Q-News

April 2010

Plenty Of Players But Still Little Money

Posted in Mike's Commentary

While reported financings in March simply confirm the continued weakness of the Canadian private investment sector, a real positive note was the large number of firms that made investments last month.  These included: Covington Capital, VentureLink, Wellington Financial, MMV Financial, Morningside Technology Venture, BDC, Northwater Intellectual Property Fund, Ontario Centres of Excellence, Chrysallix Energy, Green Angel Energy Corporation, Northbridge Capital Partners, Caisse de depot et du Quebec, FIER Longueuil, Fonds Soutien Longueuil, Investissement MSCI, ACE Management, NSBI Venture Capital, MSBI Valorisation, Go Capital Fund, BankInvest New Energy Solutions (Denmark), SiC Processing (Germany), Bekaert (Belgium), Epic Ventures, Gideon Hixon, Enertech Capital, Cycad Group, Espirito Santo Ventures, Milcom Technologies, Applied Ventures, Phoenix Fire and Merrimaker.  No doubt the large number of foreign investors bodes well for the sector.

 

Another positive note during the month was the announcement by Adenyo that since July 2009 the company has managed to raise $26.9 million from institutional investors.  It’s been a while since we’ve seen a private company raising funds of this magnitude from institutions and my guess is that investment bankers are looking to leverage Motricity’s upcoming attempt to complete an initial public offering into additional IPO opportunities.  The success of Motricity’s IPO may signal a new round of consolidation in the mobile space, particularly if the company is able to coax $250 million out of the pockets of US investors. Of course, if Motricity decides to pull its IPO the sector could be in for continued challenges in finding new capital.  My guess is that Motricity will be looking for a valuation of between five and seven times revenue, which could be a real challenge for a company that had an accumulated deficit of $267 million as of December 31, 2008 and had a net loss of an additional $10.8 million on $117 million in revenues for the first nine months of 2009.  If the IPO is successful I would expect to see Adenyo file for its own IPO within the following 12 months.

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