Sprout Fund, an Alberta-based venture capital firm, has designated a representative to scout for more opportunities in B.C. as part of its second fund.

“We have investments across different industries and verticals,” Abhay Ghatpande, the appointed senior associate, told the Vancouver Tech Journal. “We have seen a lot of really incredible founders and ideas coming in from B.C., so we are bullish on [the province].”

Founded in 2018, Sprout focuses on seed-stage B2B software startups in Western Canada. It has allocated approximately $1.8 million in ventures based in B.C., seven of which are among the 11 companies in Fund II. Over the next year and a half, Sprout intends to make an additional 15 commitments, with initial cheques ranging from $100,000 to $300,000 and up to $500,000 for follow-on rounds.

The firm has, so far, invested in a range of markets, including enterprise, finance, cybersecurity, real estate, health, and gaming. Within Vancouver, its portfolio companies include Dyne, a suite of restaurant tools leveraging ML for marketing, inventory, supply chain, and other needs; Levr, a marketplace using AI to assist small businesses in accessing loan options; and Styx Intelligence, a platform employing natural language processing and ML to protect assets against cyber and digital risks.

Sprout’s diversified approach comes from the belief that “good founders and businesses can come from anywhere.” What it is keen about is an entrepreneur’s plan for scalability, particularly in terms of interesting use cases that can be applied to adjacent markets and reducing customer acquisition costs as the startup grows.

“I always encourage founders to think big and be ambitious,” said Ghatpande. “You sometimes need to suspend your reality [to envision] how this can become really big. You will find the money, the resources, and the people if you can show that vision and the change that you can make.”

The firm also values teams that demonstrate diversity and hustle. To them, this is defined by cultivating diversity of thought — where different perspectives, experiences, and ideas are valued — finding creative ways to overcome constraints, and identifying opportunities for network effects, such as through virality or community building.

“There's this phrase in the startup world: first-time founders focus on product, and second-time founders focus on distribution,” explained Ghatpande. “Ultimately, how are people going to discover you? [...] We see a lot of founders miss out on that [...] You don’t want to throw millions of dollars at advertising and marketing.”

What Sprout requires when first evaluating a startup beyond pitch decks and memos are market signals. These could include any form of traction — such as community engagement, waitlist numbers, or newsletter subscriptions — that gauge how many people are interested in a product and whether they’re willing to pay for it. 

The firm generally advises startups to build relationships with investors well before planning to raise capital. For example, pre-seed startups should engage with both pre-seed and seed investors, while seed-stage startups should connect with seed and Series A funders. The advantage being twofold: investors are more likely to commit when funding is needed, and founders gain valuable insight into the milestones required to secure future rounds. Sharing progress on a regular basis is also encouraged.

“Updates are a great way to ask for input, resources, or support,” Ghatpande highlighted. “Not everybody will engage, but there are people like us who will, right? We'll say, 'How can I help this founder out?' If I know somebody and can open some doors somewhere, I'm more than happy to do that.”

Along with active mentorship being part of Sprout’s ethos, it has been pivotal in driving its portfolio companies’ valuations — some increasing by as much as 3x to 10x in less than three years, according to the firm.

Notably, Ghatpande has helped startups scale from $0 to over $50 million in revenue. The Sprout team also includes Kristina Milke as general partner. She is the former president of Valhalla Angels, Western Canada’s largest angel network, and the previous SVP of Investopedia, a finance publication acquired by Forbes. In addition, Shaheel Hooda, also a general partner, has backed ventures that achieved 10x returns by Series A.

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