Sheldon Inwentash: Accurately Picking the Right Business to Invest Into

Sheldon Inwentash is a seasoned investor and entrepreneur with more than 30 years of experience. As Founder, Chairman and CEO of ThreeD Capital Inc., he is currently playing an instrumental role in the rise of companies that are developing disruptive technologies. And Sheldon seldom chooses the wrong business to invest into.

As a leader, Sheldon believes in leading by example. He does not force people to do what he would not want to do himself. He is also a hands-on leader and accessible. “I’m involved and not remote,” he says. “I make time for all the people who we are involved with and the companies they represent.” Sheldon is also committed to helping people. For him, success means enjoying what one does, being a role model, as well as helping society in some manner. And he considers himself successful. “I absolutely enjoy what I do,” Sheldon says.

Sheldon does not have to take a pill in the morning to create a passion for his work. “I have been driven from the get-go in my life,” he says. 

Investing in Micro Companies that Fit into Macro Picture of the World

After founding and leading Pinetree Capital Ltd. for two decades, Sheldon launched ThreeD Capital around five years ago. The focus of his new venture capital firm is on disruptive technologies. Sheldon says that ThreeD is more than a venture capital fund. 

People see ThreeD as an investment company, where they can get exposure to investments at the ground floor that an average investor would never see or be able to invest into. Sheldon points out that ThreeD is much broader than the venture capital funds, which usually focuses on a specific vertical. “We invest in micro-companies that fit into our macro picture of the world,” Sheldon adds.

Sheldon says that they are interested in the green revolution and hence, they want to invest in Environmental, Social & Governance (ESG) companies, including those focused on electric vehicles (EVs) and battery recycling. Blockchain is another area where they plan to invest more. Sheldon believes that blockchain is going to revolutionize currencies and financial decentralization. One area ThreeD is focused on in Blockchain is around decentralized finance (DeFi). Sheldon states, “DeFi technologies provide peer-to-peer financial transactions that provide greater than normal returns without a middle entity such as a bank. Blockchains allow this to be done in transparent and trustless manner. We believe there is an opportunity for investors to get exposure to DeFi and the high interest rates accompanied in yield finance to protect individuals against purchasing power erosion by inflation.”

“We are involved in biotechnology as well,” Sheldon says. One of the biggest areas in this industry is longevity biotech. “We are a big believer in this evolution of science,” Sheldon says, adding that people basically want to live longer, and they are interested in finding out what they can do in terms of science to meet that goal. “These are the types of things that we want to invest in at ThreeD,” Sheldon says. “The risk is that the world is not yet as clear in front of you, but the reward can be spectacular.”

Overall, ThreeD has six main investment verticals: Blockchain & Metaverse, AI/Machine Learning, Esports, Electric Vehicles, Internet of Things, and Junior Resources. An investor can get exposure to all of these important and topical industries through a single investment company – ThreeD Capital.

Sticky Edge Over Other Investors

A lot of people want to invest in the space that ThreeD is investing in, but businesses approach Sheldon’s company and not others because ThreeD is a value-add investor. “We are not just money,” Sheldon says. “We get involved in advice management and mentor management, and we help them achieve their objectives and goals.”

People come to ThreeD because the company has been successful in choosing the right businesses to invest into and help them grow; there have been many successful relationships and ventures. Entrepreneurs whom ThreeD has helped build successful companies contact ThreeD again when they again start something new. “Serial entrepreneurs come to us,” Sheldon adds. “And that is the kind of sticky edge we have over others. We have proprietary deal flow.”

Sheldon, however, points out that not every fund is willing to invest in these early stage deals. “We get involved very early. A lot of people can be afraid of being too early. A lot of them prefer to come later on, in later stages,” he says. He has noticed that sometimes there aren’t enough people that want to take that risk. “So, we take a significant portion of that risk in terms of financial commitment to these companies,” Sheldon adds.    

Influencing Destiny of a Company

Sheldon says that their whole business is about risk. In many cases, there is not a lot of “concrete reality” or substantive evidence, as they get involved in the earliest stage of an idea, a prototype, or a concept. This means that they don’t know much about the end result of their investment. For example, in the biotech industry, one needs to go the whole way to find out whether or not there is going to be a commercial drug. “People would find extremely early-stage investment in such an industry highly risky, in a conventional manner,” Sheldon says. 

Sheldon, however, does not consider it as risky as one might expect because ThreeD is very hands-on. “We have influence over the destiny of companies we get involved in,” Sheldon says. “And we are also getting involved at a low valuation with great management.” 

As someone who believes in the saying that “money is made when one buys,” Sheldon says that when one invests right, they are typically protected even if there is a correction in the world or a black swan event because they invested in an early stage and their downside is limited. 

Successful investments, however, have not made Sheldon forget that “there is an absolute risk in the unknown.” 

People are the Biggest Challenge

Sheldon always had a big-picture view of the world. And he has always been “reasonably” accurate about the companies that he needs to invest into and which would benefit from his big vision. 

A driven and passionate investor, Sheldon has helped several companies across the world through his early investments, including a few that ended up selling well north of a billion dollars. His foresight also enabled his previous company, Pinetree Capital, to increase its share price by more than 200 times. He has achieved a lot of success and recognition; in 2007, he was a finalist for the Ernst & Young Entrepreneur of the Year Award, and in 2012, he received an honorary degree, doctor of laws (LL.D) from the University of Toronto for his valuable leadership. All these recognitions, however, does not mean that he has had a smooth ride. Sheldon has faced multiple challenges as well. 

He says that there are some events that one cannot control; for example, the black swan events such as 9/11, the Black Monday market crash of 1987, and the 2008 economic meltdown. These are the events that overtook the financial system. Also, there are challenges related to cycles: one never knows when they begin and end. “You might get a good sense of that over time,” Sheldon adds.  

“And, there are also things like people,” Sheldon points out. “I have learned that maybe people are the biggest challenge because they morph and they change. And they may not be what you think they are. So, sometimes, when one relies on these people, they let you down and they basically bring you down,” Sheldon says.  

“Unfortunately, the people component is also something you learn by mistakes,” Sheldon says. “So that is a challenge.” He believes that everyone makes mistakes, and the key to success is learning from them. “And, believe it or not, there are a lot of people who don’t learn from their mistakes,” Sheldon adds.

A Productive Year during the Pandemic

The Covid-19 pandemic has had an impact on businesses across the world. Sheldon, however, considers the year of the pandemic as the most productive year of ThreeD. “I can conduct eight meetings in a day, communicate with people, have board meetings – all virtually. I have more time to distill what occurs in all our business dealings,” Sheldon says. He also got to know more people during the pandemic.

Sheldon also points out that the pandemic restricted their freedoms but also forced everyone to adapt. “The bonus and dividend have been the productivity side, especially of my life and ThreeD,” he adds. 

For example, in 2020, Sheldon and his company got involved in a Quebec-based company with operations in China. It has designed an App for the B2B segment. The App, Sheldon says, matches people who are looking for capital with those who are qualified to lend. “It has just blown up in very positive ways,” Sheldon adds. “And it has led to a revolution in many industries because of what it has allowed businesses to do.” 

Future Plans for ThreeD Capital

ThreeD Capital plans to continue doing what it has been doing since its launch. “We will continue to show that we can pick the right horse,” Sheldon says. It is this ability of theirs that makes people invest in them. “Individuals investors don’t have the same access to projects that we do and when we do. Moreover, we leverage our expertise and do the due diligence, manage the investments, strategy, and vision – all the things that an average investor cannot do on his own,” Sheldon says. “That is why people invest in us.”      

“We want to continue to demonstrate that we can do it better than almost anybody else. We have done that before and we think we can do it again. It is just the trajectory we are on,” Sheldon adds. “We are just beginning. It is still early days.”  

A Philanthropist and Collector of Contemporary Art  

Along with being a successful investor and entrepreneur, Sheldon is also a philanthropist and a collector of contemporary art. For him, philanthropy is one of the big motivators for becoming more successful. “Contributing to society is very important to me,” he says. 

Sheldon points out that he and his wife, Lynn Factor, are very involved in social work. They have endowed the school of social work at the University of Toronto. The couple is involved in many initiatives for child protection through many agencies. “We help them fund what governments would not fund.” Sheldon and Lynn have also created and supported post-secondary scholarships to students who grew up in difficult circumstances, enabling them to get a career and make their lives better. 

Sheldon is passionate about art and gets the greatest enjoyment by being a collector of contemporary art. “It has a lot of parallels to my business world,” Sheldon says. “Many of the artists that I like to invest in are emerging artists – just like the companies that I invest in are emerging ones. I have been actually highly accurate in assessing those artists who are going to be successful.”    

Advice to Younger Self

“Show patience,” is the advice that Sheldon would like to give his younger self. Along with that, he also wants to tell him that he needs to do his homework, even though it may not be enjoyable at times. “You have to reach out to a lot of people. You have to check the facts. There is a lot of misinformation that goes on out there in business. There are lots of people who just make up stories to get money,” Sheldon adds. “And what is great today is that there is many different ways, online, to check on the people’s side of the equation, which was never there previously.”

Sheldon sums up his advice by saying, “It’s the patience to do the work and not be lazy about it.” 

Message to Budding Entrepreneurs  

In his message to budding entrepreneurs, Sheldon asks them to have perseverance. He also says that they should not take “No” for an answer if they believe in what they are doing. It is because in every industry, whether sports or arts, people have been turned down. Entrepreneurs have been disappointed because they think that they have not been given the opportunity they deserve.   

“You have to get up. You need to get off the disappointment mat,” Sheldon tells budding entrepreneurs. Go for it and persevere. Not every idea or an approach can be successful, but you will learn – why you were not right or why the environment was not right.”

“I found many people learn, morph, pivot. Life is an evolutionary process and failures are a part of that. To persevere is what my advice would be,” Sheldon adds.       

Still, Lots More to Do

Sheldon does not think he has achieved everything that he has set out to achieve. There is still lots more to do. And he is not someone who believes in retiring. “What is retirement? It is different things that you perhaps couldn’t have done while you were working full time,” Sheldon says. “One of the advantages I have is I work on my own schedule. I meet all the responsibilities that I need to do. I manage all that full-time from my end. So, I don’t need to quit and stop.”

“There is a lot more I want to do – whether it is in the world of art, business or philanthropy. I enjoy building and I continue to build. I am passionate and stimulated,” Sheldon adds. “So why not continue?”