Seven weeks ago, Damien Steele, head of OMERS’ venture capital arm, said he would gladly write Kirk Simpson a “blank check for his next adventure” as the tech entrepreneur exited from Wave Financial Inc. , three years after it was purchased by H&R Block HRB-N for US$405 million.
Mr. Steele, whose pension fund employer doubled his early $10 million investment in Wave, made that pledge. OMERS (Ontario Municipal Employees Retirement Systems), along with the Weston family’s Wittington Ventures, Round 13 Capital and several North American angel investors have invested $5 million in Mr. Simpson’s new company, Qui Identity Inc.
Qui is a Toronto-based Web3 play that’s little more than an idea, presentation platform, and five-person. (Web3 refers to an emerging generation of web technology that includes decentralized applications, blockchain-based software, and artificial intelligence.) But one of those five people is Mr. Simpson, a software entrepreneur in Toronto, the other being Peter Carrescia, a veteran tech investor and pioneer. Mall Wave business in 2011 when he was at OMERS and joined the small business software vendor in 2016 as Senior Vice President of Strategy and Corporate Development.
“I hold these two people in the highest regard,” Mr. Steele said. “This is a very early stage investment for OMERS Ventures, but we were happy to make an exception for these two.”
Other major investors didn’t need convincing or an introduction either: Wittington Ventures managing partner Jim Orlando also worked at OMERS Ventures, while Round 13 digital asset fund Managing Partner Satraj Bambra, who led Qui funding, once worked for Wave as a mobile developer. .
For Mr. Orlando, the investment proposal was simple.
“It’s because it’s a really interesting problem and these are the right people to go back to figure out a way to solve this problem,” he said.
With Qui, Mr. Simpson and Mr. Carrescia are changing how people verify their identity across the web with a decentralized technology that allows users to control how their information is stored and shared, rather than being stored and tracked on Web 2.0—a method by digital giants that leverage data.
“The prevailing notion is that you have to have your own digital identity, which today is very onerous for users, with information spread across the Internet,” Mr. Simpson said in an interview.
Qui aims to create tools based on new open standards and protocols in the emerging decentralized identity space that will enable individuals to easily verify their credentials when applying online for things like accounts or jobs. Instead of sending digital copies of their licenses, diplomas, certificates, registrations, or certificates to companies or agencies that then validate them, users will get verified and token digital credentials from the issuing institutions.
Consumers will store credentials in their encrypted digital “identity wallets” and share access to those tokens as required when applying for jobs, accounts, etc.
“They can submit a query to my portfolio and I will simply give them confirmation that I have a signed degree from a university, which is all they need to know,” said Mr. Carrescia, who heads Qui’s business development and strategy. Only the accredited organization will get the confirmation it needs, known in the Web3 parlance as a “zero knowledge proof”. He added that Qui will not retain or access any user data, but will facilitate interactions between consumers, credential issuers and auditors.
The concept is the easy part. The next step is to hire 10 people by the end of the year, then build a “minimum viable product” by early 2023.
The biggest challenge may be solving what Mr. Simpson calls the “chicken and egg” problem: persuading consumers to use Qui technology, issuing agencies for accreditation to send verified credentials and agreeing organizations to accept them. Mr Simpson said Qui was “on the starting line”. When asked how to make the money, he replied, “I would say that it has not yet been decided.”
Qui is also one of many startups entering the space. Toronto-based private equity firm Georgian led a $8.5 million investment in June in Salt Lake City-based decentralized identity product developer Trinsic, while SpruceID of New York raised $34 million led by Andreessen Horowitz in April.
But Mr. Simpson, with experience building a company at Wave, has faced the challenge of convincing many disparate small businesses to adopt their software for growth. Part of its success has come from offering a free, basic and easy-to-use version of its accounting and invoicing software to get businesses to try it out. Wave then offered financial services such as bank transfers, loans and payroll services through the platform and expanded to 300,000 clients and $100 million in revenue from Mr. Simpson.
“It is a race to deliver value to customers to put them in good standing and then get third parties to use our services,” said Mr. Simpson. “We’ve done it before; we feel confident we can do it again.”
“Entrepreneurs who are built from scratch with a scale who know how to handle adversity and get through it,” said Mr. Bambra. He added that successful Web3 startups will “need entrepreneurs who have built at scale who have served real users and customers and understand things like disruption. Most importantly, they have to build a great user experience” for Qui to succeed.
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