Inside Canada’s Next-Gen Venture Capital Scene With Matt Wilson Of Allied Venture Partners

Scott Kelly interviews Matt Wilson, Founder and Managing Director of Allied Venture Partners. He discusses what it is like to work for one of Canada’s largest angel investors that supports software and technology companies. Matt talks about their particular focus on infrastructure layer software and their investor profile composed mostly of US-based individuals. He also shares insights about the role of AI in their investment strategy, how they navigated through the COVID-19 pandemic, and what makes long-term sustainable companies thrive.

—

Watch the episode here

Listen to the Podcast here

Inside Canada’s Next-Gen Venture Capital Scene With Matt Wilson Of Allied Venture Partners

Scott, we have Matt Wilson, Allied VC and what an interesting background.

The reality is he used to be what a lot of VCs are doing. They’re starting out as angel investors making small investments and they graduate to become VCs and that’s exactly what Matt has done with Allied.

With the Canadian market view, I think’s really interesting because there’s so much going on in that Toronto market exchange that is really at that small level and interesting. I’m sure he had some great interesting finds as an angel, but I think that opens up the world.

He did. It’s interesting. Obviously, he invests throughout North America, but having that perspective of the smaller market in comparison to the US, not only can you find great companies in the United States, you can find great companies to in our neighborhood to the North.

I also think that that really interesting thing that we’re going to hear about is his perspective on that seed market, like how important that is and where you start to find something good in that seed area. I think that’s a really interesting look.

Yeah, that’s the thing. Obviously, a lot of these VCs are trying to find their niche and one of their niches is to get in early and help these companies early. I think that’s really the thesis of what Matt’s trying to do. There are hidden opportunities that are not on the coast and are not the name brand cities that you would normally think about

That’s a little theme that we’re hearing. We have from Matt Wilson, Founder and Managing Director at Allied Venture Partners. He’s in Calgary and he’s been there after coming out of the Toronto-based CPG startup space. We’re going to hear all about his VC and angel activity in Canada and the US.

I’m happy to introduce the next guest. Matt Wilson of Allied VC. Matt Wilson, welcome to the show.

Thanks for having me, Scott. It’s a pleasure to be here.

Introducing Matt Wilson Of Allied

Thank you. We’d always like to start with a little background before you got into the world of venture capital. Tell us about your background prior to starting Allied.

Yeah, I’m a former founder. I previously built and sold a CPG company in Toronto back in 2012. From there, I ended up moving out West. I now live in Calgary, Western Canada. For anyone who’s not familiar with the landscape up here, it’s just next to the Rocky Mountains. We’re like the Denver, Colorado of Canada. I moved out West in 2012 and started helping startups with their sales and marketing strategies because that was my background.

I wanted to stay connected to the local ecosystem. I thought I could help founders with their go-to market strategies. I was doing that during the day. I also discovered angel investing as a bit of a side hobby on evenings and weekends. There wasn’t much venture capital here in Western Canada, so I strategized and built most of my network South of the border. I would join Angel Networks in Silicon Valley venture funds based out of New York, Boston, etc., and some more established venture ecosystems.

As the years went on and I was working with founders, making small angel checks, building my investor network, I started to realize that all the founders I was working with during the day were also struggling to raise capital. I started bridging the gap between the two and essentially, what I would do is put together 1 to 2-page deal memos on the companies that I was advising with and working with.

I was sharing those with relevant investors in my network, like why I like the company, why I think it might be a good fit for their fund. I was able to make a lot of great introductions, help get some companies funded. From there, that really seeded the idea in the back of my mind that I’m seeing so much interesting deal flow now, I’m positioning myself as a super connector. Maybe I can start syndicating and doing some of these deals myself.

I went back to business school in 2018, got my MBA and then figured I would graduate, work at a venture firm for a few years and then eventually spin out and start my own thing. Unfortunately, I ended up graduating right in the spring of 2020 just as COVID was taking the world by storm. As you remember, nobody was hiring. Most firms weren’t even deploying capital. People were basically just going into their basements and not knowing what was going to happen to the world.

I continued to write small angel checks throughout the summer. Thankfully, my MBA capstone project was the business plan for an early-stage venture syndicate based here in western Canada that would invest across North America. I sat on the business plan for the summer, continued to write small angel checks, continued speaking to investors in my network, just trying to get a feel for the pulse of the market where people thought it was going to go.

Eventually, by October 2020, I said to my wife, “I have no idea what’s going to happen with this pandemic. I have no idea where the market’s going, but I know I want to be in venture. I know I want to do my own firm eventually, so I’m just going to launch and see where it goes. What’s the worst that could happen?” I ended up launching Allied Venture Partners in October 2020 and here we are now. We’ve deployed over $6 million into 21 portfolio companies and haven’t looked back since.

Share a little about your funds thesis. Obviously, you’ve got a good background in CPG and marketing. Talk about the types of companies you invest in, characteristics of the founders and check sizes, things of that nature.

We’re anchored around infrastructure layer software. I describe that as software that enables and democratizes access to large and rapidly expanding markets. Basically, what that means is we’re looking for platforms that anyone or any industry or any company can build on top of. Think about enterprise software platforms like AWS, a consumer side like a Canva or a Plaid and just enabling new markets to develop and grow and build on top of their software platforms.

We invest predominantly at seed to series A. I describe that as post-product, post-revenue. The company has an MVP in market, they’re generating $3,000 to $5,000 a month in revenue or $50,000 to $100,000 in annual revenue. Our typical check size is about $150,000 US dollars. We’re not leading rounds by any means, but where we like to come in is if you know there’s a lead investor, the terms are set, we can come in and then help fill up the rest of that round. Lastly, i’ll just mention geographically, we invest across North America, so Canada and the United States.

Founder Experience And Success Stories

What does the experience of the founders play into your decision or the team?

We like to see founders that have at least some type of domain expertise. For me, the best types of founders are founders who are solving a problem that they previously experienced or they’re scratching their own itch, maybe they were running a company previously and continue dealing with a persistent issue or they’re working at a company and had this persistent issue. Now they’re finally spinning out to build a company to solve that problem.

I love that. Yes, there is an argument to be sad for someone with completely fresh eyes who doesn’t have a background in the industry, but I think it’s important to have at least a little bit of domain expertise or surround yourself with people that have some domain expertise. Ultimately, you’ve got to be passionate about the problem that you’re solving. If you haven’t really lived through the problem yourself, it’s going to be much harder to build a solution for it.

Absolutely. Obviously, you’ve been investing as an angel and as a VC fund. Any success stories or any companies in the portfolio that you want to give some recognition to?

We have 21 companies, 12 of those have gone on to raise larger follow on rounds from some pretty prominent firms. Three of those companies are very healthfully profitable right now, which is great. We’ve had one acquisition. One of our early investments, ZenSports, was acquired in 2022 by a larger group. That was a great success story. It’s still early days, we’re a few years in, but we’re slowly making steps in the right direction.

Why Choose Allied Venture Partners

Let’s talk to potential lps or potential investors in the fund. Why your fund and why now?

When I moved out to Western Canada, I realized that there was a pretty large funding gap, particularly at pre-seed and seed. For those, again, who aren’t familiar with the local landscape, we’re the oil and gas capital of the country. It’s like Houston, there’s lots of money here, a lot of billionaires, a lot of accredited investors, but most of their money was made in resources and real estate.

I can’t blame people for wanting to only invest in what they understand. That’s totally fair. What I realized was a convergence of three critical forces here in the local ecosystem. The first force was we had a lot of local tech founders that were now looking to raise venture capital from experienced VC investors. We didn’t have a lot of VCs in the market at that time, so they were having to go South of the border.

At the same time, we did have some local investors that were getting more interested in venture capital but they were looking for access to deal opportunities for more established VC markets. They wanted access to the next Uber, the next Facebook or the next hot company out of the valley. Lastly, because now we’re Canada’s fastest growing tech hub, we’re starting to see more outside VCs and firms from the valley coming up North and looking for a trusted access point to deal flow from the local market here.

Those three forces come together. Local tech founders looking for experienced venture dollars, aspiring angel investors looking for access to established VC markets and then now outside VCs looking for access to our local market. We’re trying to position ourselves at Allied as the nexus between those forces. That’s partly why as well we invest across the United States and North America.

We have a lot of local angel investors here who’ve joined our network and they’re looking for deal flow opportunities from Boston, from New York, from Austin, Miami, Silicon Valley, Toronto as well, some of the more established VC markets. It all ties back to me solving the problem that I faced when I moved out West and wanted to start angel investing and get involved in venture capital and there really were no options.

Talk to me about your current LPs and what’s the profile of an LP or someone who’d want to invest in the fund?

We’re not structured as a traditional venture fund. We’re structured more as an angel syndicate, a hybrid between an angel network and a venture fund. Any accredited investor can join. Eighty percent of our investors are actually US-based. They come from the tech world, they’ve worked at tech companies or they’ve built tech companies. We have a lot of individual high net worth individuals. We have a lot of family offices.

Not so many larger institutions because in terms of their fund math, they need to put larger checks to work. That typically doesn’t work for us. Mostly high net worth individuals, people with technology backgrounds or aspiring angel investors that are looking to diversify their portfolios and get into technology, and then quite a few family offices as well.

Advice For US Investors Doing Business In Canada

As with yourself, I’ve worked with literally hundreds, maybe thousands of companies and you are obviously in Canada. What would you tell US investors looking or considering investing in Canadian companies? Obviously, there’s a little bit of rub there from time to time. Obviously, there’s a big argument of whether they should be a Delaware C-corps and all those other items that come up. What would you say to someone in the US looking at venture and all the companies in those markets you mentioned? Why Canada? Why Calgary?

I think first of all, the currency exchange rate right now is highly favorable to US investors. You’re essentially getting a 30% discount plus valuations are lower in Canada. That’s one thing to consider. For us specifically, like we’re pure venture investors. We’re looking for those 100x, 1,000x generational companies. We’re not looking to play venture beta and generate 3x to 5x returns. Every investment that we make, we’re looking for that grand slam home run winners.

I always tell particularly Canadian founders that are looking to build a venture-backable and a venture scale company, “If your plan is to raise mostly from US VCs and have mostly US customers, just start by incorporating in the United States.” Typically, like you said, that’s Delaware. We’re seeing a lot of venture scale Canadian companies, even though they might have headquarters here or staff here, they’re actually incorporating in the US.

I wouldn’t write off a company just because they’re based in Canada because when you start to dig a little bit deeper, you actually realize that a lot of them are actually incorporated in the US and obviously, US investors love that. It’s just one less hurdle to jump over and makes it so much easier for the fundraising process.

What The Market Looks Like In The Future

You’ve obviously been investing for a while. You invested during the pandemic and you regain your career there and before. The last couple of years, although I’ve been relatively good on the angel VC investing side, liquidity has been an issue. Where do you see that happening and where do you see the opportunities for you to find liquidity for your portfolio companies?

I think the bar has just gotten so much higher in terms of the types of companies that are coming to market and the types of companies that are getting funded. I think the same thing is true on the VC side of the table. The number of firms that are able to raise Fund 2 or Fund 3, we saw throughout 2021, it seemed like everything was getting funded, whether it’s a venture firm or venture fund or startups and crazy high valuations. We’re left now picking up the pieces because I think a lot of people have left the industry because now it’s actually getting much harder and you really have to dig in and start doing the real work.

In terms of liquidity, again, because we’re structured as an angel network, we have over 2,000 investors now globally in the network. It’s getting quite large, but again, because it’s mostly high net worth individuals and family offices, people’s financial situations can change. We had people that were investing with our group back in 2021 and they were doing every investment that we brought to the table. Now they’re taking a break or maybe their financial situation has changed.

When you’re running an angel network, you’re constantly refilling the top of the funnel and getting new investors. We have new high net worth individuals coming to market. Some people are taking a break or maybe they’re fully allocated to ventures so they don’t need to add any more to the asset class. Durability of capital is always going to be a challenge. We’re getting to the point now where we’re hitting that critical mass where we have new lps joining every week, so we’re constantly having people that are getting more and more interested in venture.

I think to your point, we went through a pretty tough time in 2022 where public markets were down, private markets were down, everything was just struggling. Going into 2025, venture has really come back. We’re starting to see a lot more capital flow into the market. AI has obviously helped a lot with that because people are more interested in investing in early-stage technology. AI’s made it exciting again I think with a lot of people that maybe got burned in crypto because crypto didn’t work out the way that they wanted to, but we’re actually seeing a lot of real use cases and real world applications with AI. People are excited again. They want it back early-stage companies and they want to get a piece of venture for their portfolio.

Role Of AI In The Investing Space

I’m glad you mentioned AI because I want to ask you about how that plays into how you operate the fund and how you invest with the fund. The lion share of my career was in Silicon Valley during dot-com boom. Obviously, there were some amazing companies. Amazon, Yahoo and Google were all created in and around that time.

Obviously, there were a lot of dot-coms that fizzled out. I was an early investor in Pets.com that had nothing left but a sock puppet at the end. Obviously, an idea that was probably a good idea, but a couple of decades too early. Tell me, how do you judge AI as an investor and how are you using AI to, to manage your portfolio or manage operations?

AI has obviously changed the game for everybody. Even in terms of diligence and research right now, I don’t need to hire a research analyst anymore. I can actually just go through myself and with whether that’s perplexity or Gemini Deep Research. I can pull a research report that even if it’s 80% accurate, it’s a great starting point to then go in when I’m doing market analysis or competitive analysis. That’s really helped me as a solo GP just to leverage my own abilities and my own time in terms of the things that I can get done.

As far as AI goes in the broader sense, I think like any new technology, we’re seeing a lot of early players rush to market, try and capture market share. The real question and the hardest part of my job is really trying to differentiate between what is a cool tool now versus what’s a long term sustainable company that will still be here in ten years.

OpenAI and all the foundational model companies are shipping new products and iterating every day, it seems, so it’s really hard to determine will these companies still be here in six months or will ChatGPT 5 or 6 totally upend their business. We’ve already seen that with the rollout of four and some of the other deep seek recent models, for example.

For me, I’m looking more so at the companies that have an established solution and established product in market. They’re solving a real problem for real customers. They’re generating revenue and now they’re able to leverage AI as a tool to enhance their business to totally improve and change the economic profile of the business. Maybe years ago, before AI, they were maybe on the cusp of what’s considered a venture scale company. Now with AI, their margins are better.

They’ve gone from like 65% to 85% gross margins. They’re now growing 20% to 30% month over month instead of 5% to 10% and they really fit that venture profile and they’re really starting to scale up. It’s time to maybe take a second look at some of those companies. In terms of like companies that are purely just AI software plays where they’re using open AI on the back end, I feel like that’s a really risky investment to make as an investor.

It again comes back to like what’s a tool that can maybe get to 7 or low 8 figures of revenue but getting to that $100 million in revenue, that’s what’s truly going to build a scalable generational company and generating meaningful exit for investors. That’s the hardest part of my day, trying to distinguish between what’s cool right now and here for the next 6 months and what can still be here in 10 years.

Long-Term Plans For Allied

Talking about the future, what’s your goals and aspirations for the future of Allied?

The longer-term vision for Allied, we started as a venture syndicate. The next step is to raise a small pre-seed fund. For us, as a venture syndicate, one of the biggest challenges is you need to reach what I call minimum viable consensus among your LP base in order to raise enough capital, fill your allocation and make the investment. As we know, typically the best investments in venture are the non-consensus investments.

Looking back at our portfolio, 21 investments over 4 years, our best performing companies are typically the ones that had the hardest time fundraising both themselves as a company and even us through our group. Trying to convince lps, “Come on board. This is an interesting opportunity here. I know you don’t see it right now, but just give it a few years.” By having a smaller pre-seed fund where we can write smaller checks, call it $50,000 to $75,000 at the pre-seed stage, get in earlier, start tracking these companies, build that relationship and that equity ownership.

As those companies break out, start investing, taking our pro-rata investing at seed and then ideally again at Series A, so 2 or 3 times over the life of a company where we can really start to build our overall ownership and get to that 5% to 10% mark. That would be my long-term vision for Allied. Also, just continue raising subsequent pre-seed funds every 3 to 4 years on that timeline. Having that co-invest model between the early-stage fund and the syndicate to really increase our ownership and gain meaningful ownership in those companies, that’s the longer-term vision.

Final Words Of Wisdom And Episode Wrap-up

Any final thoughts or things you want to share with the readers?

We’re always looking for new investors to join our network that are interested in seeing our deal flow. There are no membership fees, no cost to join, totally free and no obligation to invest either. You can see our deal flow, ask questions, and then we’re always looking for really interesting innovative companies. Whether you’re a company based in the US or Canada, we’re always looking for interesting early-stage software and technology companies. You can apply through our website at Allied.vc or just reach out to me directly on LinkedIn.

Readers, I encourage you to take a look at Matt online and on LinkedIn. Matt, thanks for being on the show.

My pleasure, Scott. Thanks for having me.

—

That was fascinating, Scott

It was.

I love that he was really focused on that looking at those seeded funding opportunities and really just checking him out and seeing where the biggest performers could come out of.

I think the other reality is you may say the concept is minimal viable consensus. I think everyone looks at minimum viable product and other factors in determining whether a company is going to be successful where they are from a stage standpoint. The reality is this has bit of a contrarian view and there’s a real opportunity. It’s when you zig when someone zags and that’s where you can find some hidden gems.

I think coming from that space of where if everybody jumps on the bandwagon and then because everybody’s jumping on the bandwagon, that’s a whole lot of pressure in maybe there’s not going to be as much success or now there’s too many cooks in the kitchen, too many drivers, if we were thinking of bandwagons, let’s keep our metaphors together, but then it doesn’t really perform as well. I thought it was really interesting that he said the best performers were non-consensus, were the ones that were hardest for him to get funding and yet they turned out to be the highest performers. I think that’s so interesting.

Honestly, I think that really makes a lot of sense if you think about it because a lot of in venture capital, it’s about just raising them as much money as you possibly can and not so much building as good a company as you can. I think when you go against that and you’re working with companies that’s like, “I don’t need to raise literally billions of dollars to get me to point A and then get me to point B.” That was really how you’re getting away from the consensus of raising as much money as you possibly can as opposed to building a company as great as you can.

In the beginning, he said they didn’t like to be the lead investor and I thought, “Okay,” like he doesn’t invest in these early stages, but that’s not what that means. He meant post-product, post-revenue and then he really likes to lead that round from that point forward. I think that’s really actually a little bit different than saying that you’re not the lead. You might not be the first investor in, but that doesn’t mean that you’re not leading on the choice and opportunity.

You may be leading that particular round, although you may not be the very first investor.

I also thought that was interesting and I think we’ve been seeing a little bit of a trend of this like building the markets or the businesses on top of software. That software, that tech stack, you’re building on top of something that’s really solid.

That’s the thing, too. Obviously, you want to make sure that a company is building something that’s sustainable with capital and sustainable without capital. If you can find something like that, then you’re basically just putting extra gas in the tank.

I think the big question right now and everybody’s mind, and I was just having conversations with one of a Canadian entity that I work with and they were hesitant. They were registering for Google Workspace and they were saying that they were not Canadian because they were like, “The prices are outrageous and everything’s going on.” I think that they’ve got a very big challenge of bridging the two markets between Canada and the North America right now and all of North America in general.

I think not so much because the reality is you can get a perspective. Matt is obviously investing throughout North America and in other places, but the reality is you can have a good perspective for being in Canada and still be aware of what’s happening in the lower 48, so to speak.

How did you meet Matt? I didn’t ask you that earlier.

We met through a mutual relationship of another investor that I knew. I’ve had him on my VC Fast Pitch a couple of times and he’s been a great participant in that and he always he is always willing to be out there. He is always looking and I love that part. He’s always on the hunt. We had our last VC Fast Pitch and he was active on the call and asking questions. I think good investors ask a lot of questions.

It was fun listening to Matt Wilson, Allied Venture Partners, just a fantastic individual and company. We’ve got many more coming up, right, Scott?

We do.

You’ll have to stay tuned. You’ll have to subscribe and we’ll be back next time with another interview with an emerging manager.

Important Links

• Allied VC
• Allied VC Linktree
• Allied VC on X
• Allied VC on LinkedIn
• Matt Wilson on LinkedIn
• Matt Wilson on X