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Dispatches from The Valley: Shivon Zilis, venture capitalist at Bloomberg Beta
Dispatches from the Valley is a weekly series where we chat with Canadian entrepreneurs who have moved from Canada to create their fortunes elsewhere.

At 18 years old and coming off an outstanding minor hockey career, Shivon Zilis’s decision not to pursue a spot on the Canadian women’s hockey team shocked her friends, family and coaches. They had assumed that was her dream. But Shivon knew that her education was more important to her. That’s why she accepted a full ride scholarship to one of the world’s most prestigious educational institutions, Yale.

We spoke to Shivon about how hard it is to find hockey leagues in California, why most people don’t truly understand the real reasoning behind venture capital funding and why reading novels is completely underrated.

How’s the hockey in California? 

I played in semi-final match last night. We won, so we’re going to the finals next week. I’m the team’s goalie.

Basically, hockey is non-existent here except for this one league, but that one league is amazing. I lived in New York for five years and it was easy to play there because there were 16 different leagues.

In San Francisco, there’s one rink with four leagues in it. The A league is amazing, and the B league is pretty good, but you only have two opportunities to play good hockey.

Everyone told me that when I came to California I wouldn’t be able to continue playing hockey, but if you do come here and it’s important enough for you to still play, chances are you’ll find something.

From your perspective as a venture capitalist, what are some important things Canadian entrepreneurs should know before they make the move to California or New York?

I think one of the misconceptions about venture capital funding—and Canadians aren’t the only ones that make this mistake—is that it is an indicator of success. The reality is that venture capital funding is an incredibly constrained funding mechanism that is only meant for a very specific subset of businesses. There are lot of Canadian’s building phenomenal businesses, but most of them are not a fit for venture backing.

These are the businesses that are solving an immediate pain point, and they’re getting revenue and customers right away through serving an existing market and serving it well. They are generally serving markets that are in the sub-billions of dollars, however. Those are still amazing businesses, and when I start a business one day, there’s a good chance it will be in that category.

However, with a business that fits the venture-backed mould,  you’re either going to change the world or go bust; you need capital to run that high risk, high reward experiment. If you don’t have that “transform the world or go bust mentality,” then you’re not a fit for venture capital. I think that difference is misunderstood.

What about the difference in the VC landscape between Canada and the U.S.?

A lot of the venture capital in Canada has government backing. In the States, VCs are generally looking for a different kind of investment. Neither is better or worse, they’re simply different approaches.

Government oriented investments should be focused on protecting downside risk and creating jobs. When you think about the kinds of businesses that’s going to attract, it’s going to be ones that are de-risked and have the ability to bring in revenue right away, and those businesses are going to be in markets that are also de-risked

When you take a look at almost every traditional fund in the United States, the approach is the opposite. They care much more about outsized upside potential than downside risk. For almost every investment that we make, we have to be able to envision the story of how it becomes a billion dollar company. It’s not that it has to become a billion dollar company, but it has to have the intention and the desire to do so.

I think one of the really frustrating things is that the factors that make you successful in Canada are not well regarded in the United States. If you’re bringing in a bunch of revenue out of the gate but serving a small set of customers, that doesn’t really mean anything in the U.S. In the U.S., it’s all about the big picture and the viral product market fit.

How did you get your start in the tech world?

I grew up in Markham and my intention was to stay in Canada, but because I played hockey and had a chance to get a scholarship I was encouraged to take the SATs. Once I took them, I realized that I could get into a really good school, and from there I just fell in love with the idea of a liberal arts education. So I ended up going to Yale.

At Yale, I read about the history of America’s tech treasures. I was enthralled by how companies like IBM had transformed society. I ended up joining IBM out of undergrad, which is atypical for a Yale student to do.

At IBM, there was a small group of us that were incubating micro-finance technology in third world countries. It was a curious experience because it was almost like being a startup inside of a big institution. It was like having training wheels. I really enjoyed the experience much more than anything else I had done up to that point.

Prior to Bloomberg Beta’s fund launch, I was a part of Bloomberg Ventures, which operated as a startup incubator where we built new businesses for Bloomberg. Currently, with Bloomberg Beta, our team invests in early stage startups for financial return.

What big opportunities do you see for Canadian entrepreneurs?

Canada has such a deep pool of technical and engineering talent coming out of schools like Waterloo. Machine intelligence is coming to the forefront as a way to solve new types of problems, and the Canadian knowledge base has an inherent advantage in that field.

That talent is very hard to come by and it takes many years to train, so it’s not something that you can teach through a Coursera course. I think the knowledge base in Ontario is well suited to solving those problems better than a lot of other places.

Do you have any favourite books or are there any very influential books that you’ve read recently?

An an early stage investor, I tend to read an insane amount of tech news on websites like GigaOm. When I read novels, I tend to focus on books that can expand my perspective outside of tech. They tend to be the ones that are slightly more creative and mind expanding.Right now I’m reading a Murakami book, which is surrealist fiction and I enjoy the counterbalance.

Are there any productivity tools that you use on a daily basis?

I use Quid everyday for research and thesis development. It helps pull together more creative and abstract connections. We also use a product called Datafox, which does a great job of pulling together information about private companies. It also helps score them.

On the news front, our first investment was a company called Newsle. I use their service everyday to keep in touch with news about my friends and professional network.

What do you think you would be doing if you weren’t doing what you’re doing now?

I’m generally obsessed with providing productive capital—whether investments or loans—so if I wasn’t a venture capitalist, I’d probably be trying to create emerging market credit solutions through micro-finance or otherwise.
____
Christian Borys is a contributor to Toronto Standard. Follow him on Twitter.

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