A couple of months ago, I blogged about a report from the investment firm LetkoBrosseau, titled “Canada Has Cut Back on Investing in Its Greatest Asset—Itself.” This report highlights how minimally the Canadian pension system is investing in Canada. The blog post quickly became one of my most popular in recent times.

Shortly after, the founders of LetkoBrosseau reached out to me and asked if I would be interested in participating in an open letter addressed to our Minister of Finance of Canada and the Provincial Finance Ministers. After reading the draft, I replied with a resounding “yes” without much hesitation. Over 100 business leaders in Canada also agreed to participate. You can see the coverage on The Globe and Financial Post.

This is the slide from the original report that caught my attention and summarizes it well:

I believe that Canadian pension funds are among the best in the world. Our pension funds are adept at finding some of the best investment opportunities globally and generating the best “returns” for us. They are doing the job they were tasked with doing.

However, while they generate the best “returns” from their investments, they are not asked to consider the economic impact of the “feedback loop” highlighted in green. This feedback loop encompasses the second-order effects and its economic benefits from investing in Canada. In other words, “the best returns to Canadians (the pensioners)” are not necessarily the same as “the best investment returns.” More importantly, these two aren’t mutually exclusive. With some fine-tuning to the investment sourcing process, for instance, achieving the best returns for Canadians shouldn’t come at the expense of achieving the best investment returns.

To be clear, I am not in a position to tell pension funds where or what to invest in, let alone suggest they invest solely or primarily in Canada. They are the experts and have been performing outstandingly. However, we need to change how we evaluate investment returns to include the second-order effects of investing in Canada. This adjustment would encourage pension funds to seek out investments that serve pensioners best when these effects are considered in their evaluations. I believe no one would argue against this approach.

You can read the open letter here:

Dear Minister of Finance of Canada and Provincial Finance Ministers,

We are concerned with the decline in Canadian investments by pension funds and its impact on the Canadian economy. Millions of Canadians have contributed to their pensions with wages earned in Canada.

Pension funds represent approximately 37% of institutional savings in Canada, a size comparable to the banks. Contrary to the banks and insurance companies that focus mainly on debt, pension funds are unique in their ability to be patient long term equity investors, just what Canada needs to forge its future.

Canadian Pension Funds have reduced their holdings of publicly traded Canadian companies from 28% of total assets at the end of 2000 to less than 4% at the end of 2023. It is estimated that the eight largest pension funds in Canada have more invested in China (roughly $88B) than they do in Canadian public and private equities (roughly $81B). Their holdings of all Canadian based equity investments including public and private companies, real estate, and infrastructure is down to approximately 10% of total assets.

Why should we care?

Canada’s gross domestic product (GDP) per capita has fallen from 95% of US GDP per capita in 1980 to 75% in 2023. Non-residential investment per worker in Canada is less than half that of the United States. For every dollar Canadians invest in startups, the United States invests $40.

Canada benefits from enormous advantages. It is one of the most developed economies in the world and has been a wonderful place to invest. Over the last 25 years Canadian equity markets have topped the G7 countries and have consistently delivered very competitive returns.

Investment opportunities exist in many countries, and we believe pension funds should be able to invest anywhere in the world. However, investments made in Canada do not impact just pension portfolios; they also have a considerable impact on the country’s economy: generating jobs, improving incomes, and increasing contributions to retirement plans. Less investment in Canadian businesses increases their cost of capital, discounts their value, reduces their ability to grow, and makes Canada less attractive.

Pension funds should not fear but rather embrace with enthusiasm the challenge of investing in Canada. The positive impact these investments have on their member’s incomes and development should not be ignored. 

Without government sponsorship and considerable tax assistance, pension funds would not exist. Government has the right, responsibility, and obligation to regulate how this savings regime operates.

Canada has great companies, true global champions These competitive businesses deserve our support, and we must create many more. Increasing investments in Canada should be a national priority.

Given their importance to the Canadian economy we, the undersigned, would support an effort by the Minister Finance of Canada and the Provincial Ministers of Finance to amend the rules governing pension funds to encourage them to invest in Canada. Consideration should also be given to incentivize other investors to allocate more capital to domestic investment.

P.S. This blog is licensed under a Creative Commons Attribution 4.0 International License. You are free to copy, redistribute, remix, transform, and build upon the material for any purpose, even commercially, as long as appropriate credit is given.

Last September, I had the honour of being the keynote speaker at the Lab2Market Deeptech Expo, where I discussed the current state of deep tech investments and commercialization. A key theme I emphasized is our growing excitement about deep tech. In fact, I would even argue that we are entering the golden age of deep tech.

Why this belief? Reflecting on the significant “platform shifts” over recent decades reveals a pattern: each shift has unleashed waves of innovation. Consider the PC revolution in the late 20th century, the widespread adoption of the internet and cloud computing in the 2000s, and the mobile era in the 2010s. These shifts didn’t just create new opportunities; they fundamentally altered user behaviour, democratized access, and unlocked unprecedented value.

It goes without saying that the primary beneficiaries of these shifts are the 5 billion internet users and relevant businesses. However, these shifts have also been the biggest enablers of what I term “shallow tech.”

Take, for example, the late 2000s. The App Store’s top charts were dominated by simplistic applications — remember those infamous fart apps?

This era marked the beginning of a trend where ease of creation and user experience overshadowed the depth of innovation. Recall Instagram’s initial release as a straightforward photo-sharing app with just a few attractive filters. Similarly, the first iteration of Wattpad on the Motorola RAZR was a simple Java app, supported by a basic LAMP stack backend.

Subsequent early iPhone, Android, and Blackberry versions were only marginally more complex. Over time, both Instagram and Wattpad evolved into deep tech companies, driven by the massive amounts of data they amassed. However, in both cases, it only took months from concept to launch, despite taking years to become substantial businesses.

In contrast, building deep tech companies from the ground up was far more challenging. Years could be spent developing the technology alone, even before considering market readiness or commercialization. This long cycle made it very hard to build companies and secure funding.

In recent years, however, the landscape has begun to shift. The playbook of developing minimal tech, amassing vast data pools, and then creating a defensible moat through network effects is becoming increasingly difficult. The entrenched network effects of incumbents in both consumer and enterprise spaces make it harder for “shallow tech” startups to achieve escape velocity.

Conversely, as we find ourselves in the midst of another significant platform shift – this time centred around AI – AI is revolutionizing how deep tech companies are started and scaled. For instance, robotic designs can now be developed through a few AI prompts. AI is also transforming chip development, allowing for significant acceleration before tape-out. In drug discovery, AI-assisted processes have condensed timelines from years to mere weeks. These are just a few examples. What once seemed like science fiction is now our reality.

While deep domain expertise in fields like robotics, chips, biotech, and other areas remains crucial, AI is now democratizing deep tech. It’s making it more accessible and is accelerating innovation across numerous sectors. We are on the cusp of a new era, one where the depth of technology plays a far bigger role in building successful companies that reshape our world.

The golden age of shallow tech is over. The golden age of deep tech is upon us!

P.S. This blog is licensed under a Creative Commons Attribution 4.0 International License. You are free to copy, redistribute, remix, transform, and build upon the material for any purpose, even commercially, as long as appropriate credit is given.

Last week, I had the honour of chairing this year’s TechExit.io conference in Toronto, marking my first time in the role at a conference! Given my background as a 3x entrepreneur, with two of my companies having been acquired, I was thrilled to have the opportunity to share my insights and experiences. Now, as a venture capitalist, I actively support numerous entrepreneurs within the TSFV portfolio, guiding them toward outstanding outcomes.

In recent times, we’ve observed a shift in the landscape: funding has become more scarce, tech valuations more sensible, and consequently, M&A activity more appealing for both sellers and buyers. This is particularly true for traditional players, who now find themselves with greater purchasing power and are no longer priced out.

I was particularly heartened to witness the flourishing tech community in Canada. A decade ago, the focus was predominantly on selling, with most transactions below the $100 million mark. That landscape has transformed dramatically. Our ecosystem has expanded considerably, giving rise to a greater number of scaleups and facilitating larger deals. More importantly, Canadian companies are demonstrating a stronger appetite for acquisitions, with many scaleups actively pursuing growth through M&A, beyond organic means. The dialogue at TechExit.io underscored this shift.

While it’s impossible to capture all the rich content from the conference in a single post, I’d like to share my responses from a panel I had the pleasure of moderating, featuring Amar Varma, Monique Simair, and Mark Steele:

Q. If you had to choose just one thing, what would be the top learning or the biggest obstacle you wish you knew while you were building your company, that you know now?

A. Optionality! At the time of Wattpad‘s acquisition, we were in a great position, self-sustaining and with multiple paths forward, including raising another growth round or even considering an IPO. Ultimately, the decision was ours to make, and we opted for the path that we believed was in Wattpad’s best interest. The acquisition by Naver WEBTOON presented itself as the optimal choice, as it aligned with our strategic objectives and offered the unique opportunity to fully unlock Wattpad’s potential.

Q. Some investors love to ask, and some founders love to answer the following question: ‘What is your exit strategy?’ Were there things you built for an exit that went against building a great business?

A. We actually never did anything specific about the exit or formulated an exit strategy. For instance, we never created a product feature because we had potential acquirers in mind. Of course, we built relationships with them, but we didn’t do anything unnaturally in the hope of driving an acquisition. In other words, we only focused on building a great business.

Q. What did you miss the most after selling?

A. No doubt, my Wattpad team! We built an amazing all-star team. I missed my daily lunch with them in our kitchen!

It’s hard to convey the immense scale Sheertex has achieved in such a short time since its founding in 2017. Now going by SRTX, it will become one of Canada’s largest textile manufacturers with its upcoming 1,000,000-square-foot factory in Montreal.

Yet, the vast size of the factory, the quantity of pantyhose sold, and even their revenue only tell 1% of their story. If you think SRTX is “only” a direct-to-consumer company selling unbreakable pantyhose named Sheertex, think again.

The power couple, Katherine Homuth and Zak Homuth, are not your typical founders. Each has led their respective tech startups as CEO/founder. Together, they are building SRTX from the ground up as a software company and an advanced material company that is “disguised” as a textile company.

Check out the three products on SRTX Labs and you will understand.

Watertex – Their proprietary technical textile is crafted with one of the world’s most hydrophobic polymers that are engineered for unparalleled water resistance. Swimwear is an obvious use case. Clearly, there are more.

Cortex Software – Built to automate manufacturing operations, Cortex is a SaaS platform for running modern, connected, responsive and real-time aware soft goods and textiles factories. It enables factories to go paperless, generates meaningful insights into production and gives operators better work order control and reporting capabilities.

Sheertex – Its rip-resistant technology is already world-famous. Enough said.

STRX is rewriting the rules of textiles. This is another great example of our investment thesis:

Two Small Fish Ventures invests in early-stage products, platforms, and protocols that transform user behaviour and empower businesses and individuals to unlock new values.

“Bags 2 Riches”, brought to you by Simplii Financial, is a docuseries that features the origins of seven notable immigrants’ journeys while highlighting their new lives in Canada. The series revisits the lows and celebrates the highs as each individual recounts the challenges they faced.

I am honoured to be featured alongside NBA star Chris Boucher, Syrian-born “refugee” chocolatier Tareq Hadhad, broadcast pioneer Shushma Datt, first 3-sport-Canadian-Olympian Georgia Simmerling, and a few others. We are all immigrants who call Canada home, and we all aim to contribute to this incredible country.

The docuseries was a massive success, so last evening the “Bags 2 Riches” team brought us together in real life to celebrate with a few hundred guests.

Tareq shared how the war destroyed his family’s chocolate business, which was one of the largest in the region at the time. As a refugee in Canada, he rebuilt everything from the ground up. Peace by Chocolate is now one of the largest chocolate companies in Canada.

If you think his inspirational story is like a Hollywood movie, you are not wrong. You can now watch “Peace by Chocolate” (the movie) on your favourite streaming service.

Chris revisited his early struggles. He occasionally needed to ride the overnight bus just to stay warm for the cost of a fare before achieving success, including helping the Raptors win the championship in 2019.

Shushma, Georgia, and I also revisited our own experiences, moderated by the amazing Sangita Patel. The takeaway? Follow your passion, lean into your strengths, work hard, don’t give up, and dream big.

Other important takeaways: 1) Chris is incredibly tall! 2) Like me, Sangita is an electrical engineer, which I didn’t know. She is now one of the most engaging media personalities in Canada.

Thanks again to Simplii Financial for giving us the platform to share our stories!

P.S. All 7 episodes of “Bags 2 Riches” can be viewed on YouTube. I know you’ve probably seen enough of me. But, if you’re curious, catch Eva and on episode 4 🙂

After so many years, the two A Laus finally met 😂

Yesterday at TIFF, in the world’s premiere of The Movie Emperor, one of the A Laus watched the other A Lau cheekily cast as a movie star, also named Lau, seeking relevance via a film festival–baiting art-house role in director Ning Hao’s sharp satire of movie industry pretension.

Equally importantly, it was an honour for me to witness the one and only Andy Lau receiving the prestigious TIFF Tribute Award live. 🏆

I wasn’t in that many pictures as I was too busy taking pictures and enjoying the show. 📸🎥

On September 25, I will be the keynote speaker at Lab2Market Deeptech Expo.

While many associate Wattpad primarily with storytelling (and they’re not wrong – after all, I am on IMDb!), it is important to highlight that Wattpad has also been an AI-driven company for well over a decade, long before AI became cool! 😉 We built our own “Story DNA” AI technology to generate insights from the world’s largest and most diverse sets of stories and data. Without AI, managing our billions of story uploads would be impossible.

It is also worth noting that I am an electrical engineer, which means I know a thing or two about semiconductors, energy, telecommunication, etc. In fact, all three partners at Two Small Fish Ventures, i.e. Eva, Brandon and myself, are engineers with BOTH software and hardware experience. We’ve been backing commercialized AI, semiconductor and advanced material companies like Ideogram, Ada, BenchSci, Zinite, Sheertex and many more for years.

As an engineer-turn-CEO-turn-investor who has been involved in deep tech for a long time, I will share a broad perspective of where deep tech is heading. Look forward to it!

It feels like it’s been ages since we were last here! In 2011, Union Square Ventures’ Albert Wenger led Wattpad’s Series A, our first institutional round. throughout the subsequent decade, Ivan and I made frequent visits to the USV office, be it for board meetings, the CEO Summit, or just casual get-togethers whenever we were in NYC.

Yet, my last visit was just before the pandemic hit. And after Wattpad‘s acquisition in 2021, circumstances didn’t permit me to return.

Until now.

USV has backed many iconic companies that have become household names — Twitter, Tumblr, Zynga, Cloudflare, Twilio, MongoDB, Etsy, Duolingo, to name a few.

Becoming an investor in these companies at a mature stage, or post-IPO, is straightforward. But what sets USV apart is that this team has spotted these future giants before anybody else, time and again. Often, these companies were budding startups with just a few team members and pre-revenue. To illustrate, when USV placed their bet on Wattpad, we had fewer than 10 on the team. While we weren’t exactly pre-revenue, it would still be years before many of our current revenue streams took off.

Throughout this journey, our learnings haven’t just come from the USV team. We’ve peer-learned so much from the network of USV portfolio CEOs and founders. The speed, intensity, skills and tenacity needed to navigate these rocket ships are on another level. A single misstep can derail years of hard work. What is at stake is unbelievably high. Interacting with these founders was tremendously helpful to me. I can testify that being part of the USV network played a part in Wattpad’s eventual success.

Post-Wattpad, the Laus has re-entered the USV fold as an LP. We’re also thrilled to be collaborating with USV’s Andy Weissman on an exciting new investment. Stay tuned for more updates on this front!

I’ve long wanted to craft a steampunk story on Wattpad. The allure of this science fiction subgenre, which fuses futuristic tech with 19th-century steam-driven aesthetics, has always captivated me.

But the initial draft didn’t meet my expectations. I lacked the time for refining, and equally challenging was crafting an appealing steampunk cover.

That’s changed now.

Take a look at these covers I designed using Ideogram.ai, the newest addition to Two Small Fish Ventures‘ portfolio.

Ideogram.ai empowers individuals with generative AI, enhancing their creative capabilities.

Here’s how simple it is: I just typed:

Text says: “My Steampunk Story”. A male and a female wearing steampunk style fashion in Europe, 4k, cyberpunk., 3d render, cinematic, photo, typography.

…and voila!

What sets Ideogram apart is its ability to address a longstanding issue among popular AI image generators: rendering text in a spectrum of colours, fonts, sizes, and styles within images. Whether it’s lettering on signs or crafting company logos, it’s all achievable with a few keystrokes or taps.

Previously, I’d spend hours attempting to create a passable cover using tools I was hardly proficient in. Now, I simply describe my vision, and a polished cover is instantly brought to life. The process couldn’t be more effortless.

I thoroughly enjoyed yesterday’s fireside chat between OpenAI’s CEO Sam Altman and Shopify’s CEO Tobi Lutke!

Despite the downturn, it is a super exciting time to be an entrepreneur and an investor in tech startups. We are in the midst of a “once-in-a-decade” paradigm shift as a number of new tech trends emerge. Generative AI is one of them. When these new transformative technologies achieved mass adoption, they changed behaviour, democratized access, and unlocked values that weren’t possible previously. New startups will more easily challenge the old guards. An exciting time indeed!

Specifically, Altman said: “It should be a big moment for Toronto,” which I couldn’t agree more. In the last decade, Toronto has become one of the world’s AI epic centres. TSFV has already invested in many Canadian AI companies. Look forward to seeing the proliferation of a new crop of moonshots born and raised in your home and native land!

Thanks Lisa Zarzeczny and team Elevate for organizing!

No doubt Grand Tourismo 7 is one of VR’s killer apps! Although my Thrustmaster setup already has a brake pedal with an adjustable spring, a seatbelt and a manual transmission with a clutch to maximize the immersiveness, PS VR2 brings it to another level. Watch the video if you don’t believe me!

Although Two Small Fish Ventures does not invest in games, we invested in platforms like Horizon Blockchain Games and Masterpiece Studio. These platforms transform how games are created and unlock new values for gamers and game creators in unprecedented ways.

For instance, creating game-ready 3D assets is very challenging and time-consuming. Using Masterpiece’s 3D Generative AI, one can now create 3D assets with just a few words, such as “blonde viking with a beard.”

Millions of people are already creating games. Unity, one of the most popular game engines used by 2 billion monthly gamers, already has over 1.6 million monthly creators. Platforms like Masterpiece will further democratize game creation and unlock creativity amongst millions who never thought they would become game creators.

Check out Masterpiece Studio’s 3D Generative AI here.

Despite two (!) flight cancellations and catching two (!) snow storms in Toronto and Halifax, my trip to Halifax last week was a blast!

First, I hosted an oversubscribed “office hours” at Volta. For those who couldn’t book a time, there is always a next time.

After that, I hosted a tech ecosystem dinner, where we had terrific conversations with many investors and accelerators in the tech ecosystem, and of course, some good food too 🙂

Lastly, I participated as a judge at Saint Mary’s University in Canada’s only VCIC (Venture Capital Investment Competition), an educational competition that provides students real-world experience in venture capital by simulating the venture capital investment process. The student VCs from across the country (e.g. University of Waterloo, University of Alberta, University of Toronto – Rotman School of Management, Queen’s University, Schulich School of Business – York University, University of New Brunswick, etc.) listened to pitches from real entrepreneurs and defended their investment choices to a panel of senior partners (i.e. me and other real investors).

I was super impressed by the quality of the students’ analysis, the term sheets they put together and their explanations. Equally importantly, we had a lot of fun, including the celebration and the after-party networking chat. Congrats again to all the winners!

It was such a (snow) blast. I will be back! Since Wattpad opened its second HQ in Halifax a few years ago, I have been coming to Atlantic Canada regularly. It is like a second home to me. No doubt this tradition will continue for many years to come!

Today is a big day for Two Small Fish Ventures as we reach first close of $24M for Fund III that targets $40M!

With the new and bigger fund, TSFV will continue to back early-stage startups using game-changing technology to achieve global scale. That has not changed. The difference is that we’ll be writing bigger cheques and leading more rounds. It’s a great time to invest as tech touches everything. It creates previously unthinkable opportunities for massive disruption. We will back early-stage companies that shift paradigms.

You can read the announcement here. You can also read the coverage on Globe and Mail and BetaKit.

Recently Eva and I were able to take in the iconic Toronto skyline, hear the roaring of Niagara Falls, see stunning fireworks display against the backdrop of Parliament Hill, and visit the cobblestone streets and charming architecture of Quebec City — all in under an hour. 

How? We visited Little Canada, an exhibit that takes you on a journey of discovery through the sights and sounds of our great country in miniature scale. A scale of 1:87 to be exact. 

The Laus personally invested in Little Canada a few years ago, and one that’s been incredible to see come to life. We remember visiting the workshop in January 2018 and seeing the skill and dedication of Jean-Louis Brenninkmeijer and his team in creating the beauty of Canada’s vistas, its famous landmarks, and iconic cityscapes in miniature form. Now that the exhibit is open, it’s jaw-dropping to see the level of detail involved: every time we looked there was something new to discover. 

As part of the Little Canada experience, Eva and I also got to try out the Littlization Station. We were scanned and our likeness will be 3D printed into our very own Little Me figurine that will get placed inside Little Canada. Way cooler than a bobblehead! 

But perhaps the coolest thing about visiting Little Canada was this:

Can’t see it? Hang on, let’s get closer:

That’s right: Wattpad HQ exists in Little Canada, too. It was so fun to see our logo on a miniature building in the miniature St. Lawrence Market area of miniature downtown Toronto. 

Here are a few more pictures from our visit. I hope you have a chance to explore Little Canada soon and see for yourself how this tiny experience delivers a big wow factor. 

In honour of Asian Heritage Month, BenchSci hosted Showing Up, a discussion that delved into the experiences of four Asian panelists: Kepler’s CTO and co-founder Wen Cheng Chong, Wealthsimple Foundation’s CEO Leen Li, Backbase’s Regional VP of Customer Success Yuko Naka and me.

It was a wonderful conversation. You can find the summary on BenchSci’s blog or watch the whole panel on YouTube.

One thing I said that I would like to highlight: ‘You are the CEO of your own career.’

Culturally, many Asian parents have a strong influence on their children’s careers. Of course, it is great to listen to parents’ experiences and leverage their wisdom. However, your career decision is all yours. You are not your parents. Your interest is not the same as your parents’ interest. Most importantly, your career aspiration should not be a projection of your parents’ career aspiration. You are accountable for your career. Listen and learn, but chart your own path.

Because you are the CEO of your own career. 

Last week, Naver, the South Korean internet conglomerate, announced the acquisition of Wattpad in a transaction valued at more than an estimated USD $600 million. The acquisition is expected to close in Q2 2021.

It has been an incredible roller coaster ride. So grateful that we have a fantastic outcome for everyone involved in this action-packed thriller! 

The acquisition is all about accelerating Wattpad’s growth and taking our business to the next level. It is a match made in heaven because it aligns Wattpad and Naver’s WEBTOON, a leading digital comic publisher, under the same umbrella. Wattpad’s multi-platform stories are already available across audio, book, TV, and film formats. By joining forces with WEBTOON, our combined audience has almost doubled to 160 million people overnight. In one stroke, we also gain expertise in new formats like digital comics and animation. As a result, our entertainment ecosystem has greatly expanded. The synergy is so obvious.

The last few days certainly feel like winning the Oscar. The next step is to win the real one! Yesterday was the Season 1 finale of The Wattpad Story. Today is the first episode of Season 2.

We’re not done yet! 

Thanks for joining me!

Good company in a journey makes the way seem shorter. — Izaak Walton