The fund plans to make up to 10 investments per year, ranging from CAD 100,000 to CAD 250,000.
The for-profit arm of Toronto-based incubator DMZ has announced a new fund for early-stage startups and its first investments.
DMZ Ventures will initially commit up to 5 million Canadian dollars to the fund, although a DMZ spokesperson told BetaKit that this amount may be increased in the future. The fund plans to make up to 10 investments per year, ranging from 100,000 Canadian dollars to 250,000 Canadian dollars, and will invest specifically in pre-seed and seed-stage startups both within and outside DMZ’s portfolio.
“Every startup we back has gone through rigorous screening and has been approved by the DMZ. That’s why we’re backing winners, not just startups.”
According to a spokesperson, the fund hopes to fill a significant funding gap at the pre-seed and seed stages: A Torys report found that early- and mid-stage funding fell 37% in 2023. Abdullah Snover, executive director of DMZ and CEO of DMZ Ventures, believes DMZ’s proximity to early-stage startups will benefit the fund.
“No other investor understands startups as deeply as we do,” Snover said in a statement.
“Every startup we back goes through rigorous vetting and is approved by the DMZ, which is why we don’t just back startups, we back winners – founders and ideas we truly believe in,” Snover added.
The fund will be structured as a corporate venture, rather than a general or limited partnership, and will be made up of “recovered proceeds” from DMZ’s consulting arm and alumni portfolio exits, according to a DMZ spokesperson. The fund, which is expected to last five years, will make lead, co-led and follow-on investments.
The fund has already invested in four startups, three of which were announced today at the incubator’s Insiders event in Toronto: Leasey.AI, a platform that aims to streamline and automate the leasing process, secured DMZ Insiders’ largest investment, C$100,000.
The event saw further investments in Flowjin (CAD $75,000), which offers tools to transform long-form video and audio content into shorter clips for social media, and Talin (CAD $75,000), which has developed an AI-powered talent acquisition and sales platform for staffing and recruiting.
The fund’s first investment is Toronto-based SoftDrive, a developer of virtual computing services that provide high-powered computing power to local computers and a graduate of DMZ’s incubator program. DMZ declined to disclose the amount of the investment.
Related: DMZ Receives $500,000 Grant to Expand Basecamp Program for Student Entrepreneurs
Founded in 2010, DMZ is a startup incubator at Toronto Metropolitan University (formerly Ryerson University). The organization offers startups mentorship, coaching, legal support, and assistance with global expansion. In a statement released today, DMZ claimed to have helped over 830 startups raise a cumulative $2.69 billion in funding to date.
The incubator’s for-profit arm was formerly known as Ryerson Futures, which invested in seed-stage companies that participated in a now-defunct accelerator program. Ryerson Futures was merged into DMZ in the spring of 2020 and renamed DMZ Ventures.
The DMZ Ventures fund will invest primarily in companies within the DMZ portfolio, but unlike its predecessor, it will also consider companies outside the incubator’s network, a DMZ spokesman said. DMZ Ventures is investing significantly more in companies with this fund than the roughly $50,000 checks Ryerson Futures previously issued to companies.
Also this week, DMZ partnered with real estate tech investor GroundBreak Ventures to provide custom scaling support to eight companies offering tech solutions to address Canada’s housing crisis.
Photo by Natalia Dolan, courtesy of DMZ.
