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newsletter - first quarter 2005Ventures West News We are pleased to announce that Robin Axon and Pardeep Sangha have been named Vice Presidents of Ventures West. Robin Axon joined Ventures West in 2001 and is based in the company’s Toronto office. He focuses on investment opportunities in the Information Technology and Communication sectors. Robin currently serves as a director of Instrumar Limited and is the co-founder of the CVCA´s Young Venture Capitalists (YVC) Committee. Pardeep Sangha joined Ventures West in 1999 and is based in Vancouver. He focuses on investments in telecommunications, photonics, wireless, semiconductors and IT. Pardeep is an active participant in organizations that mentor and promote entrepreneurs. He participates on the Boards and committees of such organizations as TiE-Vancouver, Venture Capital Association of Alberta, and the Banff Venture Forum. Pardeep also teaches a course on technology entrepreneurship at the University of British Columbia. We are also pleased to announce that Riaz Lalani has joined the firm as a Research Associate. Riaz comes to us from Workbrain Inc. where he was a Technical Consultant. He is involved in due diligence and evaluating new prospective IT opportunities. New Companies Funded In the first quarter of 2005 Ventures West participated in four financings, both new and follow on, investing a total of $10.41 million. The new portfolio company is Fortiva Inc. Information Technology
Staying Ahead of the Compliance Curve by Robin Axon, Vice President, Ventures West Five years ago, very few people had heard of Paul Sarbanes and Michael Oxley. Their compliance Act of 2002, however, has drastically changed the corporate world and made them household names. Following such corporate business scandals as Worldcom and Enron, the Sarbanes-Oxley Act was implemented to establish investor protections and set higher standards for corporate governance. As part of these regulatory requirements, companies must now ensure all documentation, whether they are electronic files or emails, are maintained and retrievable for a pre-determined period of time. In response to these demands, executives and boards are increasingly turning to their IT department for solutions. IT managers must seek new strategies that minimize the burden and maximize the benefits of addressing regulatory compliance. A recent report by Mercury Interactive Corporation and the Economist Intelligence Unit details how compliance will place a heavy and ongoing burden on IT operations and that implementing regulatory compliance programs is one of the biggest current challenges facing IT. In response, companies are implementing IT Governance strategies and software to establish a sustainable approach to making these changes and lowering the cost and risk to the business.1 The significance of compliance issues and the number of companies affected makes this a very attractive market for early stage technology companies. We believe there is growing demand for innovative solutions to solve these compliance needs. Email Archiving Recent corporate accounting scandals have taught us that emails are given as much legal standing as other corporate documents and records. Accordingly, the management and retention of email is increasingly subject to regulations, particularly for financial, healthcare and publicly traded corporations. Thus, it is the responsibility of the company to establish policies, protect the information maintained in email systems, and retrieve this information in a timely manner, or face penalties that can include significant fines or even criminal charges. Even though these regulations exist, only 35% of organizations have an email retention policy in place.2
Companies that have no written policy in place governing their use of business email can turn to the Electronic Communications Compliance Council (TE3C), a non-profit organization established to educate and inform users about the electronic communications compliance life cycle and provide guidance on how to minimize risk in an evolving regulatory and legal environment. They offer a free product called ‘Policy Builder’, an online template tool designed to help companies create a customized electronic communications policy. Once these corporate email policies have been established, the next challenge is to monitor and enforce them. Fortiva offers an easy-to-implement and easy-to-use email archiving solution with robust search and discovery, supervision and enforcement features. With a comprehensive email archiving and management tool, organizations can quickly and easily meet compliance and legal discovery needs. Protecting your Data Email communication is not the only information that must be managed and protected. Good corporate governance, above and beyond what is required for compliance, involves ensuring the integrity of mission critical systems and corporate data. Corporate systems and data are increasingly susceptible to multiple threats including system failure, security breaches, or malicious attacks. If systems are compromised, companies are forced to rely on legacy backup technologies to access and retrieve their data. Existing solutions include tape backup and replication, which save ‘snap-shots’ of data at certain points in time, but ultimately leave large gaps of time where transactions can be lost and recovery can be difficult. Because the majority of proprietary and mission critical information is in electronic form, this is no longer acceptable and has resulted in the emergence of a new storage technology called Continuous Data Protection (CDP).
Ventures West portfolio company TimeSpring has developed a product, called Protector, which allows for continuous data protection by storing all of the deltas (every save) of all the files protected by the system. What is different about TimeSpring is that it has an intelligent agent that sits between the application and file system layer. The advantage of implementing CDP at the file level is that the application integrates more deeply with e-mail and database applications and needs only to journal changes that affect those applications, as opposed to every change to a volume. This information is then stored on an external server either on site or remote. This provides near real time data backup with a full audit trail and possibility for roll back to any point in history. Management can be assured that the risk of data loss or data corruption is minimized. The ongoing challenge for many organizations is understanding the compliance requirements of Sarbanes-Oxley and other regulatory Acts. The legislation is often vague, convoluted and open to interpretation. Some Canadian companies may think that Sarbanes-Oxley affects only American businesses, however, if going public on the NASDAQ or being acquired by an American company is in the future, they will have to comply with Sarbanes-Oxley requirements. Management and Boards, working to abide by new regulations and reduce operating risk, will continue to turn to early stage technology companies for strategies and solutions. 1 Computerworld, ‘Compliance Top IT Challenge: Global Research,’ 4/5/05 Portfolio Companies' Financings, Acquisitions and Awards
March , 2005 - Convedia announced that Infonetics Research, a leading independent market research firm, has named Convedia as the global leader in both market share and revenue for IP media servers in 2004. To read the press release, click here. January, 2005 - Frost & Sullivan selected Convedia as recipient of the 2005 VoIP Equipment & Network Infrastructure Company of the Year Award. The honor is bestowed annually on the company which has exhibited unparalleled excellence in business development, marketing, competitive strategy, and industry leadership. Click here to read the press release.
Spotlight - Robin Axon Each quarter, the newsletter will feature a member of the Ventures West investment team.
Prior to joining Ventures West, Robin was at MD Robotics (formerly Spar Aerospace) and the Canadian Space Agency where he helped to prepare the Canadarm2 for installation onto the International Space Station. Robin currently serves as a director of Instrumar Limited. He is the co-founder of the CVCA´s Young Venture Capitalists (YVC) Committee. Robin holds a B.A.S. in Aerospace Engineering from the University of Toronto and a MBA from Queen´s University. Location: Toronto, ON |
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Fortiva offers the only hybrid email archiving solution that combines the control and privacy of an in-house solution with the benefits of a managed offering, allowing businesses to quickly and easily meet compliance and legal discovery needs. 
As Paul Chen, CEO of Ventures West portfolio company Fortiva, explains, “As e-mail and instant messages are increasingly featured in headlines and lawsuits, these commonly used tools have become the electronic equivalent of DNA evidence. Those organizations that do not develop, communicate, and enforce formal policies guiding email behaviour are putting their employees and organization at serious risk of fraud, lawsuits, and loss of confidential data – not to mention reputation damage, loss of business, and decreased productivity.”
CDP is different than existing back-up and recovery technologies in that it is like a video tape of historic information versus a series of snap-shots in time. CDP saves a baseline of the original data or document and then continues by saving each incremental change made to the original data. This allows for a complete history of the data from the original save, and significantly decreases the storage requirement in the process. For the majority of small and mid-sized companies, back-up is still done on a regular periodic basis where a snap-shot is saved on tape, which is then stored off-site. Larger companies tend to use a combination of snap-shot technology and data replication. Data replication provides real time data protection but only provides a replication of the latest version of the file. So if a file is corrupted and then replicated, without CDP there is no way to revert back to the original data prior to the data corruption. CDP technology saves all application changes as they are happening at the bit level, time-stamps them and moves them off to disk to be stored. If a data restore is required, a systems administrator can literally dial back an application to any point in time, even seconds before a virus struck a server. 
February, 2005 - Chancery Software announced that the Software & Information Industry Association (SIIA) has named their premiere Student Information System (SIS), Chancery SMS®, a finalist in the Best Interoperability Product for Schools category, for the 2005 Codie Awards. For 20 years, the Codie Awards have been the leading tribute for the software and information industry’s finest products and services.
March, 2005 - Marqui, Inc. announced it has been awarded the 2005 InnoTech Innovation Award. The Innovation Awards, which are announced at the annual InnoTech conference in Oregon, are designed to spotlight and reward companies for innovative development of a product or service. Winners are selected based on product strength, business model, caliber of management team, number of customers and partners, and a variety of financial measures, such as year-over-year percentage growth and multi-year trends. 
Robin Axon joined Ventures West in 2001 and focuses on IT and telecommunications investments.