I have always been somewhat intrigued by the fascination some people have with looking back at a given calendar year. I assume they do so in the hopes that the enumeration of the past year’s achievements and successes (but rarely failures) will bring satisfaction and encouragement that repeats itself in the upcoming year. Experience has shown me that none of my last 19 years as an entrepreneur have ever been even close to resembling one another. I feel that the intensity has constantly increased year over year. I think the rush against time is never-changing, and the odds and the amount of effort required to overcome life challenges are always unique. Of course, at the same time, the stakes seem to keep getting higher. We have been investing in new opportunities driven by exceptional entrepreneurs at a rate of 8 deals per year since Fund II (launched in 2007). Over 60% of our deals have been in very early or pre-revenue companies. All of our investments were done in sectors we understand. We have invested in entrepreneurs that we believe in and in large and growing markets that fit our IT cluster strategy (Mobile Internet and Ecommerce, Enterprise SAAS and Cloud-Computing, Digital Media and Communications). Our management’s focused expertise has allowed us to better identify fast growing companies for which we can provide specific insights, and attract complementary skill sets and managerial experience. As a result, many of our investments are either rapidly growing revenue and/or are growing exponentially in their markets. We know that there is nothing easy about building a successful tech company these days. I can only applaud the founders and CEOs that we’ve been privileged enough to work closely with for their constant efforts and energy in making the impossible a reality. Hard work? Yes - and a lot of it! But, most importantly, these entrepreneurs have repeatedly proven that by focusing their energy on the elements of their business they do control, they can learn faster, adjust quicker and gain market validation at much lower cost than anybody else. We have lost 3 of our portfolio companies as a result of not controlling these factors. With all of what we have gone through over that last 12 months (our re-enforced management team, a rapid portfolio growth, M&A analysis, missed opportunities, liquidations, course-corrections, market changes, unique new investments and high quality deal syndication), I can only be ecstatic when thinking of the work load, challenges and opportunities staring at us right in the eye for 2011. However, when I come to think of it, I’m not a big fan of New Year Resolutions either (especially since I’ve listed so many in my past that I was never able to respect). I think we should stick to doing what “feels right”, and what drives our deep passion to succeed. I personally put a lot of effort in doing so. I think that what it boils down to is: “Doing more of what one is amazing at, and doing less of what one is mediocre at.” That simple rule makes me a better person, our team stronger and more cohesive, and our fund a great resource for exceptional entrepreneurs who are looking for a helping hand in building great tech companies. I'm totally psyched, curious, excited and anxious when thinking of what awaits us in 2011: raising a new fund, working with some of the most amazing entrepreneurs on the planet, building up our current portfolio of companies, identifying new opportunities and establishing long lasting relationships… in our own way, helping change the world for a better place! I’m looking forward to what lays ahead…Happy New Year!
The past year seems to have gone by ridiculously fast - actually, the past decade seems all but a flash! For all of us at iNovia, the last few years have been very rewarding. We have achieved many critical milestones, and yet seem to have set ourselves up with even more for the coming year.
Friday, December 31, 2010
Looking forward to 2011!
Friday, December 17, 2010
A brave new world: Amid the recent industry turmoil a rash of new VC players have emerged in Canada
This post was originally written for the Private Capital Privé winter 2010 edition of the printed magazine. And was Curated for nextMontreal on November 22, 2010. No point in letting a good crisis go to waste. Opportunity emerges during times of market challenge. At the tail end of perhaps the toughest decade that the global – and Canadian – venture capital industry has endured, a flurry of new fund managers has hit the fundraising trail in Canada and successfully raised first-time funds. It takes guts, and patience, to launch a new venture at times like these. You may have heard that the venture industry in Canada has been declining for years, that LPs are ‘pruning’ managers rather than adding new ones, and that raising a new fund is nothing short of a suicide mission. Nonetheless, you can’t say that entrepreneurial spirit and guts are not alive and well in the Canadian venture capital industry. Compelling market opportunities, good teams, and perseverance in a difficult fundraising environment is paying off for a new generation of emerging VC managers in Canada. In more than one way, we are witnessing the re-birth of the Canadian venture capital industry. Canada has always been, and continues to be, a venture market that is dramatically underserved by capital, and so there is plenty of room for new entrants – indigenous, entrepreneurial and from outside our borders. Over the last year, against all odds, a new generation of emerging “entrepreneurial investors” teamed up around specific domains and market segments, built strong teams the same way a startup builds an A-team, and launched into a world of opportunities and chaos. Impressive accomplishments on the fundraising trail by upstart GPs has created a dramatically changed landscape in Canadian venture capital. Not to belittle the effort, it should be pointed out that some of these debut funds were on the money raising trail for a few years. And now we have a whole new crop of opportunities being pursued, by a whole new crop of new venture investors. Global digital media funds, global water business funds, expansion capital where none existed before in Canada, to name a few. Capital: $100M first closing First Close: May 2010 Partner Locations: Vancouver and Shanghai Investment Focus: Digital media Sources of Capital: Numerous Canadian and foreign institutional, corporate and private LPs. Team: Paul Lee is the former president of Electronic Arts responsible for the worldwide studios, as well as an active and successful angel investor. Glenn Entis is the former chief visual and technical officer of Electronic Arts and former CEO of Dreamworks Interactive. Divesh Sisodraker is the former CFO of Taleo Corporation, former CEO of Pivotal Corporation and former finance head at ALI Technologies (McKesson). Jason Chein is former general manager of EA China and former Asia developer relations with Microsoft’s Xbox group. Capital: $100M+ First Close: February 2010 Partner Locations: Toronto Investment Focus: Water technologies and water-related businesses Sources of Capital: Canadian and International institutions. Team: XPV’s team is a marriage of investment expertise, sector knowledge and deep industry operating experience. “Tenacity, focus and an enormous team effort has positioned XPV to capitalize on the growing investment opportunities now present in the water sector,” said David Henderson. Capital: $50M+, first closing First Close: July 2010 Partner Locations: Toronto Investment Focus: Growth equity firm investing in expansion and later-stage enterprise software and information aggregation companies. Sources of Capital: Institutional investors form Canada and the U.S. Team: Georgian Partners Justin LaFayette, Simon Chong and John Berton; all have hands-on experience in operating and managing expansion stage technology ventures. Capital: $300M first close First Close: November 2009 Partner Locations: Toronto, Montreal and Vancouver Investment Focus: Later-stage Canadian technology companies Sources of Capital: Anchored by commitments from BDC, EDC and Teralys, which sponsored the formation of Tandem in collaboration with two of Canada’s best- known business leaders. Team: Tandem’s managing partners – David Bookbinder, Andre Gauthier, Christopher Legg and Alex Moorhead – all have significant investment and entrepreneurial experience domestically and internationally. “Tandem is the only Canadian based growth equity fund, this give us a unique advantage in both sourcing and working closely with our portfolio companies,” said Christopher Legg. Capital: $20M First Close: March 2010 Partner Locations: Toronto Focus: Invest in domain expert entrepreneurs who are building early stage mobile and Internet software companies, surrounding them with an ecosystem of experienced operators to get their ideas from conception to market. Sources of Capital: A family owned commercial and residential real estate developer Team: The main investment partners are Robin Axon and Duncan Hill. Robin is ex-Ventures West and Duncan was an EiR at Ventures West and previously founded Think Dynamics (acquired by IBM back in 2003). “At MantellaVP we believe strongly in maintaining alignment between founders and investors. We work shoulder to shoulder with entrepreneurs to build their business, and provide the right capital at the right time. This ensures that at all stages of the company’s evolution, a good outcome for the founders is a good outcome for everyone,” said Duncan Hill. Capital: $50M initial closing First Close: October 2010 Partner Locations: Montreal Investment Focus: Seed stage venture capital firm investing in Internet, software, mobile, digital media, social and casual gaming startups. Sources of Capital: Invest Quebec, Fonds FTQ and private LPs Team: John Stokes, JS Cournoyer, Alan MacIntosh, Mark MacLeod, Austin Hill and Daniel Drouet, who have all been entrepreneurs, angels and/or VCs. “The Web and mobile web are creating major disruption, incumbents are being challenged and new markets being created. The productizing and commercialization of ideas can be done with significantly less capital and as innovation is becoming harder to realize internally, established companies are using acquisitions to fuel revenue growth…what a great time to be starting a business … or a venture fund!” said John Stokes. Capital: undisclosed First Close: Started investing in November 2007 Partner Locations: Vancouver Investment Focus: Consumer Internet, social media, online commerce Sources of Capital: personal investment fund of sole partner, Boris Wertz W Media has completed over 20 investments to date, with a majority done in the Pacific Northwest. WMedia also has a unique connection with Vancouver based Bootup Labs. Incubators 2.0 (aka “Accelerators”): In the late 1990s, the first wave of private incubators arrived on the scene in Canada, emulating the models of their U.S. counterparts. A few short years later, precipitated by the technology and equity market implosion, this part of the Canadian venture and startup eco-system entered extinction. Various government programs attempted to fill some of the gaps in providing services (but usually not capital) to the new generation of post-bubble era technology startups. Now, nearly a decade later, with an explosion of new startup activity in Canada’s major technology clusters in Vancouver, Montreal and Toronto, a new wave of entrepreneurially driven accelerators – such as Montreal StartUp, Vancouver’s Bootup Labs, Ontario’s BaseCamp (Mantella-related), Extreme Ventures NeoTech, Bolidea and newly-launched Year One Labs – are taking the Canadian startup landscape by storm. Newcomers such as these are helping build a more savvy roster of entrepreneurs eager to attract follow-on financing from VCs. Some are already generating exits before VCs have an opportunity to get a seat at the table; witness Extreme’s two visible exits, one to Google and the other to Electronic Arts, within its first few years in operation. All provide hands-on support at every stage of a company’s creation and growth – from business development and marketing to financing and team development – to help facilitate early market traction. Oh yeah, and some also have cash, which, not surprisingly, still matters an awful lot to most startups, even if the amounts they need are smaller. Silicon Valley comes calling: Not alone in their optimism for the Canadian investment landscape, the new crop of Canadian venture capital players are also joined by a number of new entrants from the Silicon Valley who are exhibiting keen interest in the Canada. In each case, there is knowledge of the Canadian market opportunity owing to one or more partners having roots in Canada. Altos Ventures, Bridgescale Ventures and Panorama Capital – all Sandhill Road firms – have made investments in Canadian companies during 2010. All three firms focus on expansion-stage venture financing, while making selective earlier-stage investments on occasion. The deals being done by these Valley funds split quite evenly between Western Canada and central Canada. What is most striking is the visibly increasing commitment of partner time to the Canadian market. In the case of Bridgescale, two Canadian-based partners have been added, both in Toronto, including the October 2010 announcement that Derek Smyth – the final partner remaining at now defunct Edgestone Venture Capital – was joining the Bridgescale team. Bridgescale is the first Silicon Valley firm to locate partners in Canada. A betting man might wager that they won’t be the last. This fall, Silicon Valley’s technology accelerator on steroids, Plug and Play Tech Center, announced expansion plans into Canada. CEO Saeed Amidi made the announcement at a private gathering in Vancouver (where he also happens to have a second home), stating a keen personal interest in “strengthening and leveraging the bridge between Canada’s technology sector and Plug and Play’s industry and venture capital network in the Valley.” Virtually every major technology company in the acquisition game, and a list of venture capital funds that appears only in the wildest dreams of most Canadian entrepreneurs, is partnered in some way with Plug and Play in Sunnyvale, California. Plug and Play plans to set up shop in Vancouver in 2011 and its venture arm Amidzad Ventures, which has seed funded dozens of Valley startups including major players such as PayPal, comes along with the deal. Canada goes calling in China. Russia comes calling in Canada: With only a few short years into a landmark fund structure involving a major corporate capital commitment from Research In Motion, alongside commitments from U.S. and Canadian institutional LPs, the Black Berry fund managers – a new partnership between JLA Ventures and RBC Capital – announced the first closing of a new Blackberry Partners China Fund. With $100M+ in initial commitments, this vintage 2010 fund represents a first in Canadian venture capital – a Canadian venture fund manager successfully establishing an international fund. Interestingly, VanEdge Capital, which closed during the same month as Blackberry China, also has designs on Asia, and one of its initial three partners is based in Shanghai. Previous attempts to establish funds with an Asian focus, including efforts over the past decade by private independent managers such as McLean Watson and even the Canadian government’s own BDC Venture Capital, have not taken flight. More evidence of the growing international presence of Canadian venture capital is found in the Russian-Canadian partnership led by Rusnano, who has recently announced plans to partner with John Varghese, CEO and managing partner of Canadian venture fund manager VentureLink. Varghese plans on assembling a new nano-technology focused fund that will pursue investments from a Canadian base. Is this a sign? A new direction for Venture Capital? A new Canadian reality? The Fund will invest in Canadian companies that have the potential for global expansion. The wrinkle or added benefit of the partnership with Rusnano is that each investment will have a corporate sponsor in Russia prior to the first investment being made. Thus the go-to market strategy of each company will be established with a customer that can be referenced, facilitating global expansion. Can we say procurement assistance? Domain expertise, cross-border partnerships, a growing network of valuable industry and private capital relationships, value-added support, seed acceleration facilities and teams: these are all trends gripping Canadian venture capital. A brave new world – with brave new leaders – is evolving, and fast. Co-written by Chris Arsenault and Steve Hnatiuk NOTE: this post was originally written for the Private Capital Privé winter 2010 edition of the printed magazine. And was Curated for nextMontreal.
Thursday, December 16, 2010
Respect for C100 Knockout Entrepreneurs!
After attending “Knockout Entrepreneurs! Venture Capitalists Boxing For a Cause“, the first word that comes to mind is simply: RESPECT. I mean, you have to respect these entrepreneurs for being REAL entrepreneurs! It’s not just about taking such risk in front of their friends, family and industry colleagues; It’s about putting on a great boxing match, showing commitment to a venture, demonstrating their passion for a cause, having the ambition to succeed, taking risks beyond their comfort zones and for at long last hearing that final bell with their heads held high. I (alongside all of the other 160 attendees) was ridiculously impressed after witnessing such a well executed 6 rounds of boxing. After 150 hours of training, François-Charles “The Sniper” Sirois, walked into the ring for the first time ever as an underdog. Like most champions, he was confident of heart, body and mind. Sauntering into the arena with the sounds of “Eye of the Tiger” mixed with “I Gotta Feeling”, Sirois showed some out-of-the-box and energetic thinking that defines him. Unknowingly blessed by a famed (and perhaps genetic) “there is no way I’m going to lose” attitude, the Sniper gave 100% of what he knew he could give, plus an additional 100% of energy, creativity and effort he didn’t even realize he had prior to stepping into the ring. In contrast to France-Charles’ inexperience was Jacques “TNT” Bernier. Jacques walked into the boxing ring with an experienced entourage of purple-clad past champions with a look of complete determination and focus on his face. With AC/DC TNT blasting in the background, I can honestly say that for a moment, when I looked into Bernier’s eyes and grasped his level of concentration, my thoughts turned to: “Oh my, I hope neither one of them get badly hurt”. Jacques was “In the Zone!” Older? Yes. More experienced? Oh yes. In shape? Not as much as François-Charles – but it didn’t matter. TNT didn’t dance around the ring as much as the Sniper did, but his forceful experience and knowledge of when to push at the right moment and time paved the way to a triumphant victory after 6 rounds of top-quality prize-fighting. Checkout the short Video of round 5 The two fine combatants raised almost $40,000 for two very important causes:Fondation Sainte-Justine and Centre of Excellence for Cellular Therapy of Hôpital Mainsonneuve-Rosemont. Luckily, no one was badly hurt, although I do think François-Charles walked out with a broken rib. It was a true sign that he and his opponent gave us all they had. This was their first match, but also their last match! Great entrepreneurs come in different styles, types and personalities. But they all share similar quality traits. Entrepreneurs: By taking up this crazy yet unique challenge, Jacques & Francois-Charles showed us what truly great entrepreneurs they are. Congratulations!
Thursday, October 28, 2010
Knockout Entrepreneurs! Canadian GP & LP put-on the Gloves for a great cause on Nov. 18th
By Chris Arsenault, iNovia Capital
Posted on October 28th for nextMontreal.com
Do you remember the last time you got into a heated argument that culminated with your adversary laying down the proverbial gauntlet by issuing those infamous three words – “I dare you!”? Then, without even a shadow of a doubt and before you can even comprehend the seriousness of the situation, you responded with a testosterone-tinged “Sure, I’ll do it – name the time and place!” More often than not, the consequences of such actions end up being 
more than you wished for.
Now, to be honest, I’ve given more than my share of cocky replies over the last 20 years in the business. That being said, I can also say none of my “quick replies” ever landed me in a prize-fighting ring versus a trained boxer who also happens to be Canada’s largest VC and PE fund investor!
Yes, ladies and gentleman; Jacques Bernier, Managing Partner at Teralys Capital, has dared the VC community to face him in the ring. He wants to go at it, one-on-one and show what he’s made up of.
Personally, stepping into a ring is already something I consider a little crazy. Furthermore, to go out and face one of my future potential investors on a boxing ring is almost suicidal. It’s definitely a lose-lose proposition...Or is it?
François-Charles Sirois, a dynamic young entrepreneur (and also President of Telesystem - one of Canada’s most active entrepreneurial investor through its numerous funds), heard the calling in October 2009. When Jacques threw out his “I dare you” in a friendly meeting, François-Charles rapidly evaluated the odds of winning or losing, the time he needed to train, the muscle-mass he needed to gain to face Jacques, identified Jacques’ main weaknesses, calculated the difference in age and speed, and rapidly (because all of this happened within a micro-second) answered back: “Sure, I’ll fight you. Give me a year to prepare. Oh, and by the way, I care tremendously for a specific foundation that gives support for kids and want to give 100% of my winnings to the Fondation Sainte-Justine.” “My winnings” – talk about a bold statement! Jacques quickly replied: “Perfect - but to be clear, my winnings will go to the Centre of Excellence for Cellular Therapy of Hôpital Mainsonneuve-Rosemont, which is a cause close to my heart”.
Definitely, François-Charles is walking into this adventure with but one objective in mind - to win! While Jacques already knows he has won!
Being a Montrealer and having had the opportunity to be friends with both Jacques & François-Charles, I had the pleasure of hearing, discussing and sharing allot of the buzz this “I dare you” challenge has generated since last year. These guys are knockout entrepreneurs!
In the left corner, wearing purple shorts, you have Jacques Bernier; A self-made entrepreneur with an amazing amount of energy, vision and execution skills. In addition to have been an amazing athlete (race car driver and as a boxer) he is an avid cycler. Jacques usually doesn’t hold any punches, and gets things done once he puts his mind to it. The Billion dollar Teralys Capital fund of funds was his making, hardly a small feat.
In the right corner, wearing red shorts, you have François-Charles Sirois, a younger entrepreneur with nothing less than hundreds of millions under management. Telesystem has direct ownership in a series of companies (Stingray, Plexo, Zone 3…), VC funds under management (ID Capital, Propulsion…) and other funds co-managed (Tandem, Enablis…). Telesystem has been an important player in the Telecom arena and in the Venture Capital industry in Canada and elsewhere in the world. Yet, in a nutshell, Telesystem is about Entrepreneurs. And François-Charles, a solid entrepreneur who fears nothing but himself, makes calculated risks and takes bold moves. I’ve witnessed (and in some cases actively participated with) him launching new businesses and converting wild ideas into sustainable companies. He has the drive and the guts to go for Gold, nothing less.
So on November 18th, after a year of intense training, practice, and preparation, the challenge will be answered via a friendly boxing match organized by Christian Zabbal, Pascal Tremblay, Jacques Bernier and François-Charles Sirois.
This is an “Invitation-Only Event” and all proceeds from this event will support both St-Justine and the Centre of Excellence for Cellular Therapy of Hôpital Mainsonneuve-Rosemont. Because it is a private event, and constraints of the room, only a limited number of guests will have the opportunity of attending this memorable match.
This is going to be a knockout event! And I’ll be there to take the shots (picture-shots that is!).
Tuesday, August 17, 2010
The C100 is Changing the Pace of Development for VC-backed Canadian Tech Entrepreneurs
This article was first posted on August 10, 2010 for nextMontreal.com - The source for news & opinion
on technology and startups in Montreal
I first heard about C100 in September 2009. Chris Albinson was just paving the way for the organization, and it’s very quickly become one of the most influential Canadian Tech Entrepreneur Associations around. Comprised of a passionate group of primarily Silicon Valley-based Canadians, the C100 aims to foster relationships that will lay the groundwork for future Canadian success stories at the highest echelons of the technology industry.
In early March, at an event in Menlo Park, the association was ready to give the world a first glance at who was behind the C100 Organizing Committee, who were some of the initial Charter Members, and to highlight the C100 global ambitions. There was active participation from Montreal’s venture capital community, including iNovia Capital, Montreal Startup, Teralys Capital and BDC Ventures; as well as some of our top tech company entrepreneurs: Woozworld, Reflex, Coradiant, Beyond the Rack, and a few others as well.
So why so much hype around the C100?
For starters, this young organization has demonstrated quantifiable results and has awakened hundreds of Canadian technology entrepreneurs to a new dimension – one where Canadians are helping fellow Canadians succeed. In order to achieve such success, a C100er doesn’t just lend his or her name to setup a meeting in the Valley or provide funding to a talented entrepreneur; rather, he or she provides a “Path to Success”. The package provided by C100ers to young, dynamic and talented Canadian entrepreneurs includes access to role models, coaching & mentoring sessions, networking events, financial capital and a healthy dose of inspiration. “There is a bigger story here than just providing introductions or capital”, said Anthony Lee, a General Partner at Altos Ventures who co-founded the C100 alongside Chris Albinson (Managing Partner at Panorama Capital). “This is a non-for profit, we have no permanent staff, no one is being paid to do this, everybody is a volunteer and cares about giving back to Canada”.
With over 300,000 Canadians now working in Northern California (almost 1% of the Canadian population!), the C100 aims to attract those Canadians at a stage of their lives where they want to give back to their homeland in a truly unique way. “C100 Charter Members include top executives from technology giants such as Apple, Cisco, Electronic Arts, eBay, Facebook, Google, Microsoft and Oracle, plus a terrific group of start-up CEOs, and some of the most active venture capital investors in both Canada and the US”, said Anthony. The C100 already has over 500 General Members, with 70 Charter Members, including a few Montrealers, such as executives from Google, Microsoft, Ubisoft and from a select few venture firms like iNovia Capital and Founders Fuel. But we need more reach into C100 from our local Montreal and Quebec expatriates. As Chris Albinson puts it so well: “We should not worry about Brain Drain but Brain Flow. It’s about time Canadians come out of stealth mode and start showing what we do.”
With a few exceptions, this is the profile of a C100 Charter Member today:
· Canadian and Silicon Valley based;
· Senior Executive (VP or C-Level) within a successful tech company, Founder or CEO role at a start-up or as a Partner with a VC Fund;
· Has the ability and resources to provide coaching, mentoring and introductions to aspiring Canadian entrepreneurs;
· Fully committed to participating in the process and supporting developments in the lifecycle of a start-up;
· Passionate about Canada and driven by the opportunity to do more for their country and compatriots;
· Wants to give back!
Since its inception, the C100 Organizing Committee has already helped kickstart a new era in Canadian entrepreneurship. Beyond delivering on membership goals, the organization has hosted over a dozen networking events in major cities across North America (including Los Angeles, San Francisco, Menlo Park, Vancouver and Ottawa). The inaugural 48Hrs in the Valley mentoring event was also a tremendous success, hosting 20 top Canadian tech startup entrepreneurs for a two day session in the midst of the world’s technology headquarters. To build on the momentum of these events, the group has also continued to hold quarterly mentoring sessions via Cisco Telepresence to provide additional support to eager entrepreneurs.
Check out the upcoming 48Hrs in the Valley scheduled to be held on October 27-28th in Menlo Park. Let me know by email if, as a Canadian Entrepreneur, you want to apply and participate.
Commitment, Mentorship and Coaching:
§ Held its first “48Hrs hours in the Valley by hosting 20 top Canadian entrepreneurs;
§ The next 48Hrs in the Valley will be held on October 27-28th;
§ Held 5 Mentoring sessions via Cisco-Telepresence;
§ Ongoing Quarterly Mentoring Cisco-Telepresence Sessions;
Canadian tech leadership awareness in the Valley:
§ DFAIT series of Entrepreneur Bootcamps;
§ Major Networking events in the Valley and major Canadian cities;
Cross border deal making (VC funded Canadian tech Companies):
§ Calgary based Tynt, Toronto based Kontagent, Montreal based Beyond the Rack,
§ Edmonton based Immunet, Toronto based Dayforce, Montreal based Vantrix, to name but a few Tech startups that raise over $40M this year;
§ And, Toronto based Bumptop acquisition by Google was also co-funded by two C100ers.
Like it or not, the growth of Canadian tech startups is still heavily dependent on their ability to effectively access the US market (notably Silicon Valley). Already we at iNovia have worked on 5 different Canadian tech startup opportuities with C100 members, one which turned into an investment in Tynt and another one in Fixmo. Not a bad start! The key value-add a C100 investor brings any Canadian startup is access and personal relationships with some of the leading tech companies based in the Valley.
I think that the passion and drive behind the C100 marks an important change for Canada and the Canadian Tech Community. Not only is it time that we realize we are already leaders within the global economy, but by regrouping and providing a forum to learn from each other, we are poised to play our most important role yet in the ever changing landscape of Communications, Digital Media, Enterprise Software and the real-time Internet.
Given the tremendous traction that the group has already gained, it’s hard to believe that the C100 is only a few months old! If you haven’t yet had a one-on-one conversation with a C100 Member, don’t miss the opportunity to meet up at the Vancouver GROW conference on August 19-20th, at the Quebec city conference on October 25-26th or through one of the many mentoring, coaching and networking events. You’ll find all the details athttp://www.theC100.org. And follow The C100 on Twitter.
If your ambitions meet those of the C100, then I welcome you to join now and come make a difference. It’s awesome to see Montrealers participate as Charter Members, the General Membership, as well as some of the key C100 Sponsor Members. Yet, we can pull our weight even more and play a critical role in building out our own ecosystem by reaching into the Valley and connecting our Entrepreneurs with enhanced access to capital, mentoring, knowledge, customer relationships and most importantly inspiration.
Your comments and involvement is more than welcomed!
This post was first written up for the nextMontreal.com - The source for news & opinion
on technology and startups in Montreal
Tuesday, August 3, 2010
Untitled
Attracting the right type of co-investors (Status.Net)
Our portfolio Company Status.Net just announced that it raised $2.3M in initial funding to date. While some will argue that such an amount is on the low side for a tech startup, especially when comparing it to other microblogging platforms that raised dozens of millions in funding, others will argue they are doing it right! And I think it’ awesome when a Company is able to attract the right amount of funding it needs to execute, and at the same time get it from the right type of investors.
In a nutshell, Status.Net develops and supports medium to large enterprises with open source microblogging tools. Its products include the StatusNet Enterprise Network support subscription program and the Status.Net Cloud Service software-as-a-service offering. Its early clients include: Motorola, Mozilla, Shit my Dad says, and is already on a run rate of over 10,000 downloads per month. I’d say that’s a pretty good start.
But when building a Tech Company from scratch, it’s as important to build the right team to execute as it is to attract the right type of investors to support the vision. Evan Prodromou has an amazing vision of how Corporations around the world should integrate microblogging into their applications and communications platforms. And on the other hand, Scott Switzer of Firstmark Capital has the deep experience of having built a leading open source ad platform – OpenX, and will provide Evan with a leg up on massively deploying a profitable open source platform. Scale for growth is critical for Status.net.
When we (iNovia Capital) first seed funded the Company, it was on the basis of our belief in Evan’s vision for Status.net, his capacity to attract the right team and because the guys over at Montreal Start Up where there to help kick-start this Company. Now, the Company is kicking into second gear with the support and knowledge of the FirstMark Capital guys. And we are looking forward building an Enterprise software category leader.
Check out the full Press release here:
http://www.inoviacapital.com/news.php?langID=&pre_id=84
Or learn more about the Company and this funding round at:
Friday, April 2, 2010
by @DonDodge http://bit.ly/apb9cA
Building a culture of Entrepreneurial Venture Capital
by Chris Arsenault, Managing Partner at iNovia Capital
Earlier this month I was invited by Rob Hyndman to post some of my views on the topic of: The Future of Venture Capital in Canada, as part of a series of posts at The Mark - Canada's daily online forum for news, commentary, and debate. I ended up posting a short view of the “VC Ecosystem”, outlining only but a few key elements critical to having a stronger and most importantly a viable tech industry supported by venture capital in order to compete on a world wide basis. David Crow, added some valuable comments relating to “Creating a Venture Culture” so as did ex-VC and entrepreneur Rick Segal, tech CFO Mark MacLeod and others, participated in the discussion and shared their views on the topic. If you haven’t read the posts, I strongly suggest you give it a read.
I fundamentally believe in the early stage venture capital model that supports promising high growth tech startup entrepreneurs. And through my efforts and those of my colleagues and partners at iNovia Capital, MSBi Valorization, the CVCA, the C100 and numerous other initiatives, we are trying to make the model work by approaching venture capital the same way you one would build any other tech business: with the right people/team at the right time (entrepreneurs vs. operators); by building a strong network of knowledgeable partners with complementary skills sets and long term relationships; and by understanding what startups and entrepreneurs need from their early stage VC’s and deliver results/returns to our Limited Partners while properly managing expectations. Building an Ecosystem takes time, commitment and passion. Building an Entrepreneurial Ecosystem requires the right culture and mindset! For the last 12 years I’ve dedicated my entrepreneurial life towards helping to build successful tech business via my role as an active early stage investor. Over this same period of time I’ve witness important changes across the Canadian VC landscape which continues to evolve and now seems to be driven by a more entrepreneurial culture, one that includes Venture Capital savvy Entrepreneurs that understands the role of VC funding more than ever before. Hopefully the pieces will continue to fall in place and we will see the next generation of successful Canadian tech entrepreneurs that will change the way we work and live be funded by Canadian VC’s.
Earlier in March I was given the opportunity/challenge to discuss Entrepreneurial Venture Capital by giving a, “fast, 15 seconds per slide, 5 minute 20 slide presentation” at Ignite Montreal. My presentation was specifically on the topic of trying to communicate how to “Make Venture Capital Work”. I really like the Ignite presentation model, but it’s indeed a challenging concept, too bad I ended up doing the basic mistake of trying to say too much in too little time… thus not saying as much as I could if I would of said less!
So, many entrepreneurs these days are talking about “How the Venture Capital Model is Broken”, which is the wrong way to address the lack of capital Canadian entrepreneurs face! The VC Model isn’t broken because it never really worked in the first place, period!
With the exception of the 1980’ and the few last years of the Internet bubble, the model has never been successful for the masses, but has been only for a handful. And, when it comes down to Canadian numbers, we have to account for an additional level of difficulty: the fact that Canada doesn’t have the “weight” of numbers in its favor. Not only does Canada have a less mature IT and Biotech industry when compared to the US, it also has a small and nascent private equity and venture capital industry, and still only has a handful of privately managed venture capital funds today.
The stories about the highly successful technology entrepreneurs as well as those about the rockstar venture capitalists (note: over 80% of all venture capital returns are generated by less than 25% of the venture capital funds out there) created the impression that the only thing needed to build a high valued successful startups was an entrepreneur with an idea and an investor with cash! This meant that venture capitalists could blame poor returns on unsuccessful entrepreneurs while those entrepreneurs could blame their failures on the lack of capital or restrictions tied to the capital they did raise.
The math is the same for a Canadian venture capital fund as it is for a US venture capital fund. Investors in venture capital funds usually expect a high IRR (internal rate of return) – Top tier venture capital expected returns in the +30% IRR, a rate that is far above banking rates due to the high level of risk involved. A Venture Capital fund will usually has a ten year life and will require a certain level of management fees over that period. Therefore, in order to understand the type of capital that needs to be returned to the investors of the Fund (the Limited Partners) one needs to plan on generating three times (3x) return of capital to be successful and part of the Top tier firms that are able to continuously raise additional capital and funds.
In a nutshell, that means that a $100M size fund must return approximately $300M in order to generate the expected level of returns of a Top tier fund! So, knowing that for an early stage venture capital fund, one can expect it owning on average 20% of any given company in a portfolio of around 15 companies (for a $100M size fund), this would translates into $1.5 billion of aggregate portfolio enterprise value at exit, or $150M in cumulative EBITDA based on a 10x EBITDA exit valuation, needed to generate those type of returns. That’s pretty demanding! Managing expectations also sets the bar as regards the type of actions that will be put forward to achieve those expectations. Maybe it’s time we set an aggressive but achievable bar that would benefit the whole industry, no?
Reality is that entrepreneurs operate in a living “Ecosystem” that feeds itself by growing and building new connection. No party can do it alone! The community feeds itself off its own growth. High growth technology companies need venture capital to succeed and the venture capitalists need to back successful entrepreneurs to generate strong returns. Not only do we need to have better return expectations for venture capital funds, we also need better collaboration within the community to build networks strong enough to support promising technology companies and deliver high shareholder value.
The more successful entrepreneurs are, the more successful venture capital funds will be, leading in turn to more funding for entrepreneurs.
We have to learn how to expect more and know how to get more. Yes, funds and large institutional investors like pension funds and insurance companies should expect better returns from their venture capital investments. The last 10 years of Canadian venture capital returns represent -0.2%, yet expectations were in the unrealistic + 30% range, while solid manageable returns should be more in the 15% level. Large institutional investors can help themselves achieve such realistic returns by selecting fund managers with entrepreneurial backgrounds and experience with building successful companies. Managers who think and act like the entrepreneurs they back are better suited to select the ones who understand how build a successful start-up and have the most chances of succeeding.
Likewise, entrepreneurs should expect more from themselves, their teams and their investors. Entrepreneurs need to understand what is expected from the capital they raise and they can do this by selecting the right potential investors and doing due-diligence on them, by understanding the ecosystem they are operating in and making sure they surround themselves with people who are stronger than themselves, and generate stronger returns by setting themselves up for success.
High but achievable expectations create and define leaders!
Entrepreneurs are natural leaders, because they are able to execute on ideas, they transform opportunities into tangibles such as jobs, products and profits. So by having more entrepreneurs funding other entrepreneurs, we have more chances of building a sustainable ecosystem. It takes time to build a viable company, and by understanding the type of returns that are expected from the different source of funding, entrepreneurs and fund managers alike will be able to create a model that works.
The venture capital model is broken only to those who don't understand it those who aren't willing or interested in investing the energy to adapt it to their reality. Like other industries, the venture capital industry will continue to evolve over time.
I'm looking forward to seeing the level of returns over the next five to 10 years as the Canadian venture capital industry begins this evolution - where entrepreneurs are funding entrepreneurs
Now, some questions for you:
- What do limited partners think of the emerging number of entrepreneurial driven Venture capital Funds?
- What do entrepreneurs think of the new breed of entrepreneurial VC’s?
- Is the Canadian market mature enough to trigger the level of collaboration required to build a strong ecosystem around Canadian technology companies?
- What is expected by the entrepreneur of the early stage VC’s (other than the obvious $)?
- How will you be part of the “make it Happen” generation?
For those interested in participating, take a look at the following few links to recent articles and you’ll get a feel for the energy and around the subject:
The Mark: The Future of Venture Capital in Canada
La Presse: Jacques Bernier, de Tralys: le goût du risque
Tech vibes: Venture Capital Funding Outlook In Canada
Financial Post: Venture capital finally gets a break
TechCrunch: Strength In Numbers: Canadian Entrepreneurs Flock To The C100
CVCA: Canadian Venture Capital Investments in 2009 – Lowest recorded in 13 YEARS
StartupNorth: What is being a startup really about?
Bootup Labs: Startup Visa Canada
