Q-News

October 2009

September - hopeful signs of renewed international interest

Posted in Mike's Commentary

While September’s reported investment levels do not point to any sign of a turnaround, there was positive activity from foreign groups renewing their activity in Canada.  Of the ten reported transactions, four included a total of six international investors.  New York-based Mistral Equity Partners invested in Worldlynx Wireless; Boston-based Auctus Private Equity Fund agreed to provide up to $10 million to Capital Reserve Canada; Chicago-based venture firm JK&B Capital, Innovacom (Stockholm, Paris, San Francisco) and Entrepia (Silicon Valley, Montreal, Tokyo) invested alongside Summerhill Venture Partners and BDC Venture Capital in Vantrix Corporation; and Intel Capital invested in Transgaming Technologies.  Furthermore, while it doesn’t help Canadian entrepreneurs facing the challenge of finding capital, we saw four local VCs (Summerhill Venture Partners, MMV Financial, Jefferson Partners and XPV Capital) make investments in the U.S., with two in California and two in Massachusetts. 

 

The Quebec City Conference wrapped up and, while we were not in attendance, we are looking forward to an update on presentations and developments from the conference.  You certainly have to tip your hat to the Province of Quebec and provincial organizations in attracting an impressive list of North American and global investors to the two day event.  I suspect that in the long run their ROI is pretty high and a conference of this type is something at which BC and Ontario should be encouraged to take a serious look.

 

One piece of interesting news coming out of the conference was the announcement by OMERS that its allocation to “private markets” will be used for direct investments in private equity, venture capital, infrastructure and real estate transactions.  While OMERS hasn’t made any new commitments to venture funds in the past two years, its decision to manage internally is just another blow to Canadian VC and PE firms who are in dire need of sources of capital to form new funds.

 

Finally, The Impact Group published an interesting study called “Understanding the Disappearance of Early-Stage and Start-up R&D Performing Firms”.  The studies looks at 18 Canadian companies which in aggregate raised over $478 million in capital and disappeared over a 20 year period.  It’s a good read and focuses attention on many of the challenges facing Canadian companies as they strive to compete on the global stage.

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