The for-profit arm DMZ, a Toronto-based incubator, has announced a new fund to support early-stage startups and its first investments.
DMZ ventures will initially commit up to $5 million CAD towards the fund. A DMZ spokesperson confirmed to BetaKit that this amount may increase in the future. The fund will make up to ten investments per year ranging between $100,000 and $250,000 CAD. It will invest in both DMZ portfolio startups and those outside it.
“We don’t just back startups, we also back winners. Each startup we support undergoes a rigorous vetting process and earns DMZ’s stamp of approval.”
According to a spokesperson, the fund hopes fill a critical funding gap at the preseed and seed stage. According to a study by Torys early and mid-stage fundings fell 37 percent in 2023. Abdullah Snobar is the executive director of DMZ Ventures and CEO of DMZ Ventures. He believes that DMZ Ventures’ proximity to early-stage companies will benefit the fund.
Snobar stated in a press release that “no other investor understands their startups as deeply and as well as we do.”
Snobar said, “Each startup that we support undergoes rigorous vetting, earning DMZ’s seal of approval. This is why we don’t just back startups, we also back winners–founders, and ideas, in which we believe.”
The fund, whose spokesperson at DMZ said it will be structured as a corporate venture rather than a limited or general partnership, is comprised of “recycled revenues” from DMZ Consulting and portfolio exits by alumni. The fund will be expected to last five years and will provide lead, co-lead and follow-on investments.
The fund has invested in four startups. Three of them were announced today at Insiders, the incubator’s Insiders Event in Toronto. Leasey.AI is a platform which automates the leasing process and aims to streamline it. It received $100,000 CAD at DMZ Insiders.
At the event, two additional investments were made into Flowjin which offers a tool to turn long-form audio and video content into short-form videos for social media. This tool was awarded $75,000 CAD. Talin has developed a AI-powered talent acquisition platform and sales platform for recruiting and staffing.
The fund’s initial investment was made in Toronto-based Softdrive. This company has developed a virtual computing service that delivers high computing power to a computer locally. It is also an alumnus from DMZ’s incubator programme. DMZ declined the disclose how much money it invested.
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DMZ was founded in 2010 as the startup incubator for Toronto Metropolitan University (formerly Ryerson University). The organization provides startups with mentorship, coaching and legal support as well as assistance in global expansion. In a press release released today, DMZ claimed that it has helped over 830 startups raise cumulative capital of $2.69 billion.
Ryerson Futures Inc., the for-profit arm of the incubator, made investments in seed-stage companies participating in its accelerator program. This program is no longer active. In spring 2020, Ryerson Futures was consolidated to DMZ and renamed DMZ Ventures.
According to DMZ spokesperson, the fund will primarily consider companies in DMZ portfolio but, unlike its predecessor, will also consider companies from outside of the incubator network. DMZ Ventures will also bet more on companies than Ryerson Futures, which previously gave companies cheques of about $50,000.
DMZ partnered this week with proptech investor GroundBreak Ventures in order to provide custom scaling assistance to eight companies offering tech solutions that address Canada’s housing shortage.
Photo courtesy of DMZ, by Natalia Dolan.