, to learn and to push yourself one step closer to your goals and your success.” — Ahmer Rafiq, CEO, Souqh

Put yourself in the driver’s seat

Be accountable and disciplined. Of course, the most essential practice in manifestation is action. Joining an incubator like the DMZ helps hold founders like you accountable to your goals and provides a playbook to put dreams into action. Take ownership. You got this.

“I meditate daily, allocate time for sales calls, and have regular touch points with advisors who hold me accountable.” — Kelly Emery, Founder & CEO, Troop

 

Can you really manifest your startup dreams? Try it.

If you’re looking for a sign to join the DMZ, this is it. Check out our programs here.

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