It is clear that many of the behaviour changes the pandemic brought on are here to stay. 2020 accelerated the adoption and growth of a number of trends we’re excited to invest in; digital transformation, the shift to the cloud, ecommerce software and AI. It feels appropriate to reflect on what has been one of our most action-packed years to date, and look toward 2021 with the hopes to maintain that momentum.
In 2020, we participated in 10 financing rounds, two of which were new investments - one in the robotic automation space and the other in security and compliance. Our portfolio companies raised more than $450M collectively, including Ada Support’s $44M Series B, Top Hat’s $55M Series D, and CallRail’s $56M follow-on financing. Two of our companies had successful exits, Spot acquired by NetApp and Kindred acquired by Ocado.
We also launched the High Velocity Community, a community of experienced executives who have founded/scaled/operated businesses at scale. This community provides insights to us on new deals, recommends areas and companies we should be looking at and helps our portfolio CEO’s think about how to build companies to scale.
Leaders Fund partnered with the University of Waterloo, the Schulich Foundation and Communitech to launch the Leaders Prize, a year-long contest with the challenge to use AI to build a solution to the problem of fake news and misinformation that has been undermining democracies. The contest brought together 150 of Canada’s brightest minds to tackle a problem whose importance became more evident this year than ever before. We gave $1,000,000 to the winner of the contest, whose solution automated the work of fact-checkers with 84% accuracy.
We expanded our team, adding our newest team member, Isabel Hazan, who will help Leaders Fund continue finding, funding and working with exciting companies.
Despite not being able to get together in person, we hosted a number of events to bring our community together, including bringing on Kirk Simpson, co-founder and CEO of Wave to share some of his learnings after being acquired by H&R Block.
As we look to 2021, there are a number of sectors we are excited about.
The Ecommerce Revolution Accelerates
2020 was the year in which many of our purchasing behaviours moved online.
The pandemic forced merchants and retailers to adopt software that allowed them to sell online and try to replicate the same experience consumers have with Amazon. This meant moving stores and advertising dollars online, adopting software to market to and convert consumers at higher rates, and adapting supply chains and fulfillment to meet modern consumer expectations.
Shopify was clearly a beneficiary of this trend and reinforced their position as the platform upon which ecommerce outside of Amazon lives. While Shopify does a number of things merchants need really well (checkout, site design, inventory/backend), we believe that there is a class of software companies operating both in Shopify’s ecosystem and others that are tied to the growth of ecommerce and will become large standalone companies. Klaviyo and Yotpo are just two of the breakouts thus far, but we’re excited to find the next ones.
Robotic automation increases productivity of ecomm supply chain
The pandemic also forced supply chains to innovate, and 2020 was the year that the adoption of robotic automation in shipping and fulfillment took off.
We have made two investments along this thesis of warehouse automation tied to Ecomm in Kindred and Seegrid. The Kindred.ai acquisition and other significant activity in the space reflects automation rising to the top of executive teams’ concerns. Seegrid, a leading software and robotics company, uses proprietary computer vision technology to turn tuggers and pallets into autonomous mobile robots that can move heavy payloads around a warehouse. With labour shortages at an all time high, Seegrid helped companies adapt and saw huge demand for their autonomous guided vehicles, doubling their revenue in 2020.
Ecomm sales reached $795B in 2020, up nearly $200B (30%+) from $600B in 2019. With sales expected to reach $843B in 2021, we remain bullish on the autonomous robotics market and are continuing to seek out exciting companies in this space.
Digital transformation becomes real
Ecomm was not the only industry forced to adapt during the pandemic. Every company in the world woke up to the fact that the way we work, and consumer expectations have changed for good. Timelines to adopt solutions like video conferencing or collaboration tools were moved forward, and digital transformation became a board level initiative. We believe that the companies that will thrive in the future will be those that adopt software to improve their security postures, operations and offerings, and we’re interested in investing in the software companies powering this shift.
Early innings of the shift to the cloud
As we mentioned earlier this year in our reflections on our journey with Spot, we remain optimistic about the shift to cloud and the opportunity that lies ahead. Cloud penetration is still only at 14%, and while COVID-19 has accelerated this transition, boosting the estimated cloud spend in 2020 by $13B, we still believe that we are in the early innings of this trend. We continue to get excited by the companies powering this shift, making it easier for companies to move workloads to the cloud and help them reduce cost and complexity once they’ve adopted cloud infrastructure. We are actively seeking out more star players in this space in 2021.
Overall, 2020 was an incredibly turbulent and interesting year. We look forward to watching some of the momentous trends of the last year roll into 2021, and watch new ones emerge keeping the landscape fresh and exciting.
Onwards and upwards!
The Leaders Fund team