Seven weeks ago, Damien Steel, head of OMERS’ venture capital arm, said he’d gladly write Kirk Simpson “a blank cheque for his next adventure” as the technology entrepreneur exited Wave Financial Inc., three years after its purchase by H&R Block HRB-N for US$405-million.
Mr. Steel, whose pension fund employer quintupled its early $10-million investment in Wave, has made good on that pledge. OMERS (Ontario Municipal Employees Retirement Systems), along with the Weston family’s Wittington Ventures, Round 13 Capital and several North American angel investors have invested US$5-million in Mr. Simpson’s new company, Qui Identity Inc.
Qui is a Toronto-based Web3 play that is little more than an idea, a pitch deck and five people. (Web3 refers to an emerging generation of Web technology that encompasses decentralized applications, blockchain-based programs and artificial intelligence.) But Mr. Simpson, one of Toronto’s most successful software entrepreneurs, is one of those five people, and another is Peter Carrescia, a veteran tech investor and entrepreneur who financed Wave in 2011 when he was at OMERS and joined the small-business software vendor in 2016 as senior vice-president of strategy and corporate development.
“I hold these two individuals in the absolute highest regard,” Mr. Steel said. “This is a super early-stage investment for OMERS Ventures, but we were happy to make an exception for these two.”
The other main investors needed no convincing or introduction either: Wittington Ventures managing partner Jim Orlando also worked for OMERS Ventures, while Satraj Bambra, managing partner of Round 13′s Digital Asset Fund, which led the Qui financing, once worked for Wave as a mobile developer.
For Mr. Orlando, the investment proposition was simple.
“This comes down to, it’s a really interesting problem and these are the right people to back to figure out a way to solve this problem,” he said.
With Qui, Mr. Simpson and Mr. Carrescia are setting out to change how people verify their identity over the web with decentralized technology that puts users in control of both storing and sharing their own information, rather than having it stored and tracked Web 2.0-style by digital giants that profit off the data.
“The overriding concept is that you should own your own digital identity, which today is super cumbersome for users, with information spread across the internet,” said Mr. Simpson in an interview.
Qui is aiming to build tools based on new open standards and protocols in the nascent decentralized identity space that would enable individuals to easily have their credentials verified when they apply online for such things as accounts or jobs. Rather than send digitized photocopies of their licences, diplomas, degrees, registrations or certificates to companies or agencies that then validate them, users would receive verified, tokenized digital credentials from the issuing organizations.
Consumers would store the credentials in their own encrypted digital “identity wallets” and share access to those tokens as required when applying for jobs, accounts and so on.
“They could provide a query to my wallet and I’ll simply provide back a confirmation I have a degree signed by a university, and that’s all they need to know,” said Mr. Carrescia, who heads business development and strategy for Qui. The approving organization would get only the confirmation they need, known in Web3 lingo as “zero knowledge proof.” Qui wouldn’t hold or access any user data, he added, but facilitate interactions between consumers, credential issuers and verifiers, he said.
The concept is the easy part. Hiring 10 people by year’s end is the next step, then building a “minimum viable product” by early 2023.
The biggest challenge may be solving what Mr. Simpson calls the “chicken and egg” problem: Convincing consumers to use Qui’s technology, issuing agencies to adopt it to send verified credentials and approving organizations to accept them. Qui is “at the starting line,” Mr. Simpson said. Asked how it would make money, he replied, “I would say that is still to be determined.”
Qui is also one of many startups entering the space. Toronto private capital firm Georgian led an US$8.5-million investment in June into Salt Lake City-based decentralized identity product developer Trinsic, while SpruceID of New York raised US$34-million led by Andreessen Horowitz in April.
But Mr. Simpson has the experience of building a company in Wave that had the challenge of convincing many, disparate small businesses to adopt its software in order to grow. Part of its success came from offering a basic, easy-to-use free version of its accounting and invoicing software to get businesses to try it. Wave then offered financial services such as bank transfers, loans and payroll services through the platform and expanded to 300,000 customers and $100-million in revenue on Mr. Simpson’s watch.
“It’s a race to provide value to customers to get them onside and then get the third parties to use our services,” Mr. Simpson said. “We’ve done it before; we feel confident we can do it again.”
Mr. Bambra said “entrepreneurs who have built from scratch at the scale they have know how to approach adversity and go through this.” He added successful Web3 startups will “need entrepreneurs who have built at scale and who have served real users and customers and understand things like churn. Most importantly, they have to build a great user experience” for Qui to succeed.
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