Monadical Launches Developer Capital: Funding Early-Stage AI Startups with Support from Software Dev Team

Canada has welcomed a new player in the artificial intelligence (AI) investment landscape with Developer Capital (DevCap), offering a unique approach compared to traditional venture capital (VC) firms.

Originating from the Montréal-based full-stack software development consultancy Monadical, DevCap operates as an investment corporation, distinguishing itself by eschewing management fees and prioritizing agility. This distinctive structure facilitated the rapid closure of $2.5 million CAD in funding, enabling DevCap to swiftly commence investments in pre-seed and seed-stage startups within just three months of its inception.

“We believe that the next generation of mega tech companies will emerge in 2024 and beyond, and we are determined not to miss out on their early stages,” stated Steiner, CEO of DevCap, during an exclusive interview with BetaKit.

DevCap is led by Steiner and Max McCrea, co-founder of Monadical, serving as Chair and CTO respectively. Steiner brings extensive investment experience and a background as a longtime public markets portfolio manager, while McCrea contributes a deep technical understanding and expertise in AI. McCrea emphasized their complementary skills, noting, “Our skills combined made for a really good partnership,” during an interview with BetaKit.

Inspired by recent advancements in AI, the duo decided to join forces in 2023. Steiner transitioned from his role at LionGuard Capital Management to become Monadical’s Chief Strategy Officer, and together they launched DevCap late the following year.

While many VCs offer funding and network access to founders, DevCap sets itself apart by providing startups with access to Monadical’s team of 31 developers for guidance and advice. Monadical specializes in software development, serving clients ranging from small startups to established corporations across various industries. Steiner revealed that Monadical has developed seven AI products in the past nine months alone.

DevCap intends to leverage Monadical’s expertise to source, evaluate, and support pre-seed and seed-stage AI startups. Steiner and McCrea are confident that this collaborative approach will give DevCap a competitive edge, both in the pre-investment due diligence process and in post-investment support.

Through DevCap, McCrea and Steiner aim to support 15 to 20 early-stage startups across North America and Europe. Initial investments will range from $100,000 to $400,000, with the flexibility to increase funding for promising startups. DevCap’s investment strategy focuses on companies leveraging AI technology to address problems in innovative ways made possible by recent advancements in large language models, fusion models, and machine learning.

DevCap has secured $2.5 million to drive its initiatives. This includes $500,000 contributed by Steiner, McCrea, and other directors and advisors, as well as $500,000 from “cornerstone investor” Urbana Corporation. The remainder of the funding was sourced from a diverse group, including undisclosed family offices, friends and family, and connections from Steiner’s previous roles in the investment industry. Steiner anticipates that DevCap’s funding will exceed $3 million by the end of the month, with plans to raise additional capital in approximately one year’s time.

Urbana, a Toronto-based investment company chaired by Thomas Caldwell, a seasoned figure in Bay Street, became familiar with Steiner during his tenure covering Urbana in his public market investment career. Intrigued by the concept and the team behind DevCap, Urbana decided to invest in the venture.

“We got to know them as individuals, appreciated Steiner’s traditional finance background and his ability to communicate effectively in our industry’s language, and admired McCrea’s entrepreneurial spirit stemming from the tech sector,” explained Tom Simopoulos, a portfolio manager at Urbana, in an interview with BetaKit. “We believed that the combination of the two complemented each other well, which prompted us to make the investment.”

Urbana also assessed the risk-to-reward ratio as favorable, considering the timing in the market and the potential of AI to disrupt conventional norms. “There’s something significant brewing in the Canadian tech landscape, and we wanted to be actively involved,” Simopoulos noted, highlighting that DevCap presents an avenue for Urbana to offer additional capital to successful startups as they progress.

For McCrea and Steiner, the transformative potential of AI was evident early on. “While some jobs may become obsolete, I believe the more significant impact will be on the fundamental transformation of job roles,” stated McCrea. He anticipates significant changes in information accessibility as well. “I believe that AI will touch every aspect of business,” he added, underscoring the widespread impact AI is poised to have across industries.