PE HUB: BuildDirect and startups that go big – a conversation with MDV’s Katherine Barr

April 13, 2014

Katherine Barr was doubly pleased about Mohr Davidow Ventures’ leading role in the recent $30 million Series B financing of BuildDirect.

As a GP at the Menlo Park-based VC firm, Barr told peHUB Canada she was excited about backing a company that is single-handedly transforming the US$492 billion home improvement products market.

And as co-chair of the C100 — the Silicon Valley organization of Canadian venture and tech expats — Barr felt pride knowing that BuildDirect also happens to be Canadian.

Andrew Lugsdin, partner at BDC IT Venture Fund, which participated in the Series B round, shares Barr’s enthusiasm. “BuildDirect is a great Canadian company and an overnight success in what is recognized to be a huge market,” he said. “Through its e-commerce platform, it’s bridging the gap between building product suppliers and end users.”

“Having Mohr Davidow join BuildDirect’s other investors has been a big plus,” Lugsdin said. “Katherine and the firm have brought a lot of vision to the company, and extensive resources to its growth strategy.”

In her short time on the Vancouver-based company’s board of directors, Barr said she is impressed with its progress since the investment. “We recently had a board meeting, and my mind was blown by what Jeff Booth (BuildDirect’s CEO) and his team are doing. The business is firing on all cylinders.”

This week I had a chance to speak with Barr about BuildDirect, the C100, and the opportunities she’s exploring as Mohr Davidow’s point person for retail-commerce innovation, labour tech and life tech. In our discussion, I learned that she also has a compelling professional story.

Born and raised on a farm in Perth, Ontario, Barr obtained her bachelor’s degree at McGill. There she showed early entrepreneurial instincts by launching a painting business that paid for her schooling. Barr went on to get a master’s at Stanford and subsequently to develop her operational skills at communications startup HSA and as a senior international negotiator at Vantage Partners.

Barr joined Mohr Davidow in 2007, and is today a member of its third generation of GPs.

Barr is also a leading representative of the estimated 10-15% of all North American venture professionals who are women.

What first attracted you and Mohr Davidow to BuildDirect?

Katherine BarrBarr: Retail and commerce innovation is one of my three areas of focus at Mohr Davidow, as part of a broader firm focus on business process reinvention. We are constantly looking for the next billion-dollar idea. Despite its success in the home improvement sector, BuildDirect was a little under the radar in Silicon Valley. We began tracking it in early 2013 and decided the company was a strong investment fit for us.

BuildDirect has created a platform that bypasses the heavyweight offline systems that have in the past dominated the supply and retailing of building products. It has literally invented an alternative channel that allows people to search, sample and buy goods online. And by cutting out the middleman, it saves consumers up to 80 percent on quality purchases.

BuildDirect’s data analytics and forecasting tools are also a boon to manufacturers, as it helps them to conduct marketing effectively and realize production efficiencies.

Because its platform is so unique, BuildDirect has few real competitors. So we are bullish about the company and its future prospects. We believe it will continue to grow by leaps and bounds.

What other technology opportunities, including Canadian opportunities, are you exploring at present?

Barr: At Mohr Davidow, we are not looking to invest in the now — we are looking to invest in the five-to-ten years from now. That means keeping an eye on emerging trends across the technology landscape. There’s lots of disruption currently taking place in retail and commerce, so that will remain an important focus.

I’m also responsible for sourcing opportunities in labour innovation — or ways in which artificial intelligence, machine learning and other forms of automation can replace repetitive labour functions. I’m also managing the firm’s life tech vertical, which is focused on B2B2C products and services that optimize our lives as consumers. We believe there are many interesting startups in all of these spaces, including in Canada.

No matter what sector they are in, we want to see companies that have clear business models and paths to monetization. BuildDirect is a perfect example of this.

I believe that companies featured in investments made in 2013 — BuildDirect, HootSuite andShopify, for example — have helped put the Canadian market on the map for U.S. and global funds.

I feel fortunate to be the C100′s co-chair because I get to see many up-and-coming Canadian startups attending 48 Hours in the Valley, CEO Summit and other programs. It allows me to keep my finger on the pulse of broad innovation trends.

VC invested in C100 companies has risen from US$100 million in 2010 to US$700 million in early 2014. How are your programs driving these numbers?

Canadian Flag and SuccessBarr: Through C100 programs, a large number of Canadian startups are becoming better known in venture circles. And the participation of founders in mentoring and networking programs such as 48 Hours gives them the tools they need to make successful pitches to potential investors. The result is often previously unknown success stories that end up securing the funding they merit.

C100 charter members, of whom I am one, put time and energy into building the organization and designing the flagship programs that we believe can effectively support entrepreneurs and founders. For me, this has been incredibly rewarding, as I believe we have made a difference in Canada’s innovation ecosystem.

Perhaps because of the C100, I am currently hearing less and less about a Canadian brain drain. I think it is more of a back-and-forth brain flow that ultimately returns benefits to Canadian technology sectors.

What advice do you usually offer to company founders at C100 events?

Barr: In the past, I most often advised founders to think big. But these days I’m seeing more Canadian startups that are rapidly emerging players on the world stage. They are already thinking big.

One of my favourite C100 events is the CEO Summit. There I encounter people leading companies that are in high growth mode. For me, that’s exciting because the advice you provide to these individuals is primarily about how to scale opportunities farther, faster and more effectively — and about how to avoid landmines along the way. Over time, I think the C100 will give more emphasis to these types of enabling strategies.

Increasingly, I’m asking Canadian and U.S. entrepreneurs the same questions: Is your opportunity big? Do you have the team to capture it? Why is this the team to capture it now and where will you be in five to ten years?

And when it comes to seeking financing, I urge entrepreneurs to think like venture professionals. They need to be able to show the full scope of their opportunities, the risks and the methods they’ll be using to mitigate those risks.

Female VC professionals are relatively few in number. How do you feel about breaking that particular glass ceiling?

Barr: I honestly don’t think about it much as I am focused on being the best investor I can be. However, I feel proud of what I have accomplished with my colleagues. I also feel lucky to be with Mohr Davidow, because it has been at the forefront of having female investors in senior positions at the firm. One of my colleagues is Nancy Schoendorf, who joined Mohr Davidow in 1993. She is a real trail-blazer.

I do believe that a venture capital firm’s bottom line gains from diversity, just like any other work environment. That includes gender diversity. I think we are seeing trends in favour of more women entrepreneurs, more women-led startups, and more women investment professionals.

It was recently reported that Mohr Davidow is shifting gears a bit in its next fund. What can you tell us?

Barr: Going forward, the firm will chart a course away from investing in clean technology and life sciences and instead focus exclusively on IT and software — verticals in which it has invested since 1983. I believe this approach makes the best use of Mohr Davidow’s team of former technology entrepreneurs and operators, and will give us exposure to key vertical opportunities. You can expect to see this change reflected in our next fund offering.

Photos of Canadian flag and growth and success concepts courtesy of Shutterstock

Photo of Katherine Barr courtesy of Mohr Davidow Ventures.