Thin Air Labs’ James Lochrie bets big on Calgary’s tech scene

Prior to the official interview with Thin Air Labs Managing Partner James Lochrie, he offered an informal tour of their Beltline office in Calgary.

Heck, he was the one who let us in through the front door when he arrived at the building one morning in late September.

The second floor, an open-air space, where computers lined desks, people caught up with the water cooler cat and a friendly dog ​​came for a pet, was being prepared for a gathering organized by one of their holding companies.

Along the perimeter of the room is a series of offices where groups collaborate, innovate and chart a course to become one of Calgary’s next big tech companies.

Through a door and down a hallway there is a kitchen – and more innovators are installed. Other holding companies, like Fillip, also operate out of space.

It is a hub of entrepreneurial activity.

Thin Air Labs is a Calgary-based venture capital firm. They also provide start-up services to entrepreneurs in Calgary and Alberta. They operate Thin Air Labs Fund I, which has a portfolio of 19 companies. In June, Calgary’s Opportunity Calgary investment fund provided $4 million as part of a $20 million initial round for the first fund.

Lochrie is one of three partners in Thin Air Labs Fund I: Rick Bird is a general partner, as is Raghu Bharat.

So far, Thin Air Labs has invested $7.5 million in the portfolio companies.

The informal visit ended in a larger meeting room. This is where the official interview began.

Betting on Calgary

Lochrie’s rise to venture capital began in earnest as co-founder of Wave, a global accounting and payments platform for small businesses. In 2019, it was sold to H&R Block for $537 million.

While Lochrie had taken a step back from day-to-day operations of the business in 2015, he stayed on as a strategic advisor and to support his business partner and CEO, Kirk Simpson.

“I had time to breathe,” Lochrie said.

“I made investments in Calgary and just started working with people.”

He said along the way that he had made four investments in Calgary. Three have become some of Calgary’s fastest growing businesses, he said.

“There was this unknown about where I wanted to go with my life and what I wanted to do when I grew up again, but I knew I wanted to do something in the area of ​​entrepreneurship,” Lochrie said. .

After leaving Wave, Lochrie considered being an investor. He admitted he didn’t really feel confident at first.

“I’ve been around great (investors), seen how they acted and behaved, but I didn’t know if I was going to be able to make that transition,” he said.

Lochrie took a few years to find out what he was good at. He was a builder, an entrepreneur, but he wanted to flesh out the philosophy the way he wanted to do it.

In order to push forward the idea of ​​building a venture capital firm, Lochrie said he also needed to build a strong team. There are 16 people on their team roster today.

Calgary Tech Catalyst

In 2019, with the sale of Wave, Lochrie said there was a rush for liquidity. He was confident enough in his investment thesis and geographic focus: Calgary first, Alberta next, then the Prairies.

He said what they’re doing is “a super, super high-risk investment.” With Thin Air Labs’ combined experience and knowledge, Lochrie said they were able to look at different businesses, dig deeper into their challenges, and come up with solutions.

“We found a way to help people at the right time through certain types of problems and reduce investment risks and so far all of our investments are continuing,” he said.

The opportunity in Calgary was there for the taking, Lochrie said. There were booming sectors of engineering, life sciences and agri-tech that were untapped. The capital was available, but it just wasn’t going the way of the technology.

Just as Toronto’s tech boom was sparked by the 2008 financial meltdown, the 2014/2015 oil crash was the catalyst for Calgary’s transformation, Lochrie said.

“The slowdown in oil has been the catalyst here,” he said.

“Politics, capital, all of those things have changed and started to go in that direction.”

Now, Lochrie says Calgary’s potential is huge. It will be amazing to see the next three to five years, he said.

“We’re going to see exponential growth in the tech ecosystem here,” he said.

“It’s unavoidable at this stage. There’s so much happening at the local level that hasn’t percolated yet.

He said Toronto is saturated with different companies trying to break into the tech sector the same way Thin Air Labs is in Calgary. In addition, Lochrie loves the city and the entrepreneurial spirit.

“That was the big attraction for me. It was just this culture of building a business here,” he said.

The Role of Thin Air Labs in Building Calgary Technology

Platform Calgary on Tuesday, May 10, 2022. ARYN TOOMBS / FOR LIVEWIRE CALGARY

Lochrie said his team has a role to play in building a strong tech and business community in Calgary. The expertise they bring can educate not only entrepreneurs, but also policy makers.

“It’s even more important because – I have nothing against politicians, anyway – but they don’t work in our space, but they want to help our space,” he said.

“So how do they make the right decisions to move policy and strategy forward, that’s going to help us.”

As for how they connect with the founders – Lochrie said it was sometimes a chance meeting. Other times, the founders knock on the door. You meet them in the community at different tech events. They work with tech organizations like Platform Calgary and through Lochrie’s role with the University of Calgary’s Creative Destruction Lab.

These companies are organized and controlled, and then they take a closer look. From there, Lochrie said they see if the companies fit their investment thesis and if they are the type of companies Thin Air Labs wants to work with.

Lochrie said it was important for them to be part of building a strong tech scene in Calgary. This is how they evolve.

“We want to win in our backyard first, and we do,” he said.

“There just aren’t a lot of people doing what we do in that part of the world. And that’s a huge plus for us. But it is also a great responsibility for us to do so.

Lochrie said they are considering setting up a national venture capital fund down the road.

Measuring success in technology

In August, the province announced that 33 venture capital deals worth $70 million had closed in the second quarter. The first quarter was a monster: 56 deals worth $481 million (most of it in Calgary).

“The tech sectors in Edmonton and Calgary are experiencing significant growth. Calgary ranked fourth among cities in the country for venture capital investments with 42 deals, only two behind Vancouver and five behind Montreal. Edmonton was fifth in the country,” Parliamentary Secretary for Small Business and Tourism Martin Long said in a prepared statement.

“Our continued increases in the amount of venture capital deals and investments send a strong signal to the rest of the country and the world that we are developing a robust innovation ecosystem.”

Are venture capital investments the best barometer of success? Lochrie said success is best viewed as a ladder. He tells his three sons, who are athletes, that they must first become the best at something in their family.

Then your age group. Then your club.

“I think it’s a great stage of development. It’s an amazing step to step in and say we’re at this level,” Lochrie said.

“I don’t care if we’re better than that, if we’re better than that. It’s just, let’s keep progressing, let’s keep climbing the ranks every day.

“If you try all the time to compete with the outside world, you’re going to fail internally. Just compete with yourself.

The barriers to come

Lochrie said most tech companies in Calgary — and around the world — are facing a talent shortage.

With a somewhat recovering energy sector, it has attracted many engineers to this field. Most people who wanted to make the transition are already in tech, he said.

“We’re starting to hit the limits of the talent that’s available here in the city,” Lochrie said.

“But it’s no different than anywhere else in the world that’s building tech hubs.”

It’s a typical business problem – like access to capital, to markets. He said whether it’s in Calgary or Silicon Valley, there’s always a labor shortage, but on a larger scale.

“We don’t let our entrepreneurs use those excuses so they can slow down or think about pivoting or getting out of it,” he said.

“It’s just the world we live in. It’s the way we have to build businesses.”

Lochrie said one of the blows to Calgary’s tech ecosystem has dissipated over the years. Different groups had split up, working on their own to advance the local tech scene.

There was work in silos, but Lochrie credits that to the early days in Calgary when there really wasn’t much going on. Being stovepiped isn’t so bad either, he said.

“Innovation happens in small pieces, with small groups of people,” he said.

“We have to experiment ourselves, play with it, see what works. And then if things work, other people will see it and they might adopt certain things or come and work with us on them.

Flying effect

We asked Lochrie to make a crystal ball on Calgary’s tech scene in 10 years.

Bigger. Significantly larger.

Big companies built here. Large exits (companies built and sold).

“It creates a flywheel effect. If the founders grow their businesses here, monetize them here, and stay here, they do things like me. We are entrepreneurs, we never stop doing things,” he said.

“I see it continuing to explode and in different ways.”

Calgary could see a pattern of nonstop growth in tech, Lochrie said. Of course, there will be geopolitical, economic and social issues to contend with. But that steering wheel is already starting to turn.

“There’s just way too much momentum behind what’s going on. The only thing that can really stop it is the lack of capital in these companies to help them grow,” he said.

“And there’s way too much money in the system in the venture capital world to ignore what’s going on here.”

Comments are closed.