Toronto agency Open has launched a new brand that’s taking a venture capital-inspired approach to bringing on new clients, but partners Christian Mathieu and Martin Beauvais have long held the ambition to explore what they call “venture creative capital” based on an early experience.

“Brands would come to us early-stage and want brand development and all of the thinking, but they didn’t necessarily have the funds to support it,” says Mathieu. “That was an impetus to say, ‘OK, is there another way that we can structure something?’ In fact, our first deal was built around that.”

That first client — seven years ago — struck a deal with Mathieu and Beauvais for an equity stake they still hold today. The experience left a good impression, Mathieu says, and they have returned to the model by formally launching Alchemy.

Alchemy will provide its creative services to clients in exchange for equity, or some other form of performance participation. The agency is aptly named, as its aspiration is to take “the ingredients of early-stage companies: capital light, nimble, with decision makers at the table” and transform them into successful brands, Mathieu says.

The agency is open to established companies that are looking at reinvention or to “dust off an old brand,” but the need for those same ingredients is “critical for the model to work,” he adds.

Although it is a stand-alone entity from Open, Alchemy will tap the agency’s resources to provide creative talents for its clients. The upside for clients is that they can access those resources without having to expend capital — a challenging investment to make at any time, but especially amid a global pandemic that has placed financial strain and a need to pivot on many brands.

Clients can also take comfort in what Mathieu calls a “shared fate” with Alchemy, as the agency has a vested interest in their success.

For Mathieu and Beauvais, the upside lies in the potential of their investments, which Mathieu says are made selectively. The goal is to expand Alchemy’s roster to five brands by the end of 2021, with the idea that one will eventually pay off.

“It’s like venture capital. It’s high risk, but has the potential of high reward. If you have three, five, or 10 of these in play and one hits big, then the investment in all of the others pays off. It’s emulating that same tension,” explains Mathieu. “The potential upside offsets the risk. We wouldn’t do this otherwise.”

Alchemy is currently invested in three brands: all-natural pharmaceutical company Damiva; CBD wellness brand Yesterday; and Beau Lake, which sells luxury waterside goods such as paddleboards and dock chairs. All three brands are based in Canada, but have established sales and distribution in the U.S. as well.