Startup TNT founders to launch venture capital fund

After a successful 2021 that saw Startup TNT raise more than $3.6 million for 26 companies, co-founders Zack Storms and Tim Lynn are planning on launching their own venture capital fund.

The fund, which Storms teased on LinkedIn this week, is an effort to "get more money off the sidelines and invested into local deals."

Using the connections he's built across 10 summits with more than 200 investors, Storms said the fund will help inject capital from potential investors who may not have time to participate in the investment summits and build capacity among up-and-coming venture capitalists who may want to launch their own funds one day.

While Lynn and Storms are still working out the finer details, the fund itself will be more approachable for entrepreneurs who are interested in delving into investing. At its investment summits, Startup TNT asks for a $5,000 minimum investment as opposed to a $50,000 cheque or higher. Storms sees the fund and Startup TNT benefiting each other as well.

"From an angel's perspective, you're investing in a company that now is also getting support from a sister VC fund, that is independent but connected to Startup TNT. I really believe that the fund can be like the final and really important completion of our goals," Storms said.

Those goals are rooted in community building, which includes fostering relationships with entrepreneurs and investors at events like TNT Happy Hour every Thursday.

"You have companies that come to one summit or to one happy hour, go back, work on their deals ... and then a year, maybe even two years later, here they are again, and they're raising capital. It's this long, low journey," Storms explained.

"So if a VC fund is participating in that, and is able to share some of its management fees and carry that it gets through successful exits, it can share some of that back with Startup TNT. That becomes a long-term sustainable revenue model."

Staying true to the ethos of Startup TNT of "just start," Storms and Lynn have their sights set on June for the fund's first close.

Zack Storms speaks at Startup TNT Investment Summit IV

Startup TNT co-founder Zack Storms speaks to a virtual and in-person crowd at Investment Summit IV last fall. (Steven Csorba)

Beyond that goal, Storms would like to see Startup TNT expand its reach across the country, focusing on "rising star ecosystems" like Edmonton, Calgary, and Saskatoon (which are three of the current host cities for Startup TNT's summits).

"They're kind of the hidden gems, and there's lots of great deals to be had," Storms added.

"From an investor's perspective, if you're investing in all of the up-and-coming deals out of these smaller, high-potential ecosystems, that's a really good investment thesis."

Startup TNT has hired four people over the past four months to further bolster its operations. The organization has nine investment summits on the horizon, with plans to expand to Manitoba — bringing all of the Prairie provinces into the fold.

"Building a company should be the most exhilarating experience of your life as an entrepreneur. And building Startup TNT over the last two and a half years has absolutely been the most exhilarating experience of my life on a professional level," Storms told Taproot.

"Our philosophy has been from the beginning, let's just start making things happen. And once we prove out that there is a need and a demand for what we're doing, we will start to figure out the business model."

The organization has taken a "lean startup approach" itself, by prototyping, testing new ideas on a small scale, learning from mistakes, improving, and iterating.

It has received funding from bodies like the Edmonton Regional Innovation Network (ERIN) as well as Prairies Economic Development Canada (previously Western Economic Diversification Canada). Storms said the non-profit is in the process of securing funds from multiple levels of government, which will allow grants to supply a "significant portion" of its revenue.

Startup TNT also receives income from investors who participate in its summits, as well as corporate sponsors. It is aiming to secure more than $100,000 in sponsorship over the next 12 months, Storms said.

Startup Edmonton also began as an entrepreneur-led non-profit that focused on building the ecosystem through events that connected investors, entrepreneurs, and other contributors. It was acquired by the city and became part of the now-defunct Edmonton Economic Development Corporation (EEDC) in 2014. It is now a program within Innovate Edmonton, which replaced aspects of EEDC in May 2020.

Despite the grassroots similarities of the two organizations, Storms maintains that Startup TNT is different because it is focused on building out the investment community and the sophistication of local investors.

"As some have described it, we're like an on-ramp for a new angel investor. If you look at our investment summits, most of the programming is actually geared at training investors. (The entrepreneurs) learn and they get a lot of value out of the hands-on experience talking to investors ... but we don't actually offer the entrepreneurs a whole lot of formal programming," he said, adding that they are referred to accelerators or Startup Edmonton for more programming support.

Hear Taproot's full interview with Zack Storms on Episode 5 of Bloom.