Q-News

June 2009

Some Positive Developments

Posted in Mike's Commentary

May turned out to be more of the same as we continue to see the downward slide in investment activity.  During the month only six companies reported raising a total of $20.6 million in new capital.

 

On the positive news front May (and early June) saw a number of encouraging developments.  These include:

 

The announcement on June 15th that the Business Development Bank of Canada will receive $450 million from the Government of Canada with the funding to include $100 million to establish the Operating Line of Credit Guarantee and $350 million over three years for venture capital investment in Canadian technology businesses.  The $350 million will allow BDC to make $260 million in investments over three years in Canadian businesses already in the BDC portfolio, as well as to make investments in new seed and later-stage technology companies.  The remaining $90 million will be committed to private, independent Canadian venture capital funds.

 

Bridgescale Partners reported that it will open an office in Toronto during the summer of 2009.  Bridgescale has experience working with Canadian companies and has assigned managing director Robert Chaplinsky, a Toronto native, to the job of opening and initially managing the new office.  Bridgescale has an investment in Ottawa-based semiconductor company Cortina and in June 2008 its portfolio company Proofpoint acquired Toronto-based e-mail archiving service company Fortiva.

 

The Ontario Venture Capital Fund made their first direct co-investment and while a $1.8 million investment in is I love Rewards isn’t a lot, at least it’s a start.

 

Finally, from the “seems like only yesterday’ file, May marked the 10th anniversary of the acquisition of The Learning Company by Mattel for a stupendous $3.7 billion.  Unfortunately, Barbie soon found out that Reader Rabbit wasn’t everything she thought he was and a year later sold The Learning Company to Gores Technology Group for what turned out to be $27.3 million.  What has been called one of the worst acquisitions in corporate history was finally put to rest in December 2002 when Mattel announced a $122 million settlement with shareholders over the ill-fated purchase.  So the question of the month is:  Which “dragon” on The Dragon’s Den was the driving force behind The Learning Company and is a frequent commentator on Canadian businesses on BNN?

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