Investing in AI and Impact: Building Resilient Startups in Quebec

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0:00Sacha: Welcome back to AI with Sach. Today, I am with Cédric Beaudoin. Cédric does a lot of things, so I'll let Cédric introduce himself. But first of all, thank you so much for joining me, Cédric, today.

0:13Guest: Thanks, Sach. I'm very happy to be here. Very happy to be part of this conversation. I think it's up to date, right? I'm Cédric. I'm part of the investment team at IQ, Investissement Québec, who mostly invests in Series A and up technology company. And I'm also part of the business side of Quebec. So the main mandate is really to have a strong ecosystem of startup that most of them are looking at AI. So that's why we're having a conversation today. But yeah, very happy to be here and talk AI with you guys.

0:46Sacha: I'm so curious, Cédric, what sparked your interest in venture capital and innovation-driven investing? Question.

0:55Guest: Well, actually, I think the main reason why I joined the team is just because you're allowed to have an impact really early on with entrepreneurs. So every time I speak with an entrepreneur, I always tell them that they're crazy. I would never do that. It's so much sacrifice. You need to have grit. You need to have so many qualities that I'm not remotely close to having. respect them. So I know the only thing I can do is really be part of their journey in fundraising. So this is what I want to do. This is how I can support the ecosystem. And I think in Quebec, we have a lot of smart minds. We have a lot of great universities that come out with a lot of people that can disturb technology, but also grow to be global leaders. As we well know, there's a bunch of companies that came from Quebec that are now global leaders in their own field. So that's the main mandate and the main reason I went to venture capital with IQ was to do that.

1:58Sacha: You've evolved in your role, growing from associate to senior associate. How is your perspective evolved on what makes a great founder or a great startup here in Quebec?

2:12Guest: I think what makes a great startup here, and I'm pretty sure it's pretty much the same everywhere, but I think a vision, having a great vision and understanding that the technology that you're putting forward is going to be the one that is going to dominate the entire industry and really have a great team around you to lead you to breaking these barriers early. So what I want to say is really the first thing that I look inside of a startup is their willingness to go long and go hard on difficult problems.

2:50Sacha: How do you, because I know you're specifically focused, and correct me if I'm wrong, on impact investing. How do you evaluate the impact in impact investing? And is there a particular framework or set of values that you look for? Yeah,

3:09Guest: well, our mandate is really to look at everything that is related to impact. So that touches clean tech, but also the social side of it. And the way that we value impact is really, well, first of all, the main thing is to have an impact on the environment. So of course, there's a lot of companies that are aiming to have a reduction in CO2, but also to help the entire ecosystem be more circular and reduce waste, right? So first, that's one of the things that we're really focusing on. So just to quantify easily, I think the easy part is really the CO2 emission is just the easy part, right? That's the easy part to quantify, but we also look at different things. So what we look to is also the impact that these companies have on regional impacts. So for example, we invested in exterior carbon bridge solution. And what they do, they have a very specific impact inside of a region where there was a previous mine.

4:12So that's something that we also look for. And the other thing is also to have a social impact. We look at B Corps companies that want to give for the greater goods, but also wants to do it because it's something that they think is right to do. And I think most of the corporation in our impact portfolio are looking to improve all of these things, not simultaneously. Once in a while, they do all of those.

4:44Sacha: As you know, I'm super interested in AI and you work exactly where I can get that answer. So are you seeing any recurring patterns among successful startups in Quebec right now and specifically in the tech industry or AI space?

5:03Guest: Very deep and very thoughtful question. I don't think there's like one silver bullet that really helps everybody get to a success factor. I think what I would say for most of the companies that are inside of a portfolio that are doing well right now, I think the main thing is really to have a long lasting mission and align everybody inside of the organization to align with that vision and also be agile enough to go with the market. For example, I think that one of the great things that happened inside of a portfolio is Hopper. I think everybody kind of knows Hopper, the travel app, but I couldn't really count how many times they pivoted internally to bring new features in or to suppress some features and allow all the team to work on like a very specific and hard problem to solve. And I think that's why like Fred and everybody in the management team really could stir the ship easily is because they were very agile at solving big problems very quickly.

6:13Sacha: And we're having a conversation right before this, this podcast and my take on, on, on this is that resilience is going to become more and more in print as the future as we're, as we're moving forward. Right. And you're touching on that with, with Hopper, how they've been able to adapt through the years. Do you have an opinion on how startups can become or be more resilient earlier on in the process?

6:45Guest: Yeah. I think like earlier on in the process, I couldn't really tell you like how specific things could really attach to that, but I think you need to address every problem in a way that you want to solve something in, in a quick and efficient way. Okay. I think that's the best thing to do in today's world. Because I, a lot of entrepreneurs are really fixated on how you're going to solve something. And, and, and, and maybe the process of doing something that is very, very perfect and exactly the way that you want is not the best way to build something that is going to grow quickly. Like a 90% chance of actually doing it. Right. So, so I, I think it was, it was probably Mark Zuckerberg at some point in meta who I think it's Facebook quoted that, but he, he really says that you don't need to do something very perfect.

7:45Right. You need to do it right. You need to do it quickly. And I think that's very, the basic, basic stuff that I would say they ship something. It might fail. It might not, but you're going to fix it afterwards. Right. Like the only reason why you're doing a startup is because there's few people solving a very large problems. And because there's so few people, well, you can iterate pretty quickly. That's, that's very the key to that.

8:10Sacha: And so like, you're also involved in, in, in NextAI and you've been involved in the NextAI cohort as, as also as a panelist. What trends or ideas stood out to you most from that experience? I

8:23Guest: think is that AI is not new. It's not new. So what I think Anthony and David and Jennifer inside of the cohort that, that, that talked about, and they have a lot more experience than I do about like the, the whole like vector of like machine learning and stuff like that. But like AI is not new. The new tools that are put together are new. The compute is there to power these new sources of, of, of new features and, and, and, and new basic models and new language. But in the end, I think disruption came like slowly, like we see it now as something that really disturbing everything, but like it was incremental increase inside of the compute, inside of the code, inside of the vertical integration of AI. You know, it's a lot of people inside of machine learning circles. They've been doing optimization by doing deep learning for quite some times now. I think now since it's becoming like customer facing in some way, because of the interface that like chat GPT is offering us with open AI, but also Gemini is looking and Cloud from Etropic is also providing.

9:35I think the rate of change is of course accelerating right now like it's a power for sure like we're seeing that for sure but like it's been around for quite some times now so so I think that's one of the things that really stood out to me is that a lot of people saw that wave coming and some people actually are surfing the wave right now and I think the only thing that the cohort from next AI needs to do is to get on somebody else's surfboard and and serve the wave with them right so I'm a mentor for ready plan go it's a very basic platform to answer t1s which are like just taxes right so most of the CPAs these days don't want to do t1s they just want to focus on SMEs and and with AI and with the models that exist right now what you can build for that vertical is so much more powerful than like five years ago and I think what most of the companies inside of next AI are trying to do is really to put all the building blocks inside of their own technology to solve the the vertical problems that they're looking at so be it a CPA problem but it it could also be a like in clear state where it's state planning problems you can solve that there's bunch of applications that I think you can do and I think that's how you need to do it right so take all the tools that are very powerful and and you can solve like very big problems that are at the surface seems to be very complicated to do but because of the advancement of the last like three four years and AI I think you can really have a full solutions based on on integrating these solutions and and and work it with a small team it

11:27Sacha: does feel like the the bigger traditional companies that weren't really at stake before now are you know uh kind of um they're they're kind of at risk of being disrupted by AI native companies at least that's my take from from what's happening now from your perspective though how is AI changing the investment landscape because I know you joined the investment landscape before chat GPT um so how is AI changing that investment investment landscape both in how VCs assess startups but also in the kinds of startups that are being built that's

12:10Guest: a good question I think I don't have the full picture of everybody inside the market but I think most of the funds are looking at the way that they're looking at AI now versus when GPT or open AI was not around I think what they're looking for is something that is more plug and play right before then I think before open AI you wanted to have a great core team that could do machine learning that could do deep learning that could understand like big amount of data that could like scouch do that and find the real good patterns and and come up with something great right this this is what you wanted before GPT I think now it's changing a bit because of course you need to have those engineers you need to have those people that understand the code that understand pretty much everything inside of the code but they don't have to do the grunt work that's the only issue right well it's not the issue actually it's it's a great opportunity for a lot of people that don't want to do the grunt work but want to build a great product right so what you can do is is take the AI tools that are offering you different bits and pieces of of software and just put them together in very efficient ways and and this is I think this is how vertical AI companies are going to get the remote right it's it's probably having something that is modular in some way where there's a pieces that is is going to plug into your software that's going to be make it a lot more efficient but if at some point something else comes up like six weeks six months later you can just unplug that and plug something else right so you don't have to keep up with new models new computing powers and and and everything I I I think it's it's going to be in that realm for sure you

14:00Sacha: mentioned clear estate what was it like stepping into a board uh observer role there and uh what drew you to that company specifically well

14:10Guest: um clear estate is is an estate planning tool right so it's state and settlement planning tool it's a company from diagram that we partnered with and and the first look that we had and the first deck that I saw from the board was just tremendously full of data which I loved they they they they're drilling in data they understand data they're they're well well well executed team uh everybody the company can move in certain directions because their their their dashboards are really clear and and they're really efficient at not only having the reporting part but also having a a platform that you can act on right so data is great when it's static for reporting purposes but I think data is also needs to be there to take decisions out of the business I think clear estate really puts those two together and and really does that well I think that's one of the main thing that I saw the other thing that I saw is that I wouldn't say it's a boring business but it's it's not like estate planning it's not something that you want to do right you need to plan for something that is going to happen and then that thing is happening you're dead because it's dead right so you nobody really wants to do that right who wants to plan their their their settlement and what's going to happen after I die and then the wills and everything they really approached it is is very in human way where they they get all the burden from like all the different files you need to do and the forms you need to fill and and they automate that slowly so I think what I saw in clear estate and and what the team really saw is that incremental automation inside of their own platform was moving very fast because of AI and the way that they approached the whole spectrum of like wills planning and and settlement planning is that they were looking at the assets on their management that this generational wealth is going to be transferred to somebody else so there's around 40 billion dollars that is going to transfer from one hand to another in the next like 10 years which is a lot of money it's just so much money but like the boomers had a lot of money and and now they they're slowly transferring that wealth right so what clear estate is really doing is selling inside of that transfer and making this seamlessly easier in some way and

16:54Sacha: as you say the clear estate is tackling a low but also probably emotionally charged process right what role do you think technology and AI should play in in sensitive areas like estate planning that's

17:10Guest: a that's a very good question a deep question I think ethically I think at some point AI is something that can help inside of the loop to have like a support system to like assign to the right professionals if you need to have help during that that sad time of your life i think at some point um if you can reduce the stress from having to do a process that you're probably going to do at once in a life maybe twice if you're not really lucky you're probably going to do it like twice i think it's it's just going to help people cope with that a lot better because they won't have the financial stress to do so they want to have because most of the people are not very great at filling forms and following a very complex procedures inside of a settlement business right so providing them with a tool that is going to take them by the hand and help them along the process is going to be great for supporting them emotionally in the end and

18:14Sacha: a bit of a similar question but from a different perspective how do you balance tech disruption with human empathy because tech tech is great in my opinion it helps with a lot of things but when you are in a space that require personal touch how do you make sure that you can hit the right balance right yeah

18:36Guest: that's a good question i think at some point um the i think the real balance that most of the companies that are tech enabled or that also have a support team that needs to be there i think you need to have very fixed processes that are embedded inside of your software that if there's a roadblock or you can have and you can have a human in the loop just to just to wrap up pretty much everything just to speak the same language as the other person as well i think that's the main thing that you want to do uh inside of the process very

19:14Sacha: curious to get your answer on the on the next one what's one startup idea that you wish someone would pitch tomorrow that's a good question

19:23Guest: i think you know what i recently built a new house and i think the thing that i would love to have is for contractor to have relationship with uh it's it's the way that i would structure that okay is it would be a relationship between the contractor and the supplier okay so the middle place between that there's no incentive for supplier and contractor to work together right so what i would do is if somebody pitches me that i 100 percent invest but you need to be a middleman between the two so you want to incentivize contractors to work with suppliers and suppliers to get contractors to work with them so it would be a platform where you would have similar to what influencers have right now but you would have a portion of the revenue of the supplier that can be attributed to to the contractor in some ways that would be a great software to do actually and i think it it would be just so seamless right so you would have your contractor with you he would have his just his app on his phone with the link that you want he would just present to you the catalog and everything it would be his his own shop right his own shop inside of his hand and he would say you know what this is the tiles that you want these are the flooring that you want and everything and these are the suppliers that i'm working with it would be so much simpler than okay i need those tiles from that supplier i need those flooring from that supplier again and then the contractor could also have full control over the client experience i think that would be something in the realm of that just because it would simplify my life in the process but it's

21:17Sacha: probably many people's lives as well um same kind of same topic but if you could invest in any ai startup in the world right now no limits who or what would it be that's

21:31Guest: a very hard one you know that right it's it's one um i think crock it's just yeah it's i don't know uh i feel like politics shouldn't get in the way into that but i think the way that they're picking on everybody and really doing an hr job that is awesome they're skimming people from open ai and tropic as well i think all the great talents are going there like all the great talents are going there and i think them buying twitter was of course like it's it's it's kind of a shady mood right like everybody's buying everybody kind of a but but in the end there's so much data in their human data and authentic human data that it's very scary what they actually can do with that and i i think that would be the one it's a it's a pricey investment i know but you said everything right so

22:27Sacha: what's one thing or something that you believe about ai or innovation or invest investing that most people in your field would either strongly disagree with or absolutely agree with i

22:43Guest: think some people would probably disagree with the fact that ai is just a feature of every company now it it just is you're doing hardware ai you're doing software ai it's not something that you can just go without it's just not i don't i don't see it as something that you i think you probably saw the the email from toby from from shopify right i think at some point like it's just meant to be stop fighting it's it's going to be there so i don't know if everybody can agree but i know a lot of people do agree and and it's just going to be present so embrace it yeah

23:17Sacha: i definitely agree i saw one um one comment from the entropic ceo he was saying that he believes 100 of the population is going to be affected by ai and he thinks it's better that way than if 50 are being impacted because now everyone has to be a part of that conversation which is also why i'm doing this podcast right i think we need to have conversations around how we want to shape our future and um i kind of agree with him it's it's a big take and kind of controversial but it's better if everyone is part of that conversation and we decide all together then then if only like a minority has uh is being impacted and they don't have a voice um what's something that you're excited about that you you foresee in the next two three years coming in uh coming our way um

24:11Guest: i think the technology that i foresee to be something that is mostly disruptive is just an ai that is going to allow us to have more free time so not add more work but have more leisure i think at some point there's a lot of back office work there's a lot of small things that you do in your life that you don't want to do right like of course there's human touch and pretty much everything that you do but i i really really strongly believe that at some point ai is just going to impact us in a future and and we should definitely have that thank

24:52Sacha: you so much for joining me today cedric it was such an insightful conversation i do want to give you the floor for any last word that you'd like to share that maybe we didn't cover in our conversation yeah

25:03Guest: but i i think i just touched on what you're you were saying earlier is that the conversation is global for everybody and i don't like a lot of people don't want to talk about ai because they don't they're not phd or they're not data scientists and they're not come come saw a major but i think at some point it's going to touch 100 of the people so i think everybody needs to just talk about it it just understand that it's going to be a part of our conversation and if you start talking about ai with other people then you're probably going to realize that a bunch of tools are already there to help you doing your actual work or doing some other things that you think are more more hard to do for for you and it's going to simplify your life i think everybody just needs to have just a small conversation and and stop talking about like agi and all these stuff that is very scary just focus on the things that day-to-day kind of conversation that you're you're going to have and everybody needs to talk about these tools but because because it's going to allow us to be more human than than before i

26:12Sacha: do love that is there one piece of writing or an article that you've seen that you would recommend as a entry door for people to to start reading or understanding ai well

26:25Guest: i couldn't really put on exactly how you can understand ai i think talking with close to the circle is a lot easier in my sense i think reading about ai can be a lot to do i think reach out to there's a bunch of people like francois is a great like voice in quebec that is understanding and testes ai a lot but i think you need to reach out with these people follow like something that is very light i think that's the greatest entry point to to understanding ai because otherwise white papers on is probably going to scare you and and you really need to start low thank

27:09Sacha: you so much for today uh cedric it was a real pleasure thanks

27:13Guest: to you