System-3 lands $2.6M Seed funding to help companies remove bias and objectively identify emerging leadership talent

Finding the right leadership talent from a pool of potential leaders without human biases is an age-old executive talent evaluation problem that has plagued companies and organizations.

For decades, 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. Now one tech startup is on a mission to change how companies identify and evaluate high-performance candidates for executive roles.

Enter System-3, a Toronto, Canada-based tech startup that uses algorithms and models to reduce bias and support objective decision-making so companies can effectively evaluate if candidates have the core competencies required for executive leadership. System-3 empowers companies to objectively identify and evaluate current and emerging leadership talent. The startup recently received a new cash infusion to take its predictive Leadership Simulation solution to the next level

Today, System-3 announced it has raised CAD$3.6 million ($2.6 million) in seed funding led by Round13 Capital, with participation from several undisclosed angel investors. System-3 will use the funding proceeds 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 company will also the fund to support its continued growth and expansion into global markets; enable it to build out its partner channel; and grow its sales and marketing team.

Founded in 2021 by founder and CEO Elan Pratzer, System-3 is radically 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.

Using its SaaS-based Leadership Simulation solution, System-3 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.”

Using algorithms that minimize the bias and mistakes inherent in human judgment, 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 life-or-death situations and train already established pilots. Why not apply this methodology to see how people would lead a company?”