Two like-minded venture firms have formed a strategic partnership and marked the occasion with a first joint deal, backing the developer of an electronic nose sensor.
TandemLaunch, a creator of synthetic startups in the consumer-electronics space, agreed to partner with Mistral Venture Partners, a seed investor in information-technology companies.
The pact formalizes an already close bond between the firms, rooted in shared values and unconventional strategies, Mistral Managing Director Code Cubitt and TandemLaunch General Partner Helge Seetzen told PE Hub Canada.
But it also takes the collaboration up a notch, including giving Mistral an early window on opportunities emerging from TandemLaunch’s portfolio.
Founded by Seetzen in 2010, TandemLaunch gathers ideas and patents from top universities in such areas as artificial intelligence, audio-visual processing, computer vision, smart sensors and wireless systems. The raw material is used to build companies, which are then capitalized and prepared for follow-on VC.
Graduates of TandemLaunch’s Montréal venture studio have attracted considerable notice, including among investors.
In recent weeks three startups, motion-detection-software provider Aerial Technologies, 3D imaging platform Airy3D and voice-recognition specialist Fluent.ai, have all closed seed rounds backed by global VCs. Some of the biggest names include Robert Bosch Venture Capital, Telefonica, WI Harper and Youku-Alibaba.
Cubitt says these deals confirm TandemLaunch’s unique market role and “ability to identify disruptive, hard-science innovation from world-leading institutions and then transform it into a game-changing product.”
Mistral was founded by Cubitt in 2012. It aims to be the first institutional investor in startups that sell to “smart enterprise” businesses leveraging AI, cloud, mobile and other internet technologies. To help portfolio companies grow, the Ottawa investor taps a broad, cross-border network of VC contacts.
With the new partnership, Mistral will have a “first look” at TandemLaunch graduates and focus on scaling those of interest, Seetzen said. Mistral’s “strong understanding of technology” and “deep operational experience” positions it to assist startups at this crucial stage, he said.
Seetzen has particular confidence in Cubitt, whose consumer-tech background lends insight into TandemLaunch’s company-building process. “Code is one of the few VCs who can walk into our office and understand right away what we’re doing,” he said.
Mistral and TandemLaunch also have in common an unusual investor base. Both firms raise funds primarily from entrepreneurs and operators, many of them located in the United States, Europe and Asia. Taken together, limited partners total more than 100.
Along with supplying capital, Mistral and TandemLaunch LPs are active in the portfolio, offering advice and mentorship to founders and CEOs. As part of their partnership, Cubitt and Seetzen intend to accelerate this activity through joint events.
Beginning in September, Mistral and TandemLaunch will hold conferences that connect their respective LPs with select portfolio companies. Dubbed “collision days” by Cubitt, the events will give startup teams a chance to discuss growth issues and engage in problem-solving with C-level executives.
Mistral and TandemLaunch inaugurated their pact recently with a joint investment in Stratuscent, a Montréal chemical-sensing startup that is designing an electronic nose. The round’s terms weren’t disclosed.
Stratuscent’s tech platform combines a sensor with machine-learning algorithms to detect gases regardless of chemical makeup. It is based in part on innovation found at and licensed from NASA‘s Jet Propulsion Laboratory at the California Institute of Technology.
The solution has many potential commercial applications, Seetzen said. They include use in connected home appliances, monitoring airborne contaminants, checking air quality and exhaust in cars, and measuring industrial emissions.
“Stratuscent’s is the type of disruptive technology that comes along once in a half decade,” Cubitt said.
Still in stealth mode, the company is led by CEO Tullio Panarello, formerly of Solantro Semiconductor, CTO Ashok Prabhu Masilamani and AI Research Director Mojtaba Khomami Abadi. Proceeds of the seed financing will help them execute a go-to-market strategy.
Cubitt and Seetzen say they are anticipating more joint deals and initiatives in the months ahead.
TandemLaunch closed its third fund last November at $15 million. Mistral is currently raising its second fund. Mistral Venture Partners II held an initial close in January, collecting most of its $35 million target.
Photo of robot smelling flower courtesy of Westend61/Getty Images
Photo of Helge Seetzen courtesy of TandemLaunch
Photo of Code Cubitt courtesy of Mistral Venture Partners