High-profile Canadian Technology Entrepreneurs Join Ventures West's Entrepreneur in Residence Program
We are pleased to announce that we have attracted three new high-profile technology executives to our Entrepreneurs In Residence (EIR) program. They are:
Keith Bates, former CEO of Plazmic Inc., a leader in the wireless rich graphics market, which was acquired in 2001 by Research in Motion.
Alan McMillan, former CEO and Director of Think Dynamics, an automated system management firm, which was acquired by IBM in May 2003.
Laurie Wallace, co-founder, President and CEO of Datum Telegraphic, which was sold to PMC-Sierra in 2000 for over $200 million. Following the sale, Mr. Wallace was PMC-Sierra´s global Director of Marketing for wireless products.
Our investment team and portfolio companies will benefit greatly from their proven entrepreneurial skills and expertise in creating and running successful businesses. We expect them to be important contributors to the investment of our new fund.
New Companies Funded
Information Technology
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MaestroCMS Inc. - Maestro CMS is a leading provider of Content Management delivered as an Online Service. It has helped organizations of every size increase their sales, marketing and service effectiveness by giving them complete control of their online content and communications.
To read the full press release, click here.
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Articles and Opinions
Year in Review
By Dr. Robin Louis
2003 began in a state of uncertainty caused by concern for fallout from the pending war in Iraq, the volatile stock market, decreased tech spending and the languishing IPO market. During the year, new challenges arose - SARS, mad cow disease, and the East Coast blackout all heightened this sense of uncertainty. However, in the venture capital and technology industries, the year ended with a growing sense of optimism. Q4 saw several positive signs that better times lay ahead:
- Stock markets ended 2003 on a high note with the NASDAQ up 50%, the Dow Jones up 25% and the TSE up 24% (year over year).
- Even though overall IPO activity in Canada was down 20% in 2003 over 2002, excitement returned to the technology sector with the successful launch of the first Canadian IT IPO in three years. Toronto's Workbrain Corporation raised over $40 million in December and the stock has risen over 30% since its first day of trading. The potential Google and Salesforce.com IPOs in the U.S are building excitement south of the border. There were secondary offerings as well, such as RIM, which raised almost $1 billion in early 2004. The IPO window seems to be opening for IT companies - but only for companies that are a significant size, have a record of profitability and strong revenue growth.
- 2003 also saw the return of the biotech IPO in the U.S. with eight successful public offerings raising over US$300 million. There were also secondary financings in the biotech sector including Vancouver's Angiotech Pharmaceuticals which raised over $251 million in October.
- Another positive indication is recent M&A activity in the technology industry, particularly in the software sector. Crystal Decisions, a Vancouver based reporting software vendor that originally planned to go public with a US$172.5 million offering, was bought by Business Objects for $820 million in July 2003 (current value US$1.2 billion), in one of the largest acquisitions of a software company in Canadian history. Other acquisitions of note include the purchase of Silent Witness Enterprises by Honeywell International Inc. for $84 million, ActiveState Corp. by Sophos PLC for $32 million, Think Dynamics Ltd. by IBM Ltd., and Pivotal Corp. by CDC Software for approximately $59 million. Ventures West tried to invest in both ActiveState and Think Dynamics but in both cases the company chose to be acquired rather than complete the financing.
- The most encouraging sign is the improving outlook in technology spending. After two years of decline, an increase of 6% in IT spending is forecast for 2004. Even more important than the economic statistics were strong take-up of new consumer products (digital cameras, plasma TVs and camera cell phones) and also products for corporations, such as Wi-Fi and VOIP. Large companies such as Nortel reported large contract signings and smaller companies, such as Ventures West portfolio company Convedia, started to see strong take-up of their technology
Fund raising
The second half of 2003 also saw a flurry of venture capital fund raising announcements. We are delighted with the first close of our new fund, Ventures West 8 at $158 million, which is described in more detail below. As well, Edgestone Capital Partners closed a $361 million later stage private equity fund and Jefferson Partners held the fourth close of their $150 million fund. In the labour sponsored fund market, there were new managers as well as expansion of investment focus well outside of early stage venture capital, which was the original intent of the program.
Ventures West Highlights
In November, Ventures West announced the first closing of our eighth venture capital fund. At $158 million, this is one of the largest venture capital funds in Canada. The raising of this fund amidst challenging fundraising conditions is testament to Ventures West's performance as a knowledgeable and successful venture capital investor, through the up and down cycles of the industry. Investors in the fund include British Columbia Investment Management Corporation, Business Development Bank of Canada, CPP Investment Board, EdgeStone Capital Partners, OMERS, and Teachers´ Merchant Bank, the private equity arm of the Ontario Teachers´ Pension Plan.
2003 also saw the appointment of David Berkowitz as Partner of Ventures West. David joined Ventures West in 1996 and leads our energy technology investment team. David has become one of the most active and best-known energy technology investors in North America. He has led investments in several energy technology investments and is sought out by investors, both in Canada and the U.S. because of his knowledge of the sector.
During 2003, Ventures West actively sought new investments and continued to support existing portfolio companies, however, there was a relatively low level of investment activity.
- Follow on investments - six companies in the portfolio received follow-on investment which totaled $8.9 million.
- Commitments to new portfolio companies - We made commitments to two new companies this year-Oncogenex Technologies Inc. and Maestro CMS Inc.
We actively sought new opportunities but only closed investments in two new companies - our lowest commitment level since 1995. In general, we did not find a large number of exciting investment opportunities to pursue and we believe that there are two principal reasons for this. First, the extremely high level of venture investment in the 1998-2000 time frame "emptied the pipeline" so that few companies were reaching a stage of maturity last year that was appropriate for venture investment. Second, the collapse of technology stocks from 2000-2002, poor markets for technology products, and unrelenting negative reports about technology in general, and venture capital investment in particular, undoubtedly discouraged some entrepreneurs from starting new companies or seeking venture financing.
We are delighted with the two companies to which we did make new commitments:
OncoGenex Technologies Inc.: OncoGenex is a Vancouver based clinical-stage biotechnology company which is developing targeted therapeutics for cancer. In September, Ventures West led a US$11.5 million financing, one of the largest biotech financings in Canada in 2003. Other new investors included U.S based H.I.G. Ventures and Working Opportunity Fund. The syndicate also included existing investors Business Development Bank of Canada and Milestone Medica Corp.
MaestroCMS Inc.: In December, Ventures West made a first round investment in MaestroCMS Inc., a Vancouver based provider of Content Management delivered as an online service. The investment will be used to immediately expand the company's sales and marketing efforts in the United States.
We are encouraged by the several positive factors that emerged late in 2003 and are gaining momentum as 2004 begins. Deal flow is increasing and we are reviewing a number of quality investment opportunities. A recent Deloitte/CVCA survey found that optimism among Canadian venture capitalists is at a two year high with a majority of them expecting an improvement in the investment climate and economy over the next six months. We look forward to an active and successful 2004, during which we expect to invest more money, make new commitments to several companies and even see some liquidity from the existing portfolio.
Portfolio Companies' Financings, Acquisitions and Awards
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Chantry Networks is an early stage developer of Wireless Local Area Network (WLAN) infrastructure products.
December, 2003 - Chantry Networks, has received the EDUCAUSE 2003 Show-Stopper Award. The award winners are featured in this month's issue of University Business magazine. University Business recruited an undercover panel of judges to walk the exhibit floor to visit and evaluate the vendors at this year's show. The conference show featured 194 exhibitor booths, ranging from established vendors to start-ups. The judges for the show were all higher education technology administrators who are key technology decision-makers. |
Spotlight - Robin Louis
Each quarter, the newsletter will feature a member of the Ventures West investment team.
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Robin Louis, President, oversees the operations of the firm and its investment funds. He also participates in Ventures West's investment activities with a focus on companies in the software industry.
Prior to joining Ventures West in 1991, Robin was the CEO of Columbia Computing Services Ltd., a provider of software used in K-12 schools for administrative data management. Under Robin's leadership, Columbia became the dominant company in its industry, was listed on the Toronto Stock Exchange, and subsequently was sold to a British acquirer.
Robin has served on the boards of several Ventures West portfolio companies and currently serves as a director of Chancery Software Ltd. and INEA Corporation, as well as Chairman of Fincentric Corp. He is the current President of the Canadian Venture Capital Association.
Robin earned a B.Sc. (Honours) and M.Sc. degree from the University of Victoria and a Ph.D. in physics from the University of British Columbia.
Location: Vancouver, BC |
Ventures West Offices
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