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Private Equity - October 2011

Posted in Private Equity

17 private Canadian companies reported raising capital in October, one of the companies did not disclose how much capital was raised, but the remaining 16 reported that they receive a total of $115.1 million.  Very good numbers when you consider the fact that this time last year, we only came across three deals and $4.0 million in reported financing amounts.  The total number of deals this October lags only behind May, when we reported 22 deals, in terms of the highest deal totals of 2011.  It also marks the fourth time in 2011 that we have reported more than 14 deals in one month, something that we did not do a single time in 2009 or 2010.  11 of the companies raising money this October are headquartered in Ontario, and six of these raised money from US VCs.  Three of the financings took place in BC, two came out of Quebec, and the last investee was an Alberta company.  Seven of the Ontario companies and all three of the BC companies raising capital operate in the ICT sector.

Financings of Canadian Companies

Toronto’s Keek, whose social networking platform allows users to instantly share videos with their friends through a webcam, or via an Android or Iphone App, has raised $5.5 million from two Toronto-based investors, Alpha North Asset Management and Plazacorp Ventures.

Gener8 Digital Media Corp, a BC-based production company that assists large studios in transforming traditional film using 3D technologies, raised $1.5 million from private investors.

Ontario’s eSentire, which provides cyber security consulting and monitoring services, raised $987,500 from Federal Development Agency of Southern Ontario. The company had previously raised capital from Toronto’s Intrepid Business Acceleration Fund and VentureLink.

The Caisse de dépôt et placement du Québec provided $7 million in capital to Quebec’s CAD Railway Industries.  The locomotive and railcar repair business had recently been acquired and combined with Rail Action, a locomotive parts distributor based out of Montreal.

Burnaby’s Digital Payment Technologies, a company that develops and manufactures software and hardware used to operate parking lots, received $650,000 in debt financing from Toronto’s C.A Bancorp (TSX: BKP).  C.A. Bancorp made its first investment in Digital Payment Technologies back in 2008.  Digital Payment Technologies has also raised money from ENSIS Growth Fund (which eventually merged with the Canadian Fund managed by GrowthWorks), and MMV Financial.

Protenergy Natural Corporation, a food and beverage manufacturer based in Richmond Hill, Ontario, raised $1,649,885 from the Kensington Global Private Equity Fund, a private equity fund managed by Toronto-based Kensington Capital Partners.

Toronto’s Avison Young, a commercial real estate services firm, raised $40 million from Vancouver’s Tricor Pacific Capital.

US and International Activity in Canada

Bessemer Venture Partners (CA), FirstMark Capital (NY), and Felicis Ventures (CA) took part in a $15 million round by Shopify, an Ontario business whose ecommerce software allows companies to build online storefronts.  This is the second time that the three US funds invested in the business, as they were the sole investors in a December 2010 round that saw the company raise $7 million.  Georgian Partners was the lone Canadian fund involved in this round deal.

New York’s Chart Venture Partners took part in a $6.2 million Series B financing round completed by CoolIT Systems, a Calgary-based company that specializes in the development and distribution of cooling technology for computers. Montreal’s iNovia Capital also participated in the financing round.  This was the second time that iNovia put money into the company, the fund also participated in the company’s first financing back in March of 2009, alongside AVAC.  

California’s Accel KKR was the sole investor in a first round financing announced by Ottawa’s N-able technologies, a company that specializes in technology consulting for managed service providers and IT departments inside corporations. Terms of the transaction were not disclosed.

California’s Westly Group and Navitas Capital, provided $2.15 million in first round financing to Montreal’s SCL Elements, a company that develops wireless technology sold under the Can2go brand, and used to monitor and automate HVAC appliances and lighting systems in commercial buildings.

Charles River Ventures, a venture capital firm based in Waltham, Massachusetts, participated in a $5 million financing completed by Toronto’s Wave Accounting.  Wave Accounting provides small businesses with free SaaS-based accounting software while, while generating revenues through advertising.  OMERS Ventures was the other investor contributing to the deal.  The company had previously raised money from OMERS Ventures in June, through INKEF Capital, an investment alliance formed by OMERS and ABP (the Netherlands).  In September of this year Wave Accounting also raised capital from the Federal Economic Development Agency for Southern Ontario (FedDev Ontario).

Minneapolis’s Medtronic took part in a $10.4 million financing completed by Functional Neuromodulation.  The Toronto-based company, which was just founded in 2010, is working on further advancing treatments for Alzheimer disease involving deep brain stimulation.  Toronto’s Genesys Capital also participated in the financing.

Israel’s Vertex Venture Capital participated in a $5.6 million third round financing by Ottawa’s Sidense, a fabless semiconductor company. Ontario Emerging Technologies Funds, Waterloo’s Tech Capital Partners, and Toronto’s VentureLink Funds also participated in the financing round. The company previously raised $6 million in March of 2008 and $5 million in May of 2010.

California’s Menlo Ventures and Freestyle Capital, contributed $1 million in seed money to Waterloo’s Enflick.   Enflick is the developer of two mobile applications: a picture and text messaging application for Apple devices called TextNow, and an instant messaging application called PingChat! that works across several platforms.

California’s Illumina led a $8 million financing reported by Victoria’s Genologics, a provider of software designed for managing laboratory information for new genomics labs. The company previously raised $5 million in February of 2009, and $1.5 million in May of 2010, from OVP Venture Partners (WA), GrowthWorks, and Yaletown Venture Partners.

Canadian Investments Abroad

Toronto’s Rogers Ventures, the venture capital arm of Rogers Communications, invested $5 million in Zoove.  The California-based company operates a service that allows consumers to access promotions and coupons on their smartphone by dialing vanity (StarStar) numbers. Zoove raised $15 million in a Series D funding round in September, and $13 million in a Series C financing round 2 years ago.  The investors in these earlier rounds were Panorama Capital (CA), Cardinal Venture Capital (CA), Highland Capital Partners, and Worldview Technology Partners.

Montreal’s iNovia Capital participated in a raise by TagMan, a New York company whose technology allows e-commerce sites to manage online tags (metadata) on their portals. New York’s Greycroft Partners also participated in the deal.  Terms of the transaction were not disclosed.

Onex Corporation (TSX: OCX) provided over $800 million in capital to Oregon-based JELD-WEN Holding, a manufacturer of residential doors and windows.  The investment, which is made up primarily of newly issued preferred shares, allows Onex to take control of the majority of the company’s stock.  The existing shareholders did not initially intend to give up control of the company, but its poor financial position and poor credit rating necessitated a larger equity raise than originally planned.  

Clairvest Group (TSX: CVG) provided $8.6 million in capital to Linen King, an Oklahoma-based company that provides healthcare and hospitality industry clients with commercial laundry services & textile rentals.

Fund News

OMERS created a venture capital group, OMERS Ventures, that is slated to invest over $180 million over the next three years.  The fund will invest in very early stage companies, with the intent of doing several follow on investments, without pushing for early exits for the sake of demonstrating realized returns.