Powerlist Q&A – Sergio Escobar, BCF Ventures

Sergio Escobar leads BCF Ventures, Canada-based law firm BCF Business Law’s corporate venture capital (CVC) arm, as chief executive and managing director.

BCF Business Law said in a statement: “As members of the board, we are delighted to share the amazing work undertaken by BCF Ventures over the course of the last 12 months (March 2020 to March 2021), particularly in the midst of a challenging year. As we conclude a third successful year of operations, let us take the time to reflect on a period of resilience, learning and growth.

“Irrespective of the trials and tribulations of the global pandemic, BCF Ventures’ relentless pursuit of excellence has never wavered. In fact, throughout the course of such unprecedented times, the operations and management of the fund were marked by considerable increases in efficiency. By fostering a growing network of institutional partners, co-investors and entrepreneurs, BCF Ventures continues to be recognised favourably on a regional, national and international scale within the venture capital ecosystem.

“By leveraging business development and relationship building, BCF Ventures partnered with notable players such as Traction Conference, Lazaridis Institute, Launch and Boast.AI to organise virtual webinars aimed at the startup community – with exclusive guests ranging from Jeff Lawson at Twilio to Michelle Romanow, a Dragon’s Den superstar and co-founder of Clearco.

“From a strategic standpoint, our executive decision to pivot from being marketed as a ‘super angel fund’ to a ‘CVC fund’ has proven successful. This shift is advantageous in numerous ways, as evidenced by the trifecta effect.

“First, risk mitigation through the prioritisation of equity investments. Second, resource utilisation of BCF Business Law to facilitate client conversion in the business-to-business (B2B) enterprise software-as-a-service (SaaS) marketplace. Third, optimisation of the extensive network of corporate partners in efforts to expand customer growth of portfolio companies and create co-investment opportunities.

“In turn, investing in specific verticals has improved efficiency, facilitated client servicing, and helped reduce operational costs. As such, BCF Ventures has done a wonderful job at partnering with Canada’s leading AI hub for supply chain, Scale AI, to launch the first-ever corporate innovation programme to take advantage of the trifecta effect.

“We are committed to capitalising on synergies and value-added propositions between BCF Business Law and BCF Ventures. As our portfolio companies continue to grow and scale exponentially, the priority remains to support their development toward possible exist or public offering. This fruitful partnership has resulted in a favourable reputational advantage for the law firm and its esteemed professionals.”

Escobar said: “BCF Ventures, a spin-off of BCF Business Law Firm, is a pioneer in the Canadian investment scene and one of the first CVC funds to be launched by a law firm. The fund benefits from the expertise, resources and insights of the law firm as well as other notable advisers and invests jointly with other successful funds across North America and Europe.

“In the past three years, we have deployed capital to nine investments, in which three investments have already exited by means of an acquisition. During the pandemic year, we have seen tremendous growth in our portfolio companies, mainly due to the resiliency of our investment thesis, enterprise software serving B2B clients. We decided to double-down our capital into the winning companies as part of the fund’s strategy to return the best performance return possible.”

Strategic and Leadership measures:

• Any examples of corporate acquisitions of portfolio or venture-backed companies:

Our portfolio company Adracare was acquired by the Canadian public corporation called Well Health in December 2020.

• Business unit partnerships and development with portfolio companies:

BCF Ventures maintains a strong partnership with Scale AI – a co-investment and innovation hub with government funding matched by contributions from the private sector. As the hub of Canada’s AI ecosystem, Scale AI offers funding, expert guidance and a community of like-minded peers for artificial intelligence projects to entice corporations to adopt the latest AI technology.

As an investment fund, we have partnered with Scale AI to help our portfolio companies in accessing the available funding. Our portfolio companies Careteam and FleetOps were awarded C$500,000 to build a digital platform that equips community organisations and volunteers to document needs and manage interventions in a coordinated manner.

The eight metrics used for the financial KPIs:

• The number of investments participated in:

The fund has invested in nine investments since its founding date and re-invested in six follow-on deals.

• The number of exits participated in

The fund has already three exits: (1) Prospectify, (2) Alpin and (3) Adracare.

• The total dollars of exits participated in

Due to investment commitments, we are bound to keep this information confidential.

• The number of unique countries invested in:

Two countries: the fund invests primarily in Canada and the US. Sometimes we look at deals in Israel.

• The number of unique sectors invested in:

B2B cloud and SaaS intelligent enterprise software leveraging a combination of either AI, big data, business intelligence, business analytics or security.

Industries: enterprise software (legal), healthcare, logistics and supply chain, transportation and business analytics

Plans for the year ahead (March 2021 onwards):

The fund continues to flourish. With the increasing digitalisation of the world that we live in, we will continue to focus our investments in emerging technologies with an impeccable team, focusing more specifically on B2B, SaaS intelligent enterprise software that leverages the use of AI.

Milestones achieved at your unit:

Our fund greatly embraces diversity and inclusion; thus, we remain committed to building a strong team with diverse expertise and backgrounds as being a member of Beyond The Billion movement. Furthermore, as a result of the strategic partnership between BCF Ventures and BCF Business Law, the VC internship program for law students has successfully offered a channel to attract top talent and provide exceptional training in preparation for a career in corporate law and this is truly the one and only program in Canada.

Another milestone worth celebrating is the strategic performance of our portfolio company. Being a fund that invests in early-stage primarily, we had managed to pull enough capital to invest in the later stage of a series B round in one of our most successful portfolio companies. This is a huge testament to our limited partners about our work credibility and trust. The fund has a chance to earn an even higher performance return, thanks to double-down on the winning startups.

Pain points and opportunities you have encountered in corporate venturing:

The best opportunities we have encountered in corporate venturing is the instant connection that we have with other CVC funds around the world. Due to the unique structure of a CVC fund, we tend to collaborate together because we understand the innovation that can be extracted from the associated Corporation. As such, we have managed to launch the Corporate Innovation Program, whereby we connected the startups with connections to corporations for any business synergies and with CVC investors for any investment purposes. The programme has been a success with 10 celebrated startups that manage to arrange meetings across North America with some of the leading CVC funds (who are also members of GCV).

The other opportunities we have seen is the ability to utilise the resources of our corporation, which in our case, is the Business Law Firm. For example, we are able to bring in our IP agents (who are experts in any industry, including software and algorithms patenting) into one of our technical due diligence and to have them become our sounding board. Lastly, another opportunity is the constant deal flow that we receive from the partner lawyers in our firm.

What do you think all corporations could do better to make it a stronger industry?

Our team is committed to continuously supporting and aiding our portfolio companies at every stage of their growth. It has been a fruitful experience on both ends; thus we continue to believe that acting as a catalyst for the growth of one’s portfolio companies is a practice that should be common within the VC ecosystem.

As proven in our Corporate Innovation Program, there are certainly some corporations that are willing to open their doors to schedule a first meeting with a startup to discuss any business opportunities. If we could get more and more corporations to continue thinking about innovation and be willing to jump on a first call with startups, then this would strengthen the industry for both the investors and the overall technology ecosystem.

For colour, what did you do prior to your venture role or in your spare time?

The members of our team have all very diverse experiences and backgrounds, which makes the team very complimentary because we all offer different skills and knowledge. While some of our more junior members are still university students who are pursuing a law degree, comprehensively, the team benefits from expertise in the areas of law, accounting, finance, psychology, and engineering.

Prior to VC, Escobar was a recognised technology entrepreneur in the international community of startups, recipient of several awards recognising his entrepreneurial and mentoring skills. He has accumulated a wealth of experience and network as a business mentor for startup accelerators in the US, Canada, Europe and the Middle East, such as Techstars, Startup Canada, Founder Institute, etc. Sergio is also the Director at the Founder Institute Montreal, in which he has incubated over 60 startups by working with each founder to grow their business and to raise rounds from angel to series A. He has been actively developing a diversified investment portfolio of companies both as an angel investor and VC investor.