Metalab Ventures Launches to Invest in Product-Led Startups
After nearly two decades of helping startups build products, Canadian interface design firm Metalab has launched its venture arm, Metalab Ventures, to invest in product-led startups. The move comes as corporate venture capital continues to gain traction over the last decade.
A Brief History of Metalab
Metalab was founded by serial entrepreneur and investor Andrew Wilkinson in 2006. Over the years, the company has supported product innovations from companies like Slack, Coinbase, Uber, and Tumblr. Metalab often works closely with startups, acting as a co-founder to help them bring their products to market.
The Shift to Venture Capital
CEO Luke Des Cotes explained that Metalab had a record year in 2023, with the company involved in the development of 40 products that went into the market last year. With the launch of Metalab Ventures, the venture arm will play the role of a long-term value investor, essentially "putting our money where our mouth is," Des Cotes said.
A Long-Term Approach
"We want to go on a journey with them for the next 10 to 12 years," Des Cotes emphasized. "We’ve been asked over and over again by founders when we will invest, and sometimes we have, but it’s been very ad hoc in the past. Today, we make that a formal process."
Product-Led Startups
Metalab Ventures has raised $15 million in capital commitments for its first fund to invest in product-led startups where strategy, design, and technology are the key differentiators. Des Cotes explained that "product-led" refers to how a product will be the differentiator for the business.
Most businesses have some major component of success riding on how well a product is created and how well it’s connecting to the user. Metalab Ventures seeks out founders who "believe in the power of design as a tool to be able to connect with users in a way that’s different and special," Des Cotes said.
The Investment Process
Des Cotes and David Tapp, head of partnerships at Metalab, are the general partners at Metalab Ventures. They will invest in 25 to 35 startups at the pre-seed, seed, and Series A stages. So far, the firm has made a handful of unannounced investments, Des Cotes said.
The limited partnership makeup of the new fund includes institutional investors, funds to fund, angel investors, and founders of companies with whom Metalab has previously worked. Metalab is also an LP in the fund.
Diligence Process
When determining who to invest in, Metalab performs diligence on thousands of founders each year to determine who it will help. This process was shifted to Metalab Ventures in the way it evaluates investments, Des Cotes said.
The investment process includes getting to know the founders and if the firm can add value. Metalab often taps into its 160-person workforce for design, technology, product, and research leadership.
"We’ve already operated very much like a venture fund," Des Cotes said. "Now we are working through that process to understand what’s the product, what’s the opportunity, what’s the value that can be created here. When we believe in this business, we think of human capital as being our scarce resource that we can then deploy into those businesses."
The Future of Corporate Venture Capital
Corporate venture capital has found its stride over the last decade. With Metalab Ventures joining the fray, it will be interesting to see how the landscape evolves.
As Des Cotes noted, "We want to go on a journey with them for the next 10 to 12 years." This long-term approach is refreshing in an industry where many venture firms are known for their short-sighted investments.
Conclusion
The launch of Metalab Ventures marks an exciting new chapter for the company. With its focus on product-led startups and long-term value investing, Metalab Ventures is poised to make a significant impact in the venture capital landscape.
As corporate venture capital continues to gain traction, it will be fascinating to see how Metalab Ventures contributes to this growing industry.
