Donato Sferra

It is easier to save a dollar than to make a dollar. A lot of people look at upside first, but I look at the downside first.


After more than fifteen years working in financial services and investment banking, in 2017, Toronto’s Donato Sferra co-founded Hillcrest Merchant Partners, Inc., an angel investment firm specializing in early-to-mid market growth companies in industries such as cannabis, electric metals, blockchain, mining, gaming and tech, and that also advises companies with growth potential and that seek additional capital or strategic acquisitions. In addition to Hillcrest Merchant Partners, Donato’s career has included working in various capacities at a range of financial firms, including Dundee Capital Markets, Toronto’s Macquarie Group, and TD Securities.

Where did the idea for Hillcrest Merchant Partners, Inc. come from?

I’ve asked that same question to many, many successful entrepreneurs over the years. Not only where the name for their business came from but how they came up with their business ideas. I’ve been asking those types of questions since I worked at a golf course as a little kid, I asked all of the members about their businesses.

I think that a lot of qualities are important in creating a name. There has to be an aspect of the name having a sentimental meaning or evoking a certain feeling, and/or talking about what the company does. Hillcrest Merchant Partners took a little while to come up with but it meets pretty much all of those aforementioned attributes.

Hillcrest is a streetcar and maintenance yard that’s owned by the Toronto Transit Commission. My father worked for the TTC for 30 years, that’s where the name comes from. But it also has meaning from what we do – which is be at the top of the hill, we are problem solvers. Some people might see a mountain where we see a hill. So, our job is to guide companies or CEOs, other entrepreneurs, over that obstacle. We help them get over faster. That’s the name and the meaning behind it.

What does your typical day look like and how do you make it productive?

Every day for me is different, that’s really why I’m doing what I do. I’ve done the big corporate thing, I started my career working at Arthur Andersen, one of the big accounting firms here in Toronto. Then I worked at a big bank in equity research for 5 years, then went to work at a money manager for few years, so, I’ve done all that corporate stuff and there is a lot of repetition working for big companies.

What excites me about what I do now, even as an investment banker, is that everyday is completely different. I never know what’s going to happen, what clients going to need me for something, what investments we are going to be shown by somebody. And so, I’d say to everybody, there are 24 hours in a day, usually I sleep for 3 of them, maybe 4 if I’m lucky. But I’m fortunate in that what I do doesn’t feel like work and my work, my job, my life, takes me to many different amazing places around the world. I’ve been to almost every continent, I’ve seen some of the most incredible cities in the world just because of work. Being productive is about being available 24/7. The phone never stops ringing, the emails never stops coming in. And the reason for that is so people know that you’re available. So that’s what makes us unique and productive and successful.

How do you bring ideas to life?

We are an idea company. Everything for us starts with an idea. Great ideas, great management, those are kind of things that really get us excited. People talk about money, which is obviously important because it takes money to be able to have an idea come to life, but money is really a commodity and isn’t necessarily a differentiator. Money is available for good ideas, it’s really about bringing the right team together to help the idea come to fruition. Every idea requires a different plan.

What’s one trend that excites you?

Trends are important and when people talk about trends, we think from a macro level. When we think about macro trends that excite us one is the legalization of cannabis. A lot people thought we were crazy, that cannabis legalization is a crazy thing. The cannabis trend is something that we are really excited about for a whole bunch of different reasons.

It’s also about the micro, it’s about what happens within that macro and finding the best way to play that macro trend. For cannabis, we’ve been involved with some of the best companies. We became involved with small start-up companies six years ago and now they are multi-billion dollar companies that are branching-out to other parts of the world and do some pretty incredible things. So the legalization of cannabis is the trend that really excites us.

The known illicit cannabis market is at least a hundred billion dollar industry. Converting that illicit market to a legalized, global market is a trend that we are very excited about. We think it’s a trend that will continue for a long time.

What is one habit of yours that makes you more productive as an entrepreneur?

Always being open to new ideas, always making myself available to clients and colleagues.

What advice would you give your younger self?

I would tell my younger self to take large risks earlier. I come from a blue collar, working class family. I didn’t know anything about business, but I always wanted to be in business, I was curious and excited. I had a lot of questions about business and one of my friends’ fathers was a very successful entrepreneur. I was always asking him a lot of questions whenever I would go over to their house. His advice to me was, because you don’t have a business background in your family, stay in school and get lots of letters behind your name, which I did. And I really learned about business and the entrepreneurial spirit, that way I got exposed to as many businesses as possible. But I probably should have taken some larger risks earlier in my life.

Tell us something that’s true that almost nobody agrees with you on.

One thing that I have learned as an investor, entrepreneur, and adviser is that it is easier to save a dollar than to make a dollar. A lot of people look at upside first, but I look at the downside first. Because it’s easier to save a dollar you already have than to make your first dollar.

As an entrepreneur, what is the one thing you do over and over and recommend everyone else do?

A couple of things. Number one, I take every meeting offered to me. I’d say taking every meeting is important because you just never know who’s going to bring you that next incredible idea. It could be the guy or the person who has shown you ten not so good ideas in the last 12 months, but you just never know who’s going to bring you that next great investment idea. You just can’t discount anybody. A lot of people think that I waste a lot of time doing that. But some of the most amazing companies that we’ve been involved with, other people on Bay Street didn’t take the meeting.

I also read a lot. I spend a large part of my day and evening reading.

What is one strategy that has helped you grow your business?

There’s no shortcuts. There’s really no secret, it’s plain old hard work. One of the things that I’ve been doing since I was 9 years old is always working very hard. Whether that be delivering newspapers or working at the golf course, I would work from before sunrise to sunset, making $5 an hour but I’d work a hundred hours a week and saved up a lot of money. I bought my own car before university, paid for it in cash, and paid my own way through school.

I think that work ethic was instilled in me by my parents because they were working blue collar and hard workers and there’s nobody that’s going to work harder. We are not going to lose a deal to somebody because they out worked us or worked me. That’s just never going to happen. I don’t think intelligence is the differentiator in what we do because generally most people are intelligent and can do what I do. I think we just have to work harder. That’s the key. It doesn’t matter what you’re doing, that’s how you get ahead.

What is one failure you had as an entrepreneur, and how did you overcome it?

Failure is a very hard thing, especially when I left the asset management world. I left in 2008 and I had grand plans to start a merchant bank and, as you know, 2008 turned out to be the worst financial crisis that I’ve seen in my lifetime. For someone who has worked hard all their life and been successful in whatever I’ve put my mind to, it was damaging to my ego to not able to be successful at that time. We did okay during that period from September 2008 to January 2010. I worked 10 times harder than I’ve ever worked in my life, and made one tenth of the money. But it taught me a lot of things about life and business.

I’ve read a lot about a guy that I’ve always looked up to and studied and even read about as a student: Gerry Schwartz from Onex. He gave a speech that I have printed and I have in my home office in a frame. He was quoting Theodore Roosevelt saying that “far better is it to dare mighty things, to win glorious triumphs, even though checkered by failure, than to rank with those poor spirits who neither enjoy nor suffer much, because they live in the gray twilight that knows not victory nor defeat.” I think that’s a really important line because failure is a part of success, and most very successful billionaires and entrepreneurs have had lots of failures along the way.

What is one business idea that you’re willing to give away to our readers?

We have been involved in the cannabis space for 6 years, as a banker, and recently as an investor, and there’s a lot of excitement in the world of cannabis specifically as it related to some of these LPs (licensed producers) and their evaluation. I think for us, what we are looking at right now, is entering the cannabis retail space. We see that as one of the last frontiers here in Canada where you can take a company from a very small to a billion-dollar plus company. Similar to what happened to the LPs six years ago, they went from 20, 30, 40 million dollar market cap companies to 10, 12, 15 billion market caps.

I think the last frontier for that in cannabis in Canada is cannabis retail and more specifically, for us is Ontario since the rules have changed since Doug Ford was elected. The government was initially going to run the cannabis stores, and now they’re talking about allowing private retail cannabis stores.

What is the best $100 you recently spent? What and why?

Buying a copy of my favorite book for a friend and colleague.

What is one piece of software or a web service that helps you be productive?

I spend a lot of time reading news so I would say news aggregation websites, or things like Google Alerts for key things that you’re looking for. I think that makes me a lot more productive because they take me away from mainstream media. I think reading what everybody else is reading doesn’t really get you ahead of anybody. I read a lot and it’s always about specific subjects, sectors or trends. I don’t read the mainstream media. I find it slanted, general, and backward looking and we are looking forward.

What is the one book that you recommend our community should read and why?

I recently read a book called The Hard Thing About Hard Things, which was given to me and recommended by a friend. It’s written by one of the co-founders of a venture capital firm in Silicon Valley called Andreessen Horowitz. They are one of the most successful VC firms in the world, having invested in so many amazing companies very early on. They talk about some other businesses, how they met, the two founders, and some of the businesses that they co-founded before the incarnation of Andreessen Horowitz. I think there’s a lot of good business lessons in that book. It’s a book that anyone who is an entrepreneur or wants to be should read.

What is your favorite quote?

“Don’t go where the puck is going, go where the puck is going to go.”

Key Learnings:

  • Work hard. Don’t lose out on an opportunity because someone worked harder than you
  • Plan for the unexpected and roll with it.
  • Don’t be afraid to take risks early on in your career
  • Ask questions. Find people doing what you want to be doing and ask them questions about how they got there. There is a lot to be learned from other people’s success.