Why we invested in a 16-year-old founder
Our AI analyst recommended an investment in a high school founder that couldn’t even sign closing documents or serve on their own board
For 4 years we have used an AI bot, called Wendal, to act as our initial analyst. Wendal screens and evaluates deals before a human even looks at a pitch deck or took a call. We built Wendal to help make smarter investments, but an unexpected benefit has been that it removes bias resulting in us funding women and minority founders at a rate 8x higher than the VC average.
Now, we purposefully think about bias when building additional pieces of automated diligence and try, whenever possible, to make sure those models are unbiased. Wendal’s algorithm is regularly monitored to ensure fairness across race, age, and gender. We not only think that this will produce outsized returns but also believe it is the right thing to do.
Racial and Gender Discrimination often get front stage in the Venture Capital ecosystem, as these are the most well documented forms of discrimination that founders have endured for decades. But Ageism is another extremely prevalent form of discrimination that is rarely discussed. Humans generally get along with people that look, and act like them. So, just as investors have shown bias towards founders that largely resemble the average investor makeup (white male) they also tend to invest in founders that are around the same age as they are.
According to MIT, the average age of a successful startup founder is 45, and the average age of our 30 closest VC contacts is 44. We don’t believe that is a coincidence 😊.
Ageism is something we discuss from time to time but isn’t really top of mind until we encounter founders that are well outside the most common founder ages (25–55).
Enter Frenter.
Last fall we invested in a Halifax-based company called Frenter, their CEO is Zach LaBerge. We could probably write a separate post about us finding and investing in a startup in Halifax, Nova Scotia but we’ll save that for another day.
As with any other company, Frenter applied for funding via Wendal at www.wendal.io/invite/connetic (feel free to apply for funding if you are a pre-seed or seed stage startup). Wendal scored the company as a 5-star opportunity and recommended it for investment, Frenter scored in the top 3% of the 8,000+ startups we have in our database.
Wendal passed along the opportunity to Chris Hjelm, a partner from our investment team, to have a call and conduct final due diligence.
Without any background, Chris hopped on the video call and immediately did a double take when seeing Zach on the other end. Through their conversation Chris learned that Zach was still in high school and couldn’t serve on the board or sign investment documents due to Canadian laws because he is under 18. Chris also learned that Zach started his first company at 10, had hired 3 people for Frenter, and had already acquired another startup for his early-stage company. Chris tried not to think of his life at 16 where he was only concerned about getting his driver’s license so he could go on dates without his parents driving, let alone running a startup and raising Venture Capital.
Long story short…. All due diligence looked good: data room was great, Zach’s references were solid, option pool and valuation were in-line with market, and target market was large without much existing competition. If you removed Zach’s age from the equation, this deal was a fairly routine investment given our standard process. It took Chris nearly 2 weeks to finally make the call, with the founder age being the sole topic of debate in his mind.
Fast forward 8 months and Frenter is growing 37% MoM, Connetic has already made a follow-on investment, and Zach is talking to celebrities and large, prestigious VCs about his upcoming seed round. Zach’s hustle, emotional intelligence, and general optimism is contagious just like numerous other successful CEOs in our portfolio.
We are privileged to have Zach and Frenter in our portfolio and appreciate him letting us share this information.
More about Zach Laberge:
Part of our automated diligence process is a proprietary behavioral assessment that we call TeamPrint. TeamPrint has been validated for fairness across race, age, and gender which is why Wendal recommendations are so unbiased.
Zach Laberge:
- Disruptor, one of the top performing CEO personality types
- High Leadership Trait and desire to win
- Enjoys being challenged and thrives on people thinking that he can’t achieve something
- Fast, moves with purpose and makes decision quickly
- Very High Emotional Intelligence
- Gritty and Determined
- Hard-headed and may not adhere to rules and regulations
- Delegates freely
View Zach’s TeamPrint profile HERE
