2018 Portfolio Update for Rogue Insight Capital
We have been busy at Rogue this year, investing in twelve different deals in the past few months. We believe we have found teams who are unique, and who have the intelligence, skills, and resilience to build successful companies. We are very excited about the newest additions to our portfolio, and have profiled several of of our portfolio companies below. If you’re interested in hearing more, or would like to connect to these fantastic start-ups, please reach out! We would love to hear from you.
Robinhood – One of the top 25 most valuable VC-backed companies in the world, Robinhood has revolutionized the world of brokerage and trading accounts. In the 1970s, stock brokerages charged a purchasing fee on equities, because there was a physical labour cost associated with someone running across the exchange floor with a ticket that they input into a system. Fast forward a few decades, and this entire process has become electronic. However, every brokerage company kept this fee in place as a way to generate revenues from their customers. Furthermore, many of these brokerages enforced minimum balances, that only allowed customers to open accounts if they deposited a certain amount of money.
Inspired by the Occupy Wall Street movement, the founders of Robinhood thought this concept was ridiculous, and launched their own platform with zero commissions and no minimum balances. Robinhood believes that anyone should be able to invest their money in equities at any point. With a Robinhood account, customers are able to trade without paying commission (which allows them to diversify by buying single shares in as many companies as they like), and this has allowed many millennials to begin investing their savings at an early age.
Robinhood has had an incredible amount of traction, with several million active monthly users, and has already seen VC investment from Google Ventures, Sequoia, DST, Iconiq, Kleiner Perkins, and Roc Nation.
Drop – Tired of having a bunch of different loyalty cards that you forget to use, or just lose all together? Drop founder Derrick Fung realized how inefficient current loyalty programs are, and saw that these programs were not resonating with millennials. Derrick’s team then created Drop Technologies (www.earnwithdrop.com), a program that tracks user spending and automatically earns cash rewards without anyone needing to lift a finger. Drop automatically gives you rewards for your credit card/debit card spending, and allows you to use these points towards a myriad of retailers. Furthermore, users still earn their usual credit card reward points and individual store loyalty points.
With partnerships with several incredible brands including Starbucks, Tim Hortons, Sephora, Shoppers Drug Mart, and more, as well as relationships with all of Canada’s large financial institutions, Drop has been able to grow incredibly fast. By targeting the HENRY millennial population (high-earning, not rich yet), Drop has grown to well over 1 million users, and is the #2 lifestyle app in the USA AppStore behind Tinder.
With a Series A led by NEA, Drop has been revolutionizing the loyalty program game, and is showing the world how robust the Toronto start-up ecosystem truly is.
Lending Loop – Canada has a massive gap in its financial markets. Small and medium sized enterprises (SMEs) in Canada struggle to raise debt financing, because their deals are too small for large banks to spend time underwriting. These entrepreneurs are currently forced to either raise funding by mortgaging their personal properties, or by using third-tier, high-interest cash lenders that are accustomed to helping high-risk businesses and individuals pay down imminent obligations.
Lending Loop has been actively changing that by providing an automated platform that allows Canadian SMEs to raise money at appropriate levels and interest rates. Using a model that is very popular in the USA and UK, Lending Loop allows SMEs to apply for financing, and leverage AI solutions to underwrite their business very quickly. Approved companies are priced, and have their deals available to Lending Loop’s investors, who are able to invest in a myriad of deals and earn higher interest than they would with savings accounts, while also supporting Canadian businesses. Lending Loop earns an underwriting fee, as well as a spread on the interest, without taking direct risk into any individual business.
Lending Loop’s team has worked tirelessly alongside provincial securities commissions for several years, and they are now now the only company in Canada with an official Peer to Peer lending license. They have been growing at lightning speed as SMEs discover how easy it can be to receive financing (completed in a few days with Lending Loop, vs. a few months with large institutions).
Zonetail – Although technology is permeating into every industry at an increasingly rapid rate, the real estate and hospitality industry has been a notoriously slow adopter of technological change. A large reason for this has been the need to co-ordinate many players, and many large companies, to adopt the same, standardized technology.
Zonetail has been able to achieve significant leverage in helping this industry progress with a customer-facing app for hotel guests and residential condo tenants. This app allows the end-user to receive updates from, and interact with hotel/building amenities, while also learning about promotions in the surrounding area. This app is completely free for the hotel/building itself, and generates advertising revenues that is shared with the property. Furthermore, with a relationship built with the Asian American Hotel Owners Association, alongside some large Canadian developers, Zonetail has access to 30,000 hotels in the USA (representing over 65% of the North American hotel market) and 2,500 residential condo buildings in Canada.
This significant early traction, alongside the Zonetail’s team’s deep understanding of the hotel industry, is allowing the company to enact great change in the hospitality space. Rogue Insight Capital is excited to announce that Zonetail is close to completing their public offering, and will be actively traded on the TSX Venture Exchange, and that Rogue’s co-founders (Suraj K. Gupta and Reetu Gupta) both serve on Zonetail’s board of directors.
Pyrowave – Did you know that only 8% of what you toss into a blue-bin is actually recycled? The vast majority of our recycling has been sold and shipped to Asia, where it has been historically burned for fuel. The environmental implications of this are awful, and China recently closed its doors on importing our recycled materials. This means that even things tossed in blue-bins will start to enter our landfills, which already have 30% of their space taken up by polystyrene, commonly known as Styrofoam. This number is only going to grow, as there are enough Styrofoam cups produced every day to circle the planet.
Pyrowave, an innovative clean-tech start-up based in Montreal launched by Jocelyn Doucet, is looking to close this loop by offering a technological solution that will allow many types of plastics to be chemically recycled. With their patented technology, Pyrowave has created a system that can accept various types of ‘dirty’ plastics as an input, break these down at a molecular level into their clean, root chemical, and output a pure, clean version of these plastics that can then be perfectly re-used. Pyrowave is initially attacking the styrene market, and is showing the world that Styrofoam can be recycled and re-used.
Named one of the 2017 Global CleanTech Ones to Watch, and with partnerships with some of the largest styrene producers in the world, Pyrowave has proven that it can revolutionize the recycling industry, and make the world a much more sustainable place.
Chatter Research – When is the last time you filled out a survey provided at the bottom of a receipt? We would venture to guess never, however this extremely dated process has been most big corporations’ main methodology of receiving post-transaction consumer feedback.
Chatter Research's founding team recognized that this should not be the case in this day and age, and created an AI-based conversational platform that can speak with consumers, and garner an understanding of the issues that truly affect their purchasing decisions. Instead of a static email or web survey, Chatter’s proprietary technology and natural language processing allows its software to guide the conversation with the consumer, and attempt to uncover aspects that are important to the purchasing process that even the consumer themselves might not be aware of.
Currently run out of one of Canada’s top incubators, the Ryerson DMZ, Chatter Research has obtained significant traction with some of the largest brands in North America. With capital from some of Canada’s top investors, including the MaRS IAF, Manulife Financial, and Rogue, Chatter has the capability of completely changing the enterprise-consumer engagement space.
WeWork Partnership – WeWork is one of the most ground-breaking companies of this generation, as they have managed to disrupt the global real estate space by creating beautiful, efficient office-spaces for companies all over the world. WeWork began primarily as a co-working space developer, and has since expanded its operations and become a global real-estate office manager; as many large corporations have recognized their fortitude at creating and managing office-space. Furthermore, WeWork has increasingly seen real estate valuations rise when they enter a specific building, and a specific market, as tenant demand increases significantly and the surrounding area attracts more pedestrian traffic.
Rogue has co-invested into a fund with WeWork to begin buying the underlying assets where WeWork would like to operate. This partnership investment will allow all parties to enjoy the upside in real estate valuations due to this ‘WeWork effect’, while also allowing the start-up to improve the global real-estate market even more so.