Edit No. 20: Canada is producing exciting consumer brands and retail startups with global potential
It's time to broaden the discourse around our innovation economy to include companies that are writing the next big consumer success stories
There is so much momentum behind the Canadian technology sector right now. We are constantly reading about it in the press. The pandemic forced our consumers and businesses to accelerate their adoption of software and Internet-driven products across all aspects of their existence. Consequently, and as reported by the Bank of Canada, digital technologies have played a central role in safely sustaining economic activity in our country during the 2020 COVID-19 recession — a period that saw Canada’s economy shrink by 5%.
Being in the technology industry myself, I’m enthusiastic about how local companies in the sector are increasing our national output and creating thousands of jobs. But I do find that the discourse around “innovation”, “tech”, and “startups” here tends to centre around the same names repeatedly — be it names of individuals or names of companies.
Now is as good a time as any other to widen the aperture and broaden the discourse around Canada’s innovation economy to more actively include companies that may not directly be in the business of developing hard technology, but instead are perhaps enabled by it — and/or new business models — to disrupt their respective industries. Software is “eating” away at every single sector now, after all. As such, virtually every company is having to become a “tech company”.
As a first step towards widening the aperture, I’d like to propose that we start talking more about the emerging crop of consumer brands and retail startups being built in Canada. These businesses are reimagining how new business models and emerging tech can be used to “eat away” at consumer cyclical industries. Their impact is transcending our borders and is truly international in nature, thanks in part to being run by extremely strong brand builders and product curators.
In 2017, I contributed an article to The Globe and Mail about how Canada has all of the right ingredients to become a hotbed for powerhouse companies in the consumer brand and retail verticals. I specifically focused on analyzing the contributions of discretionary / cyclical brands and retailers to our national economic output, and the numbers are as stark today as they were back then.
To reiterate some of my commentary from that time (while updating it to reflect the latest data), there are over 280 publicly listed cyclical brand and retail companies headquartered in Canada, France, Italy, the United States, and the United Kingdom — the latter four countries are known for their prowess in consumer brand building, hence why I like them as comparable markets for Canada. It is interesting to note that the Canadian companies in this dataset have created more value on an absolute and per capita basis when compared with those based in Italy and the U.K. Our companies also have higher revenue growth rates and gross margins (on average) when compared to businesses headquartered in the other four countries.
Although the dataset doesn’t account for private company activity or metrics, it is still representative in its own way. If you’re surprised by the findings, ask yourself why. Canada is home to the likes of lululemon and Canada Goose, among so many other incredible brands and retailers — I have the good fortune of working with a few of them through Wittington Ventures.
It’s worth noting that the dataset I referenced doesn’t even include major success stories such as SSENSE — a Montreal-based online luxury retailer that has garnered a massive international audience. SSENSE recently announced a minority investment from Sequoia Capital at a valuation in excess of CAD $5 billion. As reported by BoF, the financing marks the first-ever external investment for the company, which is known for its curated selection of brands, ambitious editorial strategy, and younger audience.
— Susan K Robertson (@susinsky) June 8, 2021
Although Canada fares better than Italy and the U.K. based on the public company dataset that I’ve been alluding to, I should call out that we still have a ways to go before matching the brand building and retail prowess of France and the U.S. This is probably less surprising given the relative strength of the French and American cultures in relation to the creative arts and/or technology development. To put it in numbers, U.S.-based publicly listed cyclical consumer brands and retailers generated 4x the market value per capita than their Canadian counterparts. That having been said, I’m of the opinion that if they can get more output out of building consumer brands and retailers, then so can we — with the right approach, of course.
There is clearly a ton of potential in building the next big consumer brand or retailer based out of Canada. We need to continue investing in founders, communities, and the economic infrastructure around this industry to maintain the momentum we’ve garnered over the past few years — similarly to how we’ve done it for the tech industry. I’ll repeat three things that we can do more of to keep the ball rolling:
- Access to capital. Investments in Canadian private consumer startups increased at a CAGR of 19% between 2011 and 2020. Over that same period, private capital deployed in U.S.-based consumer startups increased at a CAGR of 30%. Access to more funding among founders and companies across all stages can accelerate industry momentum. More funding doesn’t necessarily mean in the form of venture capital, which has recently fallen out of favour among some consumer brand companies for a variety of reasons. It can also mean traditional private equity or inventive forms of credit. For example a Canadian startup, Clearco, has been making it easier for DTC brands to access non-dilutive revenue-based financing.
- Generating consumer awareness. We need to support initiatives that promote Canadian brands and retailers, and make them accessible to the masses the world over. In addition to community building, there are so many new technologies at our disposal that can help brands and retailers speak to international audiences, while remaining based in Canada. Brands such as lululemon have done an incredible job leveraging technology to scale globally — check out my interview with Tom Waller (SVP of Advance Innovation at lululemon) for more insights on what has helped make the company a huge hit with customers around the world.
- Communication between consumer startups and other industries. As mentioned, Canada has a growing pool of expertise in major industries such as technology. There are many opportunities for cross-collaboration between consumer startups and other industries to drive innovation, particularly as it relates to areas such as textile research and development, branding, and logistics and fulfillment. We have so many startups innovating across all parts of the retail value chain. Seeing them work together has already yielded very positive outcomes thus far, and we need to continue fostering more of this collaboration.
I’ve talked about these key ingredients before, and also recognize the importance of physical clustering in order to make them more effective. It is difficult to address the key needs highlighted above without a plan to create high-impact consumer startup clusters across the country, which would bring the right pool of talent and resources together to propel the industry forward and generate significant economic impact in hyper-local contexts. Luckily, we have natural hot-spots such as Vancouver, Toronto, and Montreal. These cities host the largest creative arts scenes in the country, as well as diverse business and technology communities that consumer startups need to collaborate with closely. Check out these updated statistics on New York’s fashion scene for inspiration. Their creative scene generates so much economic value for the city, and represents the significant impact that clustered communities of like-minded people can generate.
I’ll continue to come back to this topic over time, especially since about a year ago a very popular newsletter based in the U.S. was razzing on Canada for not really having any consumer startup success stories. I couldn’t disagree more. We’re early in the journey and don’t talk as much about our companies — it doesn’t mean that they don’t exist! But I do agree that we can do more to beat the drum and keep the momentum going.
In the spirit of today’s post, I rounded up a list of emerging Canadian brands and retailers that have received exciting coverage in recent months. This list is by no means exhaustive, which proves the point I’m trying to make above. 😃
- Press: The most comfortable sneakers for men to step out in style
- Context: Casca is building the perfect pair of customizable shoes that are stylish and functional. Its founder — Braden Parker — believes that the future of consumer goods is going to be on-demand, custom, and local. I had the chance to share Braden’s story with Fire Ant readers a few months ago. Check it out to learn more about what he and the team at Casca are up to.
- Press: This stackable cookware saves space and cooks like a dream
- Context: I met the founder of Ensembl — Kate Swanson — well before she officially launched her now buzzing housewares brand. In building Ensembl, Kate has paired a design-forward vision with relentless passion to re-imagine a stagnant product category. I was so happy to see Architectural Digest cover her stackable cookware set a few weeks ago.
- Press: Montreal twins behind the Want retail brand try to take on the likes of Amazon with less-is-more approach
- Context: Dexter and Byron Peart are towering pillars of the Canadian fashion industry. Their new venture Goodee meshes their keen eye for design and high quality products with a feel-good mission that any customer can get behind. The company is empowering creators, makers, and consumers to make a positive impact through an inclusive global marketplace where good design and good purpose intersect.
- Press: Toronto e-commerce company Knix Wear raises $53-million
- Context: Knix got its launch on Kickstarter a few years ago. If I recall correctly, at the time it was the highest grossing fundraising campaign on Kickstarter ever. It has been remarkable to witness the founder — Joanna Griffiths — build an incredible brand that has now become a leader in the intimates category. Knix tapping Ashley Graham as its new Global Brand Ambassador aptly signals the company’s global ambitions.
- Press: Mejuri launches new collaboration with Goop
- Context: Mejuri has made a name for itself in the jewelry world as an affordable luxury brand. The company has some of the best consumer investors in the world behind it. The founder — Noura Sakkijha — studied industrial engineering and worked for finance companies in Toronto before getting back to her family’s roots (in jewelry), and starting Mejuri. Their team has truly shaken up the conversation around jewelry, and how it’s marketed to women.
6. Regimen Lab
- Press: Is this the best skincare brand of 2021?
- Context: The founders of Regimen Lab have been quietly building the next Deciem out of a small manufacturing lab in Toronto. I befriended one of them — Alex Apostolopoulos — when Regimen was just an idea. One of the biggest beauty influencers in the world — Dr. Dray — recently suggested that Regimen could be the best new skincare brand of 2021. Having used Regimen’s products myself, I can get behind her endorsement.
- Press: ‘Unbreakable’ pantyhose startup Sheertex overcomes disruptions in quest to make over industry
- Context: Sheertex is the brainchild of Katherine Homuth — a serial entrepreneur with a few startups under her belt. I appreciate Sheertex’s R&D prowess and the company’s ability to apply a science-based approach to their manufacturing process, which also gives it a leg-up on the consumer marketing side. The formula is clearly working — the team at Sheertex manages an 8-figure P&L, and has raised over $60 million in private capital to date.
- Press: ‘Coveteur’ Cofounder Is Redefining Modern Luxury With Her Cozy Lifestyle Brand Sidia
- Context: I had the chance to connect with Erin Kleinberg recently, who is wholly committed to making Sidia the next big Canadian luxury brand. Having built world-class media startups such as The Coveteur in the past, and working closely with the most iconic luxury brands through her PR agency, Erin certainly has the chops to hit another home-run.
See below for a list of digital commerce startups that announced a funding round during the month of August. I have to call out Gatik, a Wittington Ventures portfolio company 🔥
- Suma Brands | E-comm merchant consolidator | $150M | Multiple leads
- D1 Brands | Amazon FBA acquirer | $123M Series A | Multiple leads
- Brandless | DTC startup | $118M | Clarke Capital Group
- Gatik | Autonomous delivery network | $85M Series B | KDT
- Octane Lending | Consumer financing | $52M Series D | PIC
- Nacelle | Headless e-commerce infrastructure| $50M Series B | Tiger Global
- Coco | Last-mile robot | $36M Series A | SVB, Founders Fund
- MakersPlace | Digital art marketplace | $30M | Multiple leads
- Flip | Beauty social commerce | $28M Series A | Streamlined Ventures
- Balance | Payments for B2B e-commerce | $25M Series A | Ribbit Capital
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