Front Row Ventures, Canada’s first student-run VC, has announced its first investment in Pelcro, a (fittingly) student-run startup.
Last fall, Front Row Ventures officially launched as the first venture capital fund in Canada designed to invest specifically in student startups. The new VC announced that they have partnered with Real Ventures to invest $600,000 in student startups in the next four years.
Front Row Ventures was started back in May of 2016, and is also the first student-run venture capital fund in Canada.
The first investment since its $600,000 launch last September, FRV was first introduced to Pelcro through the McGill X-1 Accelerator. Pelcro aims to solve the problem of decreasing advertising revenue for online publications by monetizing their biggest fans through subscription. The $25,000 injection from FRV will give Pelcro the runway needed to secure its first major publishers and perfect its business model.
“Pelcro’s vision fits perfectly into how we see revenue streams for online publications evolving long-term, and we’re confident that they’re building the right team to execute on it. Investing at our stage implies looking for high growth potential to offset the high risk we take, and we immediately saw that potential in Pelcro,” Makoto Rheault-Kihara, Partner at Front Row Ventures and lead on the deal, told MTLinTECH.
Pelcro’s AI-powered content paywall and subscription-management platform persuades readers to subscribe to an ad-free, premium experience or turn off their ad-blocker. By providing users with options, the publisher has the opportunity to recover 30% of ad revenue currently lost to ad-blockers.
“Our mission is to solve the content monetization problem by providing publishers with the necessary tools to meet ad-blocking trends and the increasing user demand for an ad-free experience and premium content,” said Andrew Morris, COO at Pelcro and recent McGill graduate.
“We believe the advertising revenue model is increasingly unsustainable for most publications, and that the industry will go through a gradual transition to subscription-based revenue. Most publications aren’t prepared for this transition, opening up a considerable market opportunity for the central platform supporting the move to subscription revenue,” said Michael Ghattas, CEO at Pelcro.
According to a press release from FRV, Google and Facebook’s growing duopoly over online advertising (49% of advertising revenues worldwide; 72% in the USA in 2016) and the rapid rise of ad-blockers has caused a decline of over 50% of newspaper advertising revenue over the past 10 years, despite a 37% increase in online traffic since 2014.
“For us, this investment validates FRV’s thesis that student entrepreneurs can bring a fresh vision to even the oldest industries. We believe young minds are in a prime position to bring the next wave of disruption to many industries,” said Éléonore Jarry-Ferron, Co-Founder at Front Row Ventures.
FRV will invest $600,000 in 24 student startups in the next four years, and aims to be the first resource for student founders of technology-powered startups.
“We pay close attention to university accelerators because they’re a great place to find talented student entrepreneurs, but it’s one source among many we look at. We’ve built networks in Montreal universities through student associations, faculty and our own personal networks so we expect our investments to come from a diversity of sources,” said Rheault-Kihara.
“This is one of the top companies we’ve seen out of McGill to date. Pelcro could become the operating system behind an industry transition to subscription revenue, and we’re glad to support them on the way there.”