Tom LaSorda may have found his second act in the world of start-ups, but he’s a manufacturing man at heart. The Windsor, Ontario, native rose through the auto-assembly ranks before reaching Chrysler’s highest office. Last year, he launched IncWell, a venture capital fund loaded with veteran executives, including racing mogul Roger Penske and former Canadian Tire CEO Wayne Sales. LaSorda hears plenty of pitches hawking the next big thing—and he thinks today’s start-ups have plenty to learn from the plant floor.
You visited Waterloo recently to hear pitches. What were your impressions of the tech sector?
The entire region, from downtown Toronto to Kitchener-Waterloo, is a mecca for great start-ups.
Many people say venture capital is lacking in Canada. Is that how you see it?
The biggest issue being raised by start-ups is the lack of access to capital. They’re getting far greater support through government-sponsored programs and grants than they are through the VC world. That’s backwards.
You consider smaller deals, in a loose range of $50,000 to $250,000.
Yeah, nobody ever comes in for $50,000. But it’s the early investing stage. This is where the majority are still flexible with their market approach. We don’t want to run any companies. We generally don’t require a board seat. If they want more advisory support, we just take more equity.
Is the pitch process at all like Dragons’ Den or Shark Tank?
We do the same thing. We invite the companies down, we give them one hour. We call ours the live pitch. You can dance, you can sing, you can bring props if you think it’ll help. Then we drill them with questions. We have a minimum of four to five partners sitting through the live pitch. We meet for 15 or 20 minutes, and we give them an answer within 48 hours. If we’re in, we tell them the terms we’re considering. If we’re out, we tell them why.
So there’s very little bureaucracy.
We have none. In 30 minutes, you can get a very good feel for how great an idea is. We ask how disruptive and innovative it is. If you don’t know your numbers or you don’t know the competition, we try to assess that. Then we do due diligence for maybe 30 days. Sometimes we don’t even take that long. Our fastest deal was 12 days from the time we met them until we transferred the funds. They have a lot of bureaucracy in VC firms. They’ll get back to you in a couple of months.
This must be a big change from your previous career.
A lot of people say that. But every tire, you’re putting new technology in. And you’re betting this stuff is going to work. We made bets every day.
Do you find there are too many start-ups focused on gaining a certain scale so they can be bought out?
The one thing we’re finding—and it’s a trend we’ve got to be careful with—is that it’s becoming very easy for people to work on the Internet/software technology side. No one’s making anything any more. It’s a scary thought. And Canada has some of the greatest engineering schools. If you’re dreaming that your whole stake in life is that Facebook or Google is going to buy you out, that’s not a great business plan. Here’s a fundamental business plan: having more revenue than costs. That’s called profit. If you focus on that, you might get more investors.
Is manufacturing something you’d like to focus on?
We’re about to put a little more focus on core technologies in manufacturing. It’s there if people want it. I just don’t think people give enough credit for how many jobs are created. Take Windsor—Windsor’s devastated.
What do you see for the future of auto manufacturing in Canada? There’s been some tension recently over subsidies.
The problem is on the political side. I don’t believe the federal and provincial governments have done the proper job to educate themselves and the people. Canada is a natural resource supplier—all this oil, all these minerals. But there are not a lot of people employed there. And everybody provides support to the auto industry. But there’s a flip side to that. None of the car companies went bankrupt in Canada. Canada stepped up, and I really appreciated what Canada did to save Chrysler. Now, people might think, “Hey, you’re back again. What are you going to get for that support? What research and development is going to be done for the country? How many jobs are you going to create?” There are things on the social side the companies would be willing to do. There are ways to help the country and the companies, before they’re all gone.
This interview has been edited and condensed.