​It is the end of December and the weather is grey. I look out the window from my makeshift home office with a green screen behind me and a big bright light in front of me while I type on my laptop which sits on my homemade games table of cribbage, backgammon, and checkers. Who would have thought that this is how many of us would be ending 2020…nine months of lockdown and still counting?

We all knew there had to be a global market correction because the world has been on a tear. Our investors had been cautioning us since 2017 but no one would have guessed it would be a pandemic that would reshape how we live, work and play. Did I actually write “play”?

At the beginning of the pandemic, I thought the irrational hype of tech would subside like it did in the two previous recessions I had lived through as an adult. I could not have been more wrong. The irrational hype of tech has only accelerated.

Competition for deals was higher than I have ever witnessed in my career. Entrepreneurs, especially in California, had more swagger and ego than before, which I thought was incomprehensible.  

Valuations soared. It has been the year of irrational exuberance on steroids for the tech sector.

But the question I keep asking myself is whether it is a "B"ubble or a new era of how we use tech to live, work and stay connected? There…I cut out the word “play”.   

I believe the world will continue on its torrent path of using tech. I also believe the longer this pandemic lasts, the more entrenched and reliant we will be on tech to remotely monitor, manage, and control our operations. It is not to say that we will never be there in-person, but this pandemic is providing us with software alternatives that help us operate better and keep production up, even from afar. 

I believe the acquisition of tech companies will soar in 2021 and it will be known as the year of acquisitions. This will not just be the acquisition of tech companies but the acquisition of many large super incumbents in traditional businesses. The reshaping and reemergence of companies and industries will be fascinating. 

Many are predicting that the 2020’s will be the liveliest decade of our lives. This prediction comes from examining the decade after the Spanish Flu subsided. The roaring 1920’s was a decade to live large and unabated. This was arguably the decade where real risk taking emerged in the Industrial Era.

I do not believe we will be living lively in 2021 or even 2022 but I do believe what we do in the next few years is setting the stage to live lively for the remainder of the decade. The race is on and what we are witnessing is an acceleration and reshaping of economies and markets. In other words, this is not a bubble. We are entering an accelerated Digital Era that is impacting every industry on earth.

Author: Whitney Rockley, Co-Founder & Managing Partner of McRock Capital

When I started my summer internship at a venture capital firm a few months ago, I had a vague idea about how VC worked, mostly derived from pop culture, such as the HBO hit show Silicon Valley.  I never really paid attention to it, mostly because of the insistence of pop culture and tech to portray the industry as something only for the mega-rich and their money managers. But the past couple months at McRock Capital have transformed that vague sense into a firm understanding and helped open my eyes to a world I now know I knew very little about. It was a steep learning curve to say the least, but here's a couple of things that I quickly learned that really stood out and surprised me.

1. It's a people business
All aspects of venture capital from deal sourcing to deal making to managing portfolio companies require having and maintaining good working relationships with people. As much as you need to have good business and financial sense, you also need to have really great people skills to have any sort of sustained success or longevity, and in truth, any enjoyment in the work you do. You rely heavily on your network of entrepreneurs, peers in the VC world, and co-workers. Without having good working relationships with all these people, it becomes nearly impossible to get anywhere.

2. You're never not learning
At its core, venture capital is all about curiosity and learning. You are learning about companies in the sectors your firm is interested in. You are learning about how different companies operate, what makes their solutions or products different from their peers and competitors, and how macrotrends will shape their businesses in the years to come. Part of the job description of anyone in venture capital is being a constant and curious learner. And ironically, the more you know, the more you figure out how much you don’t know, which for most people, is a self-sustaining loop that pushes you to not fall behind.

3. Don't stretch yourself too thin
There are so many companies out there. There are thousands of ideas, solutions, products, and pitches and that’s just in North America. There are multiple more companies in Europe, Africa, the Middle East, East Asia, South America, Australia, and in every other part of the world. Those companies are also in different stages and cycles of growth. It's impossible to be an expert on everything so be a specialist. Most people in VC spend their entire careers on one focus area, and sometimes one investment stage in that focus area. Being a generalist is fine (sometimes) but being a specialist will take you a long way.

4. Communication, communication and more communication
The ability to effectively communicate is a skill needed in almost every type of job and industry, but it is especially true in VC. You need to be able to communicate your thoughts, your ideas, what's holding you back, what you're excited about, what makes you feel great, and what makes you feel uneasy. And you need to communicate all of that CLEARLY. There are so many different crucial lines of contact that need a clear gauge on your own thoughts from your bosses to portfolio companies to potential investments to even other firms and LP's (a VC’s investor). You need to be sure to communicate what you want and need or else that lack of clarity will snowball into much bigger issues really quickly.

5. Have a process and trust it:
Your decision-making process, whatever it is, is incredibly important. What are your criteria for investment? What criteria do you have for management teams, for solutions, for financials, for yourself? How you make decisions on what to invest in and what not to invest in and making sure to trust your decision and not second guess it is crucially important not just for your own success, but for your own well-being and sanity. This process serves as a routine for you and allows you to focus on the process rather than the outcome. In basketball, players spend their entire careers having the same free throw routine and mastering it, so no matter if it is in practice or in the last second of a tight game, players have the same process that they trust and know that will lead to the outcome they want, no matter the situation. Humans can agonize over decisions for years after, which is terrible for your psyche and mental health, but if you have a trusted process you won’t beat yourself up as much. You’ll be able to say, “such is life!”.  

There are so many things to be said about the VC world, and so many more lessons I’ve learned personally, but my eyes have been opened and I have realized that a career in venture capital is attainable and extremely interesting.

McRock Capital provides paid summer internships to recent graduates and young professionals from underrepresented minorities in the venture capital industry to educate them on a potential career in the sector and provide practical work experience. McRock was founded with Diversity & Inclusion as a key pillar of its culture. The McRock Summer Internship Program integrates candidates into many aspects of the VC business with frequent interactions with all members of its investment team including the co-founders.

The new year's got McRock Capital’s Research Squad cracking its knuckles, ready to crystal ball the biggest trends that could influence the Industrial Internet of Things (IIoT) in 2020.
 
Now that the hoopla around IoT has settled, a lot of companies have started treating it as less of a buzzword and more of a way to accelerate their growth trajectory. Consequently, we've identified five trends we think will dominate the industry this year, transforming the digital landscape as we know it.

Mother Earth is heating up in an unprecedented way; it's DEFCON 1, people!

As more countries start to take the threat seriously and strive towards sustainability, green technology is expected to take the lead in reducing waste and energy consumption while facilitating effective resource utilization. However, the high cost of implementation and dearth of awareness can impede the growth of the green technology and sustainability market. To combat this, we expect Industrial IoT to play a major role, since its entire premise is based on improving productivity, reducing uncertainty and providing greater visibility to all stakeholders.
 
Several Industrial IoT solutions have the potential to optimize processes, streamline operations, reduce emissions and create a positive impact on the environment. Take agriculture for instance. By employing ground humidity sensors and leveraging environmental data, farmers can accurately gauge the amount of water required to irrigate their land, minimize the use of exorbitant chemical products and increase crop output.
 
In a similar vein, electricity demand for a city or an industrial complex can be anticipated so that requisite energy is delivered to less populated areas. Even waste management is being revolutionized, thanks to cyberphysical systems. For example, Songdo, a smart city in South Korea, has integrated IoT and sensors to bolster its waste management system. In fact, the city aims to recycle 76% of its waste by 2020. 
 
We think corporations, governments, and tech companies are well on their way to partnering like never before to play their part in making a difference. Solutions addressing electrification in mobility, adaptive traffic control to reduce emissions in megacities, and waste management will gain unprecedented attention in 2020.

With predictive maintenance and Industrial IoT working in tandem, disparate systems and assets can connect, capture, identify, share, analyse and act upon data that require attention.
 

We crafted the body of the IoT over the past decade, now we are building its mind. 

Predictive maintenance, which employs condition-monitoring equipment to evaluate performance in real-time, is not a new concept. However, the key to optimizing it is IoT. With predictive maintenance and Industrial IoT working in tandem, disparate systems and assets can connect, capture, identify, share, analyze and act upon data that require attention. 
 
At the risk of sounding poetic, predictive maintenance is the utopia of asset optimization—a beautiful dream that all operators and CxOs in the industrial space fantasize about. 
 
Since the inception of McRock Capital in 2012, we have tracked the number of sensors that have been shipped. Their Compound Annual Growth Rate (CAGR) has finally come down from its previous triple-digit growth to 92%. Moreover, we have also seen machine-to-machine (M2M) communication soar. To us, this signifies that industrial machines and devices are now equipped with sensors and can communicate with the web by themselves.

Thanks to a surge in predictive maintenance, we can now start making sense of data using Artificial Intelligence (AI) and Machine Learning (ML) models. Rest assured, though, machine whisperers (aka plant operators) are not being replaced, just augmented, as predictive maintenance solutions will continue to evolve and become part of the overall maintenance workflow.
 
In fact, with better quality of data and advanced AI and ML models, the workflow will become semi-supervised, and inevitably, unsupervised. In simple terms, we won’t have to pore through data as much as we have in the past. The software will figure it out by itself. Predictions will become much more accurate, insightful and faster than we have ever experienced.

There’s a storm coming, Mr Wayne. It’s called 5G.

The ubiquitous smartphone and the advent of 4G have already metamorphosed the way we communicate. With 5G, we are on the threshold of the next generation of mobile communication. 5G, in congruence with IoT, is already powering the Fourth Industrial Revolution; much like steam, electricity, and silicon powered the previous three. This revolution is blurring the divide among the physical, biological and digital worlds that comprise AI, 3D printing, genetic engineering, and varied technologies.With enhanced capacity and accelerated response time, 5G is a solid foundation for this transformation.
 
We predict that this year, the private adoption of 5G will accelerate and take over its public deployment, yet have more machines as its customers than humans. Billions of devices will come to life, connect and exchange data at speeds we’ve never experienced. The biggest reason 5G networks will demand AI to do so is that they’re much more complex than previous-generation networks. In November 2019, multinational networking and telecommunications giant Ericsson estimated that by the end of 2025, 5G will have 2.6 billion subscriptions covering up to 65% of the world’s population. It went on to state that the number of cellular IoT connections will reach 5 billion worldwide, up from 1.3 billion then. If that's the number of connections humans will use, think of the number machines will. Unimpressed? What if we tell you that there are about 38.5 billion connected IoT devices worldwide as compared to 9.5 billion mobile phones right now?
 
Let that sink in. Not only will the smart brick in your hand connect to 5G, but so will everything from autonomous vehicles and robots to industrial pumps. Industrial and urban infrastructure will enable the 5G network and influence the rollout of Automated Guided Vehicles, real-time edge analytics for more secure operations, video surveillance, etc.

The robots are coming and the industrial jobs they are doing may surprise you!

Industrial robotics has remarkably changed in the past few decades. Customarily, robots are tailored for a certain task at hand, and industrial robots have revolutionized the manufacturing industry because they offer several bottom-line benefits. At the top of this list is efficiency. The robots synthesize speed and uptime to bring about higher production capability at reduced costs.
 
Moreover, industrial robots, when programmed accurately, are scalable—vastly improving the consistency of production, the quality of the product, and helping reduce waste. They also deliver excellent returns on investment (ROI) despite the high initial cost.
 
These robots are now transcending the world of manufacturing and supply chain/logistics because they have proven their worth in addressing the labour shortage and undertaking perilous tasks. However, in emerging markets, where robots have not yet made a disruptive impact, robotics companies can still get by with single-point solutions.
 
Either way, industrial robots will eat away at cobots in conventional industries. New sensors that can be applied to faster industrial robots will make them smarter, reliable and more cost-efficient. A word of warning to our little cobot friends: resistance is futile. 

Who’d a thunk that the 80s anthem will be so relevant in the industrial context by 2020? 

For our intents and purposes, ‘edge’ refers to literal geographic distribution. So edge computing is just computing that takes place at or near the data’s point of origin, rather than in the cloud. But fear not, the cloud is not going away any time soon; in fact, it is coming closer to you by transforming the way data from millions of devices around the world are processed. The dramatic growth of IoT and a slew of new apps needing real-time computing power is powering edge-computing systems.
 
Edge computing has gained momentum, as evidenced by the recent acquisition of the edge AI startup, Xnor, by Apple. Despite the current shift from centralised/cloud to edge architecture, the two share a symbiotic relationship. The faster network of today (to which 5G is a contributor) facilitates edge-computing systems to support real-time applications.
 
As we process and compute more data in real-time, edge computing will become more pervasive in the industrial setup and enable the execution of most mission-critical processes and functions, including self-driving cars and video analytics.
 
So, here we are, on the Edge with our 5Gs and Predictions. Mother Earth, forgive us. Mr Roboto, help us. Time to roll up our sleeves and dedicate 2020 to individuals and organizations that have the courage to do their part and change the world.
 
Author: McRock Research Squad

We have successfully exited our investment in mnubo, a Montreal-based Industrial Data Analytics & AI software company. AspenTech (NASDAQ: AZPN)  will acquire mnubo in a $102 million all cash transaction. This is the second company in McRock’s portfolio that AspenTech has acquired.
 
McRock initially invested in mnubo’s Series A financing in 2015 alongside White Star Capital. McRock invested further capital in mnubo’s 2018 Series B financing led by Munich-Re Ventures.  McRock’s Whitney Rockley has been a member of mnubo’s Board of Directors since McRock’s initial investment.
 
mnubo is widely considered one of the most innovative analytics companies. It helped ignite the AI movement in Canada and demonstrate that one analytics platform is capable of serving multiple markets including industrial ones. The acquisition of mnubo by AspenTech is further validation that we are building world-class tech companies that deliver exceptional returns to investors.
 
As part of todays’ announcement, AspenTech is opening a Montreal-based AI + IoT Center of Excellence to build on Montreal’s world-class AI talent pool. The majority of mnubo’s 60 employees are in engineering and data science. All mnubo employees are joining AspenTech and the business will continue to operate out of Montreal.

This is a huge win for the mnubo team, the Montreal AI ecosystem and McRock's investors.

Not a lot of things get me riled up these days. I don’t know if it is because I am older and have seen (and experienced) a lot over my 48 years but this weekend I was legitimately pissed. And it all started sitting in my car out front of my Taekwondo gym waiting for the instructor to arrive, so I could get my daily dose of kicking.

A friend of mine sent me a text encouraging me to read an article written by LiisBeth, a group that claims it is “the world’s only dedicated voice and advocacy organization for the entrepreneurial feminist movement”. I had time to kill so I launched the link and read the article. It was brutal. It was not focused on advocating for women. It was focused on crapping all over the first organization in the world that invests a lot (and I mean A LOT) of capital to advance tech companies with women in the C-suite.

The Business Development Bank of Canada (BDC) launched the world’s largest Women-in-Tech Venture Fund just under two years ago. And, the person who stepped into the arena to take on this fight is Michelle Scarborough. I cannot even imagine the amount of blood, sweat and tears Michelle and her team have shed to get this program off the ground while everyone else has been watching from the sidelines or merely lying dormant.  

And what does this LiisBeth group do? They decide to critique the one gladiator that has the courage to take on the first of what will be many, many fights. They start the article by saying “we are watching”. Yeah right. If they are really “watching”, they would not be watching her. They would be watching all the nay-sayers and silent ones wishing this feminist movement would just go away. They would be fighting alongside of her and helping her win. Instead they tell her to step aside and start over.  

So thanks LiisBeth for watching the one group trying to make a difference and not watching the hundreds of others that have no intention of ever changing. What you have shown us is that you are not a feminist and you certainly are not Lisbeth Salander, the character you aspire to be. You are just a mean “girl” who delights in being a bully from the bleachers hissing at the gladiator trying to change the world.

My call to those of us out there who have been fighting the real fight is to recognize that the really hard fights are just that. Hard. Mistakes will get made along the way. We will stumble and get marred because that is what needs to happen to make real progress. BDC, Michelle Scarborough and certainly not the female entrepreneurs they have backed need you to criticize them. For that, I give you a rating of “WTF”.   

​The tech sector and private capital industry will never get out of the starting blocks and jump over the first, second and third hurdles of this race if we have “supposed” supporters on the side lines with trip wires watching and criticizing our every move. We need cheering, encouragement and hope.  

We need the women and men in this industry to rally behind one another so major change can happen. Not just to improve the gender mix but to build a more inclusive industry with people from all different orientations, backgrounds and ethnicity. You don’t do that by critiquing the ones that are trying to figure it out.

So LiisBeth and the other nay-sayers out there. Piss off. You aren’t badass. You are pathetic.

​Author: Whitney Rockley, Founder & Managing Partner of McRock Capital

International IoT Day is April 9 and to celebrate we have asked our team to select their favorite Industrial IoT company. To be fair, we agreed not to name any companies that McRock has invested in (yet). Congratulations to the five IoT companies that made our list. They cut through the noise of thousands of companies and inspired our team. Happy International IoT Day 2019!

Tencent, the 20-year-old consumer Internet giant operates China’s dominant social media platform, WeChat, with over one billion monthly active users. The company announced it will begin focusing on industries seeking deeper business integration with internet technologies given the huge potential of the industrial internet.

“We believe that the first stage of the mobile internet, the consumer internet, is drawing to a close and the second stage, the industrial internet, is kicking off. With the digitalization process ongoing, the main battlefield of the mobile Internet has moved from the consumer internet to the industrial internet,” said Tencent Founder and CEO, Pony Ma.

The culmination of many technological advancements over the past 100 years has led to the power of today’s mobile Internet. A combination of affordable compute power, data storage, software applications and connectivity has created a powerful Consumer Internet. Along the way it has created some of the most valuable companies in the world like Amazon, Google, Facebook, Tencent and Alibaba.

Tencent’s founder believes the next phase of the mobile Internet is the Industrial Internet. Building off the technology of the Consumer Internet, the Industrial Internet is adding two important advancements. One, it’s connecting and digitizing the vast physical world of machines, equipment and infrastructure. This advancement has largely been the efforts of the past 5 years. The second major advancement is around next generation data analytics commonly referred to as Artificial Intelligence (AI). The way to conceptualize the relationship between the IoT and AI is like the body and the brain. The IoT, connecting data from physical devices, is akin to the body and software driven analysis and decision making, AI, is analogous to the brain.

As with the evolution of the Consumer Internet, the more people that are connected to the network, the more valuable the software application layer becomes. Likewise, as massive amounts of data are connected to the network from physical assets, the potential for AI to unlock new value is massive. It will create new competitive forces in every industrial sector, unlock new revenue streams and create entirely new business models.

Tencent has announced plans to expand into smart services for transportation, manufacturing and urban development. Their new direction is also in line with China’s wider ambitions to lift its industries up the value chain and better compete globally in emerging technologies, such as AI.

Tencent will also form a new technology committee that will create an internal platform for the sharing of fundamental technologies within the company and apply them to different industries. This should help Tencent rapidly build an ecosystem for supplying new technologies such as cloud computing, big data and AI tools to industries undergoing digital transformation.

What we are witnessing is the battle for the future of businesses. As technology innovation continues its accelerating path forward, only the existing industrial companies that execute an aggressive digital strategy will survive as a new breed of tech-savvy Industrial Internet companies emerge.

Author: Scott MacDonald, Founder & Managing Partner of McRock Capital

Today, the Honourable Mary Ng, Minister of Small Business and Export Promotion announced the second round of investments under the Venture Capital Catalyst Initiative (VCCI). Whitney Rockley, Co-founder and Managing Partner of McRock Capital, and several VC leaders were invited to attend the announcement in Montreal.

The VCCI program was created to provide capital infusion for innovation through private sector investments, with $400 million committed by the government over three years as approved in the Budget 2017. Five Fund-of-Funds were named to receive $350 million from the first stream according to an announcement made in June 2018. The awarded firms are HarbourVest Partners, Teralys Capital, Kensington Capital Partners, Northleaf Capital Partners and Hamilton Lane.

Under the second stream of the program, the government is allocating $50 million to investment managers with a diverse fund management teams or ones that demonstrate focus in supporting under-served populations or emerging regions and sectors.
The seven investment managers to receive investments under the second round of VCCI are:

• Garage Capital (Waterloo)
• Build Ventures (Halifax)
• Tandem Launch (Montreal)
• Highline BETA (Toronto)
• AmorChem (Montreal)
• Pique Ventures (Vancouver)
• Brightspark Ventures (Montreal and Toronto)

Each of the seven winning VC firms will receive anywhere from $5 million to $15 million. All recipients will continue to show strong support for diversity and the participation of women across the venture capital ecosystem. They must raise $1 for every $1 from the government and invest at least 60 percent of the fund in domestic startups.

The announcement reiterated the Trudeau government’s commitment to promoting gender balance and the future success of cultural minority groups in the VC industry and the tech sector. The program is making significant impacts in accessing venture capital investment dollars across the country to accelerate innovation, job creation and economic growth. This marks another important milestone for the Canadian innovation ecosystem when diversity and inclusion become the fuel to help increase Canada’s economic competitiveness on a global scale.

To celebrate International Women's Day 2018, we honour some of the inspiring female pioneers in the Industrial Internet of Things sector. There are obviously many more incredible women so please keep doing what you are doing and changing our world.