Entries from March 2009
Earlier this month Ontario announced its Emerging Technologies Fund. This $250 million co-investment fund “will match small to medium private sector investments and receive an interest in companies it supports.” Such programs have a history of success throughout the world, with a notable example being the Scottish Co-investment Fund.
It is appropriate, therefore to note that the Scottish fund continues to stimulate investment as demonstrated in their recent co-investment in Ciqual. Today’s Herald included an article on this transaction, a segment of which is below.
“We’re delighted to see Par Syndicate making its first investment in Scotland, said David Grahame, executive director of LINC, Scotland’s Business Angel Capital Investment Association.
“Par’s contribution to this new round of capital into Ciqual shows once again that despite the current economic challenges, business angels are still supporting innovative technology companies across Scotland.”
He added: “It is vital for Scotland’s economic prospects that these firms have access to additional capital through the business angel network.”
Campbell Murray of Scottish Enterprise said: “To grow in today’s competitive landscape, vibrant companies need access to investment and as Scotland’s enterprise, innovation and investment agency we are delighted to support Ciqual. We see tremendous potential in Ciqual to dominate their field at a global level, building mobile telecoms excellence through attracting and retaining local, high-calibre talent.
This is a great example of the impact that as co-investment fund can have; stimulating investment by the Angel community in times when investment is hard to secure. We expect the Ontario Emerging Technologies Fund to have a similar impact, driving investment into clean technology, life sciences, digital media and information communication technology companies.
Categories: General NACO · NACO News
Tagged: co-investment, syndication, angel fund, scotland, Ontario Emerging Technologies Fund, angel fun
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As a CEO of a high-growth company, having the right business collateral is essential. In this economy the natural reaction is to tighten the reigns of all expenses. You cannot, however, afford to neglect your marketing materials as they are your first line of offense. Neither can you afford to engage in the most dangerous (not to mention messy) of all marketing plans – ‘spaghetti marketing.’ At this workshop, we will be reviewing your ‘marketing map’ to ensure it will help you meet your company goals over the next year.
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The Ontario Venture Capital Fund is committing up to $15 million in Georgian Partners "Growth Fund I" to help support innovative, high-growth businesses, including high-potential companies in Ontario.
Georgian Partners is an Ontario-based venture capital firm investing in companies in the information technology, information aggregation, and enterprise software sectors.
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Proven investors Mike Maples and Ron Conway offer tips on what it takes to enter the field of capital investment: A Rolodex of ripe talent and business resources, a market segment with potential where the investor can add value, and mutually beneficial network building skills.
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For immediate release
Angels Spurred to Invest by Ontario’s New Emerging Technologies Fund
Ontario’s $250-million Initiative Encourages Investment in Growth Opportunities
Toronto, March 20th, 2009 – The National Angel Capital Organization welcomes the new Emerging Technologies Fund announced this week by the Ontario Ministry of Research and Innovation. This fund will match private-sector investments in Ontario’s high-potential growth-oriented companies, acting as a magnet for new Angel investment in Ontario and helping ease the pressures of a widening risk capital gap in the Province.
“Ontario’s innovators and entrepreneurs can rekindle sustained economic growth in this province,” said W. Daniel Mothersill, President of the National Angel Capital Organization. “But they face a widening risk capital gap with the retreat of venture capital from seed- and early-stage financing. This fund demonstrates that the Government of Ontario understands what keeps Ontarians from building the RIMs and Mitels of tomorrow – the excessive risks that our province’s investors face.”
The Emerging Technology Fund vaults Ontario into a leading position in the world among jurisdictions encouraging Angel investment in new enterprises. It will give the provincial government a stake in companies in which the fund invests, allowing them to share the capital risk with Angel investors. For the next five years, it will focus on clean technology, life sciences, digital media and communications technology enterprises which mainly operate in Ontario, sustaining job creation well into the future.
Co‐investment funds that leverage the efforts of Angel investors, Angel groups, and Angel Funds are successfully stimulating Angel capital investment in the next generation of companies all over the world, including the United States, England, Scotland, New Zealand, and Singapore.
The National Angel Capital Organization applauds the Ministry of Research and Innovation and the provincial government for this bold action to help offset current shortage of risk capital in Ontario.
About The National Angel Capital Organization
The NACO (www.angelinvestor.ca) is Canada’s industry association for Angel investors. Recognizing small business as the backbone of the economy, the NACO is dedicated to galvanizing Angel investment in Canadian companies and promoting best practices for Angel investors. The NACO provides Angel investors with a secure environment to network and learn from their peers, as well as the opportunity to be heard collectively on national issues.
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Media Contacts
W. Daniel Mothersill, NACO President (dan@angelinvestor.ca)
Bryan Watson, NACO Executive Director (bwatson@angelinvestor.ca)
T : 416-581-0009
Categories: NACO News
Tagged: co-investment, Dan Mothersill, Emerging Technologies Fund, Ministry of Research and Innovation, Ontario
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Funding innovation by helping promising technologies get into the hands of the consumers is by far the most tangible route towards creating sustainable wealth for all. As a society, we need to promote and encourage entrepreneurship. Our governments need to look into their own backyards and realize that the Venture Capital and Private Equity Industry plays a crucial role in the building of our future. From my own experience both as an entrepreneur and as a venture capitalist, clearly VC is a unique class of financial resource that only the most dynamic entrepreneurs with global ambitions can access. These entrepreneurs are the ones that deliver the most results in any economy. They create Jobs, new products, sustainable growth, and most importantly that provide everybody else with a reason to believe that anything is possible!
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SEATTLE, WA – February 27, 2009 – The Alliance of Angels (AoA), the Pacific Northwest's premier non-profit angel investor organization, announced today that its members invested a total of $6.4 million in Northwest-based companies in high-growth sectors in 2008, an increase of 64% over 2007 and the second-highest yearly total in AoA's 11-year history.
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Just after noon today the Ministry of Research and Innovation released a teaser (see below) about a new $200 million Ontario fund established to help bridge the funding gap Ontario companies face – a gap that has widened significantly over the last year as early-stage Venture Capital investments have decline.
INVESTING IN EMERGING TECHNOLOGIES
McGuinty Government Creates New Fund To Support Green Tech Companies and Jobs
NEWS
Ontario is creating a new fund to drive start-up investment in green technology companies and other high-tech businesses.
The move is a response to the challenges emerging technology companies are experiencing in raising venture capital due to tightening credit markets. The long-term goal of the fund is to create a dynamic, vibrant venture capital community that will help Ontario companies grow and compete globally.
Starting in July, the Emerging Technologies Fund would invest $250 million dollars over five years together with qualified venture capital funds and private sector investors.
The fund would match small to medium private sector investments and receive an interest in companies it supports.
QUOTES
“The Emerging Technologies Fund supports the kind of investment that drives innovation, secures jobs today, and creates jobs tomorrow. We’re committed to supporting clean tech and other emerging technology companies in Ontario. Ontarians are looking to us to support investment in new technology, especially in this challenging global credit environment.”– Minister of Research and Innovation John Wilkinson.
QUICK FACTS
- The fund is targeted at companies working in clean technology, life sciences, digital media and information communication technology.
- Eligible companies must have a significant corporate footprint in Ontario.
- The goal is for the fund to be self-sustaining through return on investment.
Additional information will be released over the course of the day, so stay tuned!
Categories: NACO News
Tagged: angel fund, angel investor, Angel Network Program, venture capital, venture fund
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The rumours have been churning for weeks that the Ontario Venture Capital Fund has made its first financial commitment to the space, some 18 months after its launch. The figure isn’t known (US$5 or US$7.5 million perhaps), but most agree that Mayfield Fund was the first to get the nod from TD Capital Private Equity Partners on behalf of Ontario Premier Dalton McGuinty and Innovation Minister John Wilkinson.
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There's some life in the venture-funding world after all. Seed investment fund Y Combinator is starting a new fund backed by Sequoia Capital and angel investors Ron Conway, Paul Buchheit and Aydin Senkut. The fund will focus on the small bets Y Combinator specializes in?seed bets of about $5,000 to $20,000 that take 5 percent to 10 percent stakes in startups, usually at just the idea stage. The total size of the fund will be $2 million and it will make about 60 bets a year, 50 percent more than Y Combinator typically makes.
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At South by Southwest Interactive today, panelists from the Bay Area; Madison, Wisc.; Beijing; and Austin, Texas, debated the value of building your startup in the Valley, and the corrupting influence of venture capital on technology startups. The panel came to the conclusion that, if you want to build big and build fast, then you need to go to the Valley. However, few companies need to build big and fast.
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Our members at Acorn Partners host regular panel discussions on entrepreneurship and financing, and issue email summaries of these events afterwards. We commend these to you for their fascinating insights from the real world of new business development!
ACORN PARTNERS
SME FINANCING
www.acornpartners.com |
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WORDS HEARD AND OUR TAKE |
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Title: |
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BUILDING A COMPANY: THE STAGES OF DEVELOPMENT |
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What: |
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A PANEL DISCUSSION |
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Where: |
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OCRI TEB SCOTIA PLACE OTTAWA |
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Event Held On: |
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JANUARY 29TH 2009 |
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Who: |
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Rob Snow CFRA Moderator
Mark Edwards President Bent 360 Media Lab (Startup)
Rob Woodbridge CEO Rove Inc. (Growing Firm)
Jim Roche CEO Stratford Managers (Established Firms) |
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Quotes To Note: |
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“A shockingly large number of firms don’t have clarity on strategy.” – Jim Roche
“If you are not talking to customers you are not in business.” – Mark Edwards
“We listened to customers too much.” – Rob Woodbridge
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What Was Said: |
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How much time does it take? Edwards observed that they spent 6-8 months harvesting feedback from family and friends before launching. Now he is finding that it takes six months to get in the door of a key account to begin building trust. Rove has been in existence for seven years but has only focused in the last two. Roche said that Tundra, a semi conductor firm he co-founded, took three years but that was fast.
It was a Terry Mathews spin off which purchased significant IP.
How do sales get made? Bent 360 built a demo web site for use when a cold call was responsive. There is a hard commitment to talk with customers/prospect every day and to be where customers are at trade shows and preferably competitors are not. Seeking industry recognition via awards is an integral part of the path to sales. Rove had a key application use – end customer – Coca Cola tell RIM that they wanted this application and they would buy Blackberries to run it on. Rim is now a key channel for Rove.
Key customers are not domestic. Roche estimated that 75% plus of sales will be outside Canada. Edwards said the Bent 360 should be located in NYC, Chicago, or LA. Toronto is a compromise market. Their Ottawa location and limited budgets under pinned the choice. Many firms will have to hire sales staff located in key export markets from inception. This poses special problems in managing people off site who are not immersed in the firm’s culture and who have a different set of expectations. Edwards suggested using a buddy system to alleviate the inevitable challenges. All three Panelists firms sold to other organizations, B to B, significantly larger than themselves and thus need to know and understand the art of large account management. Roche mentioned the Miller Hyman approach.
Much of the discussion focused on people who are going to help build the business and the need to make decisions without full information. “If you think there is a problem, there is.”, was Roche’s view. He recommended clear consistent feedback on an ongoing basis. Politeness is a liability because it leads to blow-ups. Woodbridge pointed out that when Rove focused on one product, personnel changes followed. Indeed every new hire in a small organization “elevates the game’ by exposing issues that need to be dealt with.
Next the Panel focused on mentors, a class of external people who can help build the business. Woodbridge paraphrased the real estate advise, find a mentor, find a mentor, find a metor. Roche was clear, “I could not possibly done the things I have done without mentors.”
Edwards provided key insights: mentors need to have your interests at heart not some other agenda, and age does not matter.
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Acorn Partners
Two cents worth: |
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Roche is not alone in his observations about the lack of clarity surrounding strategy. Angel investors have the same lament. As Ram Charan, the author of Know-How: The 8 Skills That Separate People Who Perform From Those Who Don’t, put it; performers position and reposition the business to make money. Think of John Chambers and what he has done with Cisco Systems. Very few have the basic capacity of a John Chambers to process complex information under uncertainty over number of years. The number with this capacity could be as low as one in 1 million, perhaps fewer. Of those that have the basic capacity, not all are going to obtain the formative experiences required to develop their potential. Mentors really matter. Not only do they have to have your best interests at heart but they have to have the capacity to develop your capacity further.
Only businesses desiring dramatic growth require the capacity of a John Chambers. As well, the intrinsic complexity of businesses differ. The CEO of the Royal Bank of Canada is responsible for the performance of a large organization over a period of many years. By way of contrast the timeframes and number of variables that define the performance of CEO’s of early-stage firms are far less. A useful measure of the challenge facing an early stage CEO is the number of years required to reach cash flow breakeven. The key question becomes, do they have a capacity today to design and implement a strategy in that time frame? Fortunately specially trained interviewers can determine the time frame a person can work within without supervision and their ultimate capability to do so. An hour’s interview is all that is required.
The notion of times span of discretion provides insight into what constitutes a successful mentoring relationship. To add value, the mentor must be able to function over a longer time span of discretion than the party being mentored. Age difference does not matter. Usually however the older one is the more likely that one has reached one’s full capacity.
Time span of discretion also has important implications for organizational design. Time span should differ between levels of the organization. Not to do so results in either communications gaps, people don’t get it, or micromanagement between the level and their direct reports
“The power of accurate observation is commonly called cynicism by those who do not have it.” George Bernard Shaw’s remark neatly encapsulates the fact that we differ in our capacity to accurately observe what goes on around us. High-performing entrepreneurs are by Shaw’s definition cynics. Edwards observation that if you’re not talking to customers you are not in business, Woodbridge’s observation that you can pay too much attention to what customers say, and Roche’s remark that feedback is vital to people’s performance all neatly demonstrate the value of accurate observation. Harvesting feedback, as Edwards put it, is a key activity when seeking to ensure that observations are accurate. Mentors are also of great value in testing the accuracy of observations.
Sun Tzu was right when he said,
KNOW YOURSELF, KNOW THE OTHER,
FIGHT WITH OUT DANGER
KNOW YOURSELF BUT NOT YOUR OPPONENT,
WIN AND LOSE
KNOW NEITHER YOURSELF NOR YOUR ENEMY,
ALWAYS ENDANGER YOURSELF
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| The Leader in Sales Driven Finance™ |
708-350 Sparks Street, Ottawa, ON K1R 7S8, t: (613) 563 4588, f: (613) 563 4689, ourtake@acornpartners.com, www.acornpartners.com
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Categories: 5547802
If you have a new, innovative technology that helps address climate change or promotes clean water, land or air, then Sustainable Development Technology Canada (SDTC) wants to hear from you.
SDTC’s SD Tech FundTM is accepting Statements of Interest until April 22, 2009
The SD Tech Fund invests in late-stage development and pre-commercial demonstration of clean technologies by Canadian companies. For more information please visit: http://www.sdtc.ca/en/SOIinfo.htm
Categories: NACO News
Tagged: angel investors, business angels, clean technology, cleantech
Today the National Angel Capital Organization successfully delivered an introductory 90-minute webinar to 45 business development officers working in Canada’s US-based missions, regional Canada-based offices, and headquarters of the Department of Foreign Affairs and International Trade Canada (DFAIT). The webinar provided:
- An introduction to the lexicon, concepts and statistics of Angel investing in Canada
- A review of the status of Angel investing in the current economic climate
- A listing of resources for DFAIT officers when dealing with Angel investors or investee companies
The goal of the training webinar was to familiarize US business development staff with the intricacies of Angel investment so that they might better help Canadian companies access the potential cross-border co-investment resources they need to get their technologies into the international marketplace.
The webinar was moderated by NACO President Daniel Mothersill, and included the participation of three expert panellists:
- Rob Koturbash, Manager of Maple Leaf Angels in Toronto
- Dr. Allan Riding, Deloitte Professor in the Management of Growth Enterprises at the University of Ottawa
- Charlie Cameron, Founder and Managing Director at Hub Management Investment Group, LLC and SVP at Cooley Godward Kronish LLP of Boston
Angel investment is moving in to fill the capital gap left by VCs moving away from startup and early stage. With Canadian VC investment reaching its lowest level in 12 years in 2008, dropping 36% from 2007 alone, NACO looks forward to working with the Trade Commissioner Service, managed by DFAIT, on the cultivation of international Angel relationships and the promotion of cross-border co-investment.
Dan Mothersill, Rob Koturbash, and Dr. Allan Riding
Categories: NACO Events · NACO News
Tagged: Allan Riding, Angel investing, Charlie Cameron, Foreign Affairs and International Trade Canada, Hub Angels, introduction, Maple Leaf Angels, National Angel Capital Organization, Rob Koturbash, University of Ottawa, Webinar
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“Work maketh man”, and angels by their very natures tend to be hard-working, talented people who enjoy the cut and thrust and intellectual stimulation of business life. So angel investing adds a new dimension to one’s career as one has to deal with a different world of people and new challenges.
The investors that make up the Cambridge Capital Group (CCG) are all busy types with a portfolio approach to life as well as their business angel activity. Several have gone back into full-time work having got bored of not being gainfully employed; some are still running large family enterprises, others are taking up Chairman or non-executive roles in various portfolio companies (which can be very time consuming for those who like to be hands-on). And many have their charitable and pro-bono interests to fill their time.
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At an angel investing conference held by incubator and seed investor Y Combinator last week, a number of angels and venture capitalists debated how early is too early when making an investment in a start-up.
One angel investor, Naval Ravikant, suggested that it’s never too early for venture investors if the deal is good enough.
“For VCs, if they’re saying it’s too early to invest, that means they really don’t like you. If they really like you, they would invest. There is no such thing as too early,” said Ravikant.
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The OMDC Interactive Digital Media (IDM) Fund is designed to provide Ontario interactive digital media content companies with access to the final piece of funding required to move their content projects into production. Successful applicants will receive a non-refundable contribution of up to $150,000 to a maximum of 50% of the project budget to create a market-ready interactive digital media content product.
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Though these are not your run of the mill angel investments, the average investor return has been an impressive 2.6 times the initial investment according to a study conducted by the Ewing Marion Kauffman Foundation. That is an average internal rate of return (IRR) of 27%! Similar to the average IRRs seen by VC’s! In detail these finding found that angel investing had exits that generated 2.6 times their invested capital in 3.5 years, which is in line with other types of private equity deals and that 7% of exits generated returns above 10 times their initial investment.
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The Lee’s Summit-based group, which launched in September and focuses on Missouri-based startups, said in a Tuesday release that it received the grant from Missouri Technology Corp., a division of the Missouri Department of Economic Development. Show Me Angels was among four angel investor groups in the state to receive a grant, which has an optional one-year renewal.
The money will be used to pay for staff, professional services in evaluating investments, member training and development, the release said. Show Me Angels has been receiving administrative help from Mid-America Angels, a regional angel investor group.
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In the most recent edition of the Angel Capital Education Foundation (ACEF) newsletter, Canada’s Basil Peters, fund manager for Fundamental Technologies II (an angel fund) and author of the book Early Exits (available soon), is interviewed on the topic of early exit options. Among other things, Mr. Peters had this to say:
“We are in the midst of several big shifts in the economy. We have reached an evolution in the high technology industry where entrepreneurs can build valuable companies with almost no capital. Companies can be started on a shoestring and grow to be quite valuable in just three or four years…When there is a convergence of major trends like this, it can get very exciting. I believe the next several years will turn out to be very good times for entrepreneurs and angel investors. “
We recommend this highly salient interview to all Angels.
Categories: 5547802 · NACO Media Mentions
Tagged: Angel Capital Education Foundation, angel investor, Basil Peters, Early exits, exit, Fundamental Technologies II, interview
Mind to Market Innovation Series - Ontario Centres of Excellence
Take advantage of our sponsorship and reserve your free seat at NACO’s table for the next Mind to Market Session being hosted by OCE March 26th in Burlington.
Canada’s manufacturers face unprecedented challenges and opportunities that will fundamentally change the nature of their businesses. Yet only 23% of companies have a strategy to compete and win in a slower economy. Innovation is key, and possible, if you have the winning formula.
Join Value Profit Group’s Tim Glover as he simplifies the complexity of business and innovation with his proven formula – The New Economy Business Model. Then discover how to apply it to your business as Brian Maragno of Siemens shares how the Hamilton gas turbine manufacturer is growing its advanced technology business through innovation.
Following the presentations visit the Golden Horseshoe Materials and Manufacturing Network where you can connect with a wide range of manufacturing associations, government agencies, universities and colleges to learn more about the resources available to harness new manufacturing opportunities.
PRESENTERS
TIM GLOVER, Chief Strategy Officer & Co-founder, Value Profit Group
BRIAN MARAGNO, Operations Manager, Siemens Fossil Power Generation, Hamilton Plant
THURSDAY, MARCH 26
Breakfast Presentation: 7:30 a.m. – 9:00 a.m.
Networking Opportunities: 9:00 a.m. – 11:00 a.m.
Royal Botanical Gardens Auditorium, 680 Plains Road West, Burlington, ON L7T 4H4
For more information about the Mind to Market Innovation Series, please visit http://m2m.oce-ontario.org, contact the event hotline by e-mail or at 416-861-1092 x1019 / 1-866-759-6014 x1019.
The OCE Mind to Market Innovation Series thanks our sponsors.
Categories: NACO Events
Tagged: Burlington, Golden Horseshow Materials and Manufacturing Network, innovation, Manufacturing, Mind To Market, Ontario Centres of Excellence, Siemens, Value Profit Group
On Friday, May 22nd, 2009, from 11:30 a.m. to 6 p.m., the Ted Rogers School of Management (TRSM) at Ryerson University in Toronto, and the National Angel Capital Organization (NACO), will be hosting the Spring 2009 Canadian Co-investment Summit.
Our first Co-investment Summit in November 2008 was standing-room-only, with over 150 investors viewing presentations by 25 of Canada’s best early-stage companies – so register early to save a good seat for this complimentary event. This will allow you to invest in the best Angel-backed companies, and achieve diversity and solidity in your Angel investment portfolio – just when these qualities are needed most.
If you are an investor, mentor or other interested party with an early-stage company that is ready for a second round of growth capital, make sure they apply at our website until May 8th to be considered for our lineup of company presenters. Companies will be reviewed on a first-come, first-served basis, so please register them as soon as possible. Don’t let them falter for a lack of follow-on financing! 14 early-stage companies vetted by the NACO Co-investment Task Force will present to the Angels and private equity investors attending from across North America’s commercialization ecosystem.
With venture capital in Canada at its lowest level since 1996, it is up to Angels and private equity investors to turn things around, as the last remaining bastions of early-stage growth financing in Canada.
Categories: NACO Events · NACO News
Tagged: Co-investment Summit, early stage companies, growth capital, National Angel Capital Organization, ryerson university, Ted Rogers School of Management, toronto
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The Recession Claims Another Victim – During this recession, sadly many of us will lose businesses or investments that are very important to us. The only consolation you can get for this loss is if you do feel you gave it your very best. I did work with some of the management team of Amano to try and buy the business back – we came very close but we did not succeed. We were all comforted by the fact that we did do our very best – and could not have done more.
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Companies of all sizes are battening-down the hatches for survival faster than in any prior slow down. Jobs are being lost right across the economy.
Start-ups and early-stage companies are critical links in the enterprise chain and are in danger of being overlooked. Practical initiatives aimed at them are needed with support from the UK Government. Why is the enterprise economy important? All the evidence points to small and medium enterprises (SMEs) being an important engine of the economy not least in relation to direct and indirect employment. Throughout this decade, business angels stepped up the value and quantity of investments and emerged as the most significant source of funding for early-stage companies. According to the British Business Angels Association (BBAA), business angels’ share of private sector investments in early-stage ventures increased from 16 per cent in 2000 to 41 per cent in 2007.
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In the most recent issue of Canadian Business magazine, columnist Andrew Wahl, in his article “Cold Realities“, obtains a very telling quote from a Toronto entrepreneur:
“I did a couple of double-takes with Canadian VCs that said, ‘We want to see you have x-million in revenue, and then we’ll talk about investment’; if we were hitting those gates, we wouldn’t be going for VC dollars, because the company would be self-sustaining. I wouldn’t go to a VC, I’d go to a bank and get a line of credit.”
Once again we see the truth of it: venture capital in Canada cannot help in the early-stage. Angel investors are the way to go.
Categories: Angel Links
Tagged: Andrew Wahl, Canadian Business, early-stage, toronto, venture capital
