System-3 secures $3.6M seed financing led by Round13 Capital

CPE News

CPE News (2.22.2023) – System-3 has raised $3.6 million in seed funding led by Round13 Capital with participation from several private investors.

Osler Hoskin & Harcourt LLP acted as legal counsel to Systems-3.

Founded by CEO Elan Pratzer, Toronto based System-3 has developed a predictive, objective, scalable, and affordable SaaS-based Leadership Simulation solution that enables companies to determine whether leaders deploy the core competencies required today for successful executive leadership while under pressure.

System-3 will use the funding to enhance its predictive simulation software that mitigates inherent bias and predicts executive performance for the evaluation and selection of candidates for executive leadership roles. The investment will also support the company’s continued growth and expansion into global markets; enable it to build out its partner channel; and grow its sales and marketing team.

photo credit: System-3

News Release

System-3 Raises $3.6 Million in Seed Funding

Funding positions System-3 to enhance its predictive simulation software that is changing how companies identify and evaluate high performance candidates for executive roles

February 22, 2023 06:00 AM Eastern Standard Time

TORONTO–(BUSINESS WIRE)–System-3, a startup that empowers companies to objectively identify and evaluate current and emerging leadership talent, today announced it has raised CAD$3.6 million in seed funding. The investment was led by Round13 Capital with participation from several undisclosed angel investors.

System-3 will use the funding to enhance its predictive simulation software that mitigates inherent bias and predicts executive performance for the evaluation and selection of candidates for executive leadership roles. The investment will also support the company’s continued growth and expansion into global markets; enable it to build out its partner channel; and grow its sales and marketing team.

System-3 is fundamentally changing how organizations manage their leadership talent

System-3 has developed a predictive, objective, scalable, and affordable SaaS-based Leadership Simulation solution that enables companies to determine whether leaders deploy the core competencies required today for successful executive leadership while under pressure. It does this with immersive simulations of real-life executive business challenges that require complex decision-making, empowering companies to objectively look beyond “have you done it before” evaluations and instead measure actual performance to determine if an individual can and will lead effectively. The benefit of this approach, according to Elan Pratzer, CEO and founder of System-3, “is the mitigation of the enormous economic cost of poor talent selection and retention.”

Since launching its solution in May 2022, System-3 has built an impressive client roster of enterprise companies and consulting firms that are using its predictive technology to evaluate team effectiveness and inform decisions for succession planning, talent selection, and talent development.

“The methodologies that are widely used today for talent evaluation and selection at the senior levels of an organization – specifically relying on subjective information that limits choice and results in costly and misguided hiring decisions – is a process that is ripe for change,” said Brahm Klar, partner at Round13. “Elan and his team at System-3 have developed a ground-breaking solution to this problem that has massive potential in global markets. We are proud to be investing in the company alongside some of Canada’s most successful entrepreneurs and supporting its next phase of growth as it disrupts the status quo.”

Solving an age-old executive talent evaluation problem

Traditional approaches to evaluating senior level talent rely heavily on opinions that are inherently biased and subjective and are based on personal interviews focused on experience or analysis by costly and time consuming consultants. Commonly used assessment tools are also often rooted in old data and measure a candidate’s potential – but not how a person will perform under executive pressure. All these approaches limit the identification of, and opportunity for, internal and external up-and-coming talent who may be ready to lead in today’s complex business environment. System-3 enables companies to identify a larger, more diverse pipeline from which to select high performance leadership talent.

System 3 uses current leadership science and software models to run predictive simulations – a proven methodology to accurately predict human behaviour. Leaders participate in a series of engaging scenarios modeled after real-life executive suite business challenges that require complex decision making. Using algorithms that minimize the bias and mistakes inherent in human judgement, the Leadership Simulation measures performance against a current benchmark of today’s accomplished and diverse executives, augmented by System-3 using customized client leadership benchmarks.

“Reducing bias, improving selection accuracy, ensuring fit to culture, and widening the opportunity for a new pool of potential leaders are essential for companies to successfully mentor and compete for top talent,” says Pratzer, a 30-year veteran of executive search. “What we are doing is no different than the aviation industry, which has long relied on simulation technologies to both determine a pilot’s readiness in a life-or-death situations and train already established pilots. Why not apply this methodology to see how people would lead a company?”

Pratzer has spent his career advising shareholders, boards, and the C-suite on organizational transformation and strategic human capital decisions. His founding of System-3 reflects the increasing pressure organizations face to successfully manage their executive talent and build their pipeline of promising, diverse, and ready to succeed human capital.

About System-3

Founded in 2021, System-3 is fundamentally changing how organizations manage their leadership talent. Its predictive Leadership Simulation solution uses algorithms and models that reduce bias and support objective decision-making so companies can effectively evaluate if candidates have the core competencies required for executive leadership while under pressure. For additional information, visit System-3.com.
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