Chima Ubani: Hi, I’m Chima Ubani, partner at Osler and chair of the Venture Fund Formation team. I’m joined today by Étienne Mérineau. Étienne is an entrepreneur, an operator, and now a partner at Telegraph Ventures. He’s a former co-founder of Heyday, and was instrumental in building the company from scratch to a $60 million exit in just four short years. Along the way, he wore pretty much every hat: CEO, CRO, CMO, probably a whole bunch of others. Before that, he spent close to a decade in the agency world, working with some of the biggest names in advertising. He also describes himself as a business storyteller, which I think is a great way to frame what he does, just essentially taking ideas and turning them into something that actually connects and grows. I’m really happy to have you here today, Etienne, and looking forward to a good chat.
Étienne Mérineau: Happy to be here.
Chima Ubani: Tell us in simple terms, what is Telegraph Ventures and what do you guys do?
Étienne Mérineau: Telegraph Ventures is a pre-seed fund, focused on Québec-based B2B SaaS and AI applications. So we’re essentially investing in startups that are very early stage, the zero to one, as we call it, but closer to zero than one million in revenue. We want to be like capital with conviction at the very inception of the company. In terms of focus, we’re multi-sector, but always with a business-to-business model. I would say we have a bias for applications that move the needle on the enterprise side or mid-market, when there’s a clear core business application and need and therefore ROI.
Chima Ubani: Right. Interesting. Telegraph is a bit of an interesting story. Telegraph Hill Capital, long-term existing platform in Barcelona, and Telegraph Ventures, is the first foray made into Quebéc as an official fund, but I think not Telegraph’s first foray into Québec. Talk a bit more about that and what led to the decision to start a fund in Québec.
Étienne Mérineau: Telegraph Ventures, as you mentioned, is kind of a spinoff of the broader, like Telegraph Hill Capital mothership. Telegraph Hill Capital, as you mentioned, was founded in Barcelona, but the guys have been investing for more than a decade, actually, I think 15 years, by now, and they always had a pre-seed focus with a bias for B2B SaaS, so that part of the thesis hasn’t changed. They were as always, like, kind of geography agnostic, so they invested in a bunch of places, including in the U.S. and in Canada. And it turns out that in Canada, it was mostly in Québec. When I met these guys, I realized they had been leading or co-leading rounds in Québec since 2014, with more focus since 2018, and they had done, like, a dozen rounds, right? And I was like, “Oh, you know, there’s…” I knew there was a gap because, in the pre-seed market, in the local market, because as an entrepreneur, I had a hard time raising myself, right? When I met with them, it was kind of like one plus one equals, I guess, two or 10 in this case, where I’m like, “Okay, there’s a clear gap.” I experienced it as a founder, and these guys, they’re… You know, it’s not normal that two guys out of Barcelona get most of the deals in Québec, so there must be a need for a more institutionalized fund dedicated to the market. So that’s how the genesis took form. And then we wanted to validate it, so we started to speak with institutional investors, especially with the, the government of Québec and Investissement Québec, and they kind of validated the gap and the appetite for such a fund.
So, it’s never an easy process. I thought fundraising as an entrepreneur was tough. Fundraising as a general partner, as a fund manager is even harder. But we did it. Not too long, right? Eighteen months is not too bad for a fund of this size, but it still felt longer than a typical round as an entrepreneur.
Chima Ubani: It can definitely be a bit of a process,
Étienne Mérineau: Thankfully, we had Osler in our corner who helped us streamline the whole thing.
Chima Ubani: So, you mentioned, Telegraph Hill Capital obviously had an interest in Québec and saw an opportunity, and Telegraph Ventures obviously sees an opportunity in this space in Quebéc. Institutional investors obviously see an opportunity because you did successfully raise a fund focused on the space. So clearly there is an opportunity, various people think that, for founders in this space and in Québec. Maybe speak a little bit about what is it about Quebéc, if there’s something particular about Quebéc, or the connection to the rest of Canada. You can take it whatever direction you want, but for founders who are building in this space, why is doing so in Québec a good idea?
Étienne Mérineau: Yeah, no, good question. I mean, I think, it’s been well documented we’re a talent hub, right? There’s world-class technical know-how in Québec and Canada, and the beauty is at a fraction of the cost, in a way. Like, I mean, salaries are in Canadian dollars, they’re a bit lower than the U.S., for example. Plus when you factor in all the SR&ED financing, you can extend the runway and build, you know, lean and resilient companies. So I think that’s definitely an edge based just on the talent pool, and also favorable programs from the government. On the other end, something that people talk a little less about in the market, I think we’re strategically positioned just, you know, from a geographic standpoint. And the bilingualism of the market also by design gives us optionality. You can either export to the U.S,, but you could also go in Europe. For example, in my own journey, our second market was not the U.S., it was France. So I think because of the very nature of the market, you have this option, and it’s not too shabby to have that optionality, right? To be able to export globally your solution even when you’re early stage.
Chima Ubani: Makes a lot of sense. Good, real factors that can make Québec an attractive space for a founder. So maybe the other side of that question, so that’s why Telegraph Ventures, and that’s why Telegraph Hill was interested in investing in Québec. The other side of that question, for a Québec-based founder, why should they be interested in Telegraph Ventures? So what sets Telegraph Ventures apart from others? We mentioned there’s a little bit of a lack of founding- funding in the space, but there are other funds. There’s some generalist funds. Some other funding is available. Why would a founder be wise to speak to you guys?
Étienne Mérineau: Totally. I think, I always like to partner up with people who are very different from me and complementary, and I think that’s what we have. You know, we’re three general partners, and Louis and Varun, my partners are more like seasoned VC, with the experience and network, and also backgrounds that are more, I would say, the finance type, right? Coming from KPMG and EY, with an M&A and accounting background. So they bring that rigor. On my side, I’m more a guy from the trenches, you know, I’m very much of a zero to one go-to-market kind of hustler you know, type of guy, who brute forces things. So I bring in the operational experience and empathy and understanding, what it is from the founder’s shoes, and I think so far the response has been very positive because they like the fact that we’re kind of like the two sides of the Mini Wheats. We bring that operational expertise and with more institutional capital know-how. So to keep a long story short, I like to think we’re like almost co-founders with capital. We come in so early. We like to move with conviction, as I mentioned, at the inception stage, and not all VCs who can, you know, actually say that. Like most VCs will wait for more traction, a bit more, you know, a de-risk model. So we play earlier, and I would say, we like to be bold. So, hopefully we walk that talk.
Chima Ubani: Yeah. I think that’s a good distinguishing factor of VC. So you sort of started answering my next question, which was going to be beyond capital, what operational support, what else can you provide? And you answered it in your response there, and I think I’m going to ask you to expand on that a bit more because I think it’s so important. All VC is supposed to be a little bit more than just capital, of course. It’s supposed to be capital plus something else. But your unique mix, I think, has really got you guys well-positioned to not just say that, and not just say that in your decks, but actually be able to deliver on that because you have these real different skill sets. And maybe just going to ask you to talk a little bit more even about yourself having all the experience you had, operational support. How do you do that day to day?
Étienne Mérineau: Yeah. I think, you know what? Like, sometimes you gotta let the founders cook, so it’s not like hands-on or hands-off. It’s more like hands if, you know? If there’s a need, so more on demand. But you always look at how can you complement the skill set already in place. So if it’s more of a technical team, of course, you know, my go-to-market skill set can help kind of bridge the gap sometimes. In other cases, there’s already good salesmanship and go-to-market know-how on the team, but maybe they need to refine the AI roadmap. So what we built as a platform is, yes, we have institutional capital, but we have a lot of angel, strategic angel money, private investors who came in the mix, in the round, and these guys are all local entrepreneurs who have done it. And some of them have scaled businesses to $100 million, plus in terms of annual recurring revenue. So they bring a wealth of different skill sets, and not just skill sets, but also an understanding of different phases that I haven’t lived through every phase, right? Like I exited after five years, so I wasn’t close to an IPO or anything like that. It’s kind of a plug-and-play approach on demand, but I do think that the emphasis here is operational experience so that founders feel like the guidance and the advice is rooted in reality, and not just kind of like a nice blog post that you read somewhere.
Chima Ubani: Right. Very good. Another more specific question really about AI solutions, enterprise companies you work with are going be selling AI solutions into enterprise. Generally speaking, that’s a very broad statement, but what particular insight do you guys have, and what do you speak to founders and companies with about how do we approach the unique challenges with doing that?
Étienne Mérineau: Yeah. I think, look, it’s a loaded question. Like I can muse about this for a long time because, you know, again, I, it’s an area that I like. One thing I actually said to one of our portfolio companies yesterday. I said, “We tend to,” and we all do that, every founder, “we tend to overcomplexify startups, right?” “Your goal right now with this funding is get to the next milestone.” And I told him, “I promise you one thing, like you only need one sub-segment in the enterprise, even one geography, one sales channel to get there.” Like, you can get, you know, for this specific case, it could be just like mid-market financial services in North America on Google Cloud because he’s doing a cloud optimization platform. Like just that, there’s probably five to 10 million dollars in annual revenue if you just milk, you know, that segment and you focus on it. So I think, the cliché is usually true, right?
Focus is understated, and when you’re small, you don’t have necessarily the war chest of bigger players, but what you can have though is the velocity and the focus, and you kinda build, you know, that flywheel under the radar by being very intentional in how you segment the market and go about it. So, the TLDR I would say is really go-to-market prioritization and making sure that you don’t get distracted by all the possibilities. Because if you’re chasing all the rabbits, you might end up with none. I’d rather focus on one cow to milk, to keep the animal analogy, and that gets you to the next milestone, and then you can raise more money. But at least when you target, you talk to the enterprise, they’re very sensitive to trust signals. So if they see that you already have a case study in their space, they’re like, “OK, that’s validation. You know, financial services, you already work in that space. You’re already compliant. I trust you.” It doesn’t matter if you’re two years old or 10 years old; it’s more about how you target that market, how you speak their language, and how do you tailor your solution to these guys?
Chima Ubani: Very good. That, well, that, that was a very good answer, and I could tell you could have gone on a lot longer on that one. Sorry, we’ll gnash. Shouldn’t have brought it up, obviously. So to conclude, you just gave great advice, sort of great business advice, business strategy advice there in a short little snippet, and I know you’ve got way more to give. But if we ask the more general question, so what advice do you have to founders when it comes time to seek investment, right? To seek capital, raising capital. Leaving aside for a second the actual business advice you just gave, just what you guys see in founders, you get decks, you meet people. Who are the ones that impress you? Is it just being charismatic? Is it having something else? Is it the team? Is it a combination? What’s your advice to founders?
Étienne Mérineau: I’ve read somewhere, if you can build and you can sell, you’re a formidable force. So I’m kind of looking at the two components, right? I want to see technical know-how, and I want to see salesmanship. Sometimes founders complain, “Yeah, you know, the fundraising process is hard, it’s slow,” et cetera. I’ll tell you what accelerates a fundraising round. Sales. Sales is validation, and validation, again, gives trust to investors who are coming in at the earliest stages. Of course, like, you can’t have all the answers, you can’t have all the metrics, but you can compensate by showing velocity and, like, an obsession with customers. So you’re always out there, you know, pitching, learning, failing, and that feedback loop will compound and become your differentiation and strategic advantage, especially in a game where, let’s be honest, now tech has become more commoditized. So more than ever, the ability to go to market and fast will become the secret sauce of many companies. So that’s what I’m looking for. I’m looking for that ability to generate that early traction when you’ve got the worst version of your product to sell. It’s the worst spot. You know, if you can sell that worst version of your product and story, chances are this can scale, this can work.
Chima Ubani: Well, hopefully things only get better. Perfect, great answer. So I think that’s a good place to wrap it up. I just want to say thank you for taking the time to chat with me today. It was a pleasure. Really good, insightful, thoughtful answers. And congratulations again to Telegraph Ventures and the team, to yourself, to Luis, to Varun. It’s a pleasure working with you guys on your first fund in Québec, and looking forward to many more, years of successful collaboration with you guys.
Étienne Mérineau: Appreciate it. Thank you.
