Happy New Year, everyone! While we’re excited to step into 2025, we want to take a moment and reflect on the incredible journey we've had at Version One over the past 12+ years. The experiences and lessons learned over this time have been pivotal in shaping our investment thesis and all that we do.
We recently shared three key trends with our limited partners during our Annual General Meeting. And it’s interesting to see how V1 has evolved:
Our share of US and International deals have grown.
Over the years, there’s been a big shift in the geographic makeup of our portfolio. When we first launched Fund I in 2012, nearly half of our portfolio was made up of Canadian companies. This focus on Canada persisted through Fund II, where Canadian companies still represented 45% of the portfolio. By Fund III, that number dropped to 25%, and to date, Fund IV has slightly less than 25% Canadian representation.
This shift makes sense for several reasons. First, we’ve doubled down on our partnership with Angela in the US, thus expanding our reach. We’ve also made more investments in crypto, where regulatory environments are often more favorable outside Canada (and the US). The COVID-19 pandemic led to the rise of remote and distributed teams, a trend that continues today as companies seek cost savings and access to global talent. Most recently, we’ve become increasingly bullish on India, a market full of opportunity, which we will be sharing more of very shortly.
The portfolio value (Fair Market Value) created by US and International companies is increasing.
In the early years (Funds I and II), we saw more value created from every dollar we invested in Canada compared to the US. For instance, in Fund I, every dollar invested in Canada generated $12 in value, while in the US, it created $7. However, as our focus has evolved, so has the geographic distribution of value creation. By the time we reached Fund III, the dynamics shifted. A dollar invested in Canada generates $2.30, while in the US, it yields $3, and internationally, it generates $9.10.
The primary driver of these numbers (which we’ll dive into more in the next paragraph) is that much of the FMV in our later funds is attributed to crypto investments, a sector that has seen substantial growth and is predominantly based outside Canada.
The categories that drive Fair Market Value are changing.
Over time, the categories driving our portfolio’s FMV have evolved. SaaS was a key driver in Funds I and II, delivering strong returns. But as we’ve moved into Funds III and IV, crypto emerged as a major force.
We’ve certainly picked some winners, but there have also been some categories and themes that haven’t worked. E-commerce and healthcare didn’t deliver as expected, and we completely missed the boat on Fintech. And interestingly, one of the categories we were most recognized for in the early days — marketplaces — still has a solid track record, but hasn’t scaled as dramatically as SaaS or crypto.
So how does this reflection shape our approach moving forward?
When we first wrote our investment thesis in 2020 (“We back mission-driven founders at the earliest stages”), we made it clear that A+++ founders were our core focus. This remains true today and will always be central to our strategy. However, we realized that one key ingredient was missing: timing.
With that in mind, we’ve updated our thesis to: “We back mission-driven founders who are early in new areas.” This shift in focus means that, in addition to identifying exceptional founders, we’re now zeroing in on those who are early movers, riding the crest of emerging waves. In essence, we want to back category creators…those founders who are pioneering entirely new spaces and trends. This updated thesis is reflected in our refreshed website.
So why the shift? It’s simple: we’ve seen the most success when we’ve identified and invested early in emerging waves. Take the first wave we rode: Vertical SaaS between 2012 and 2014. Our second wave was crypto between 2016 and 2020. Now, as we turn to the future, we’re on the lookout for the next wave to catch.
What could the next wave be? There’s certainly a lot of attention on AI these days, and we’re focused on the incredible potential it holds. We also believe the next big wave(s) could come from deep tech and/or India — two areas we’re keeping a close eye on.
As always, our goal is to back founders who are leading the charge in new frontiers. So, if you're a founder building in AI, deep tech, or India, or if you know outstanding mission-driven entrepreneurs who are on the cusp of these waves — please reach out to us! We’re excited to continue this journey, discovering and supporting the people who are shaping the future!