Google affiliate Sidewalk Labs has been trying to win the support of Canada’s venture-capital community in the months leading up to a crucial deadline for its proposal to develop a high-tech neighbourhood on Toronto’s waterfront.
The New York urban-planning firm co-hosted a dinner for about 15 venture capitalists (VCs) and other investors on the rooftop patio of the Broadview Hotel in Toronto’s east end in July with hopes to sell them on the controversial project. It was co-hosted by the Canadian Venture Capital and Private Equity Association, or CVCA.
Among those in attendance were CVCA chief executive Kim Furlong and chair Peter Dowse; Sidewalk head Dan Doctoroff; Mark Skapinker, managing partner of Brightspark Ventures; Janet Bannister, partner at Real Ventures; and Bruce Croxon, managing partner of Round 13 Capital.
Sidewalk, a subsidiary of Alphabet Inc.., has since been taking meetings with local VCs and startups whose interests might align with the kind of city-centric technology it hopes to implement in its Toronto project, including at the Canadian Innovation Exchange conference in Toronto last week. Sidewalk revealed in its June draft master plan that it wanted to seed $10-million into a venture fund for local, early-stage companies focused on “urban innovation” and is seeking co-investors to grow the fund.
Tripartite development agency Waterfront Toronto awarded Sidewalk the right to plan a 12-acre plot of prime real estate on the shore of Lake Ontario two years ago this month. Since then, the company has said it hopes to implement technology there that could improve urban life, from artificial-intelligence-powered heating and cooling to adaptive pedestrian crossings to underground freight-and-waste-moving systems.
The company has been on a charm offensive for the past two years as the ranks of its detractors grew from a few vocal tech executives and open-data advocates to include politicians from all three levels of government, renowned academics, intellectual-property lawyers and the Canadian Civil Liberties Association.
The Globe and Mail reported last spring that Sidewalk staff had an exclusive dinner last October with many of Ottawa’s top-ranking deputy ministers at the federal Department of Innovation. The company also has regular meetings with a large “advisory panel” of dozens of urbanists, philanthropists and executives, and regularly lobbies all three levels of government.
Critics have long argued that Canadian technology companies should play a role in developing such a “smart city” community on Toronto’s waterfront and Sidewalk has said it will involve Canadian tech. But few specific details have emerged about what that role would look like, even as Sidewalk and Waterfront Toronto negotiate terms of their latest deal ahead of an Oct. 31 deadline.
The project has polarized the country’s tech community, with critics such as BlackBerry pioneer Jim Balsillie arguing that Canadians stand to lose out on massive future revenue opportunities from Sidewalk-developed technologies. Others, such as Clearbanc co-founders Michele Romanow and Andrew D’Souza, have thrown their support behind the project, calling it a catalyst for the tech sector.
That tension extended to tech investors who were invited to the Sidewalk and CVCA’s dinner. Some VCs who were invited decided to stay away because of frustrations about how Sidewalk was addressing concerns from the tech community. The meeting focused on selling the benefits of the Sidewalk project in general, rather than a specific opportunity to co-invest in Sidewalk’s fund. Sources invited to the meeting were granted confidentiality by The Globe, owing to fear of damaging business relationships.
Brightspark VC Mr. Skapinker said that while there were some pointed discussions about Sidewalk’s support for Canadian venture, “it was quite a positive meeting.” Mr. Croxon, who attended only briefly, said he remained concerned about the Sidewalk project’s unanswered questions. Without guarantees around Canadian benefits from the project’s intellectual property, “I am not in favour of blindly going ahead," he said in an interview. (Ms. Bannister declined to comment, but confirmed her attendance.)
Sidewalk’s director of investments is Nicole LeBlanc, who joined from the Business Development Bank of Canada last year. Sidewalk declined to make anyone available for an interview for this story because of its continuing negotiations with Waterfront Toronto. Details of its venture fund are expected to be revealed in the coming weeks, should both Waterfront Toronto and Sidewalk agree to proceed after their Oct. 31 deadline.
The CVCA’s Ms. Furlong said in an interview that Ms. LeBlanc suggested to meet with the venture-capital community after Sidewalk published its draft master plan in June in order to share details. “One of the key pillars of our organization is to connect people for co-investments and deal flow,” Ms. Furlong said. “It was a dinner to network, and for Sidewalk Labs to talk about the plan that had just been released.”
In August, Sidewalk joined forces with the Ontario Teachers’ Pension Plan to launch an infrastructure-investment company that would invest in projects across North America.
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