Q-News

January 2011

Winding up 2010 on a positive note

Posted in Mike's Commentary

Last month’s comment created a bit of a stir with my friend Charley Lax, who saw my critique of his CIX presentation as a slam against GrandBanks Capital. In fact, I think it’s great that GrandBanks is actively investing in Montreal and Toronto; goodness knows we need more sources of growth capital for our tech companies. The comment was meant to be a lighthearted shot at Charley, so as a way to make amends I thought it would only be right to highlight GrandBank’s investments in Canada. To date, the firm has made five investments in Canadian companies and has had two successful exits:

  • Coradiant Inc. (Montreal) - Invested January 2001; current investors include Desjardins Venture Capital, Fonds de Solidarite FTQ, Miramar Venture Partners, Mesirow Financial and DCM-Doll Capital Management. Coradiant offers performance management appliances that transparently monitor web traffic to provide real-time insight on an end user's experience.
  • Colubris Networks (Montreal) - Invested January 2004; sold to Hewlett-Packard Oct 2008. Colubris Networks is a leading global provider of wireless LAN (WLAN) access solutions to enterprise and service provider customers.
  • First Coverage (Toronto) - Invested November 2006; co-investors JLA Ventures, Commonwealth Capital Ventures. First Coverage is a software company delivering coverage optimization solutions to the institutional investment community.
  • xkoto Inc. (Toronto) – Invested September 2007; sold to Teradata Corporation May 2010. xkoto's technology platform enables the replication and virtualization of data..
  • I Love Rewards (Toronto) - Invested May 2009; current investors JLA Ventures, Laurence Capital. I Love Rewards is a web-based provider of employee rewards and recognition, sales incentive and service award programs.

Given the usual fanfare that accompanies a Google acquisition, particularly one in Canada, it was interesting to see that Google’s August 2010 acquisition of Zetawire appears to have garnered very little attention. It wasn’t until we came across a blog post from The 451 Group that we became aware of the transaction. Zetawire appears not to have had a commercialized product but had filed a patent application (20090288012) providing for mobile banking, advertising, identity management, credit card and mobile coupon transaction processing. This week’s BusinessWeek also mentioned the acquisition as part of an article published on NFC (near field communications). There is lots of interest in that area. In fact, Boy Genius Report issued a comment on what it claims is RIM’s new flagship Smartphone, the Blackberry Dakota, which is purported to be NFC capable.

It’s promising to see plenty of US and international VC activity reported in December. In total, we counted 6 US VCs and 2 European VCs working together to invest in 4 Canadian companies. Maybe we’re now beginning to see the impact of the March 2010 changes to Section 116 of the Income Tax Act.

Finally, for those of you who didn’t see our press release last week, we were happy to announce that we completed the sale of Wallace Wireless to California-based Vocera Communications, Inc.

Based in Toronto, Wallace Wireless is the leading provider of premium alerting and business continuity solutions for smartphones offering a comprehensive suite of ready to use and easy to deploy wireless applications that solve enterprise mobility issues including: pager replacements and alerting; emergency communication; contact and content management; as well as forms-based data capture and data access.

Founded in 2001, Wallace is privately owned by its founders and a small group of initial investors. The Company’s management team has worked together for over 15 years and has a track record of successfully developing and commercializing software products. The Company is a Preferred BlackBerry Alliance Partner and serves clients in the healthcare, financial services, professional services, government, public safety, utilities, and education sectors.

Rob Moffatt, co-founder and CEO of Wallace:

"Q1 Capital did a great job representing Wallace Wireless in our recent acquisition by Vocera Communications. Mike Middleton and his team were invaluable; they managed the M&A process, brought multiple bidders to the table and let us focus on running our business. Q1 was great to work with, but more importantly was able to maximize the value our shareholders received."

San Jose, California-based Vocera Communications, Inc. is the leading provider of voice communications systems designed to restore the human connection to healthcare. By providing integrated communications solutions for both voice and alarm and alert systems, Vocera allows care teams, patients and loved ones to exchange critical information at the point of care. Exclusively endorsed by the American Hospital Association, the Vocera system is installed in more than 700 hospitals with more than 500,000 daily users worldwide. The company is headquartered in San Jose, Calif., with offices in Tennessee, the United Kingdom and now, Toronto, Ontario. Importantly, Vocera intends to keep Wallace’s management and development team in Toronto and build upon that team while establishing the Toronto office as their Canadian sales office.

In this transaction, Q1 Capital acted as exclusive financial advisor to Wallace in conducting a targeted auction with multiple US players, negotiating and closing the sale of the Company.

Lastly, please note that applications are now being accepted for TiEQuest 2011, Canada’s largest business venture plan competition.  With a track record of selecting entrepreneurial companies that have gone on to raise capital or enjoy profitable liquidity events TiEQuest provides an excellent opportunity to showcase your company and compete against many of Canada’ best and brightest.

TiEQuest is open to all current and aspiring entrepreneurs. TiEQuest value proposition is:

  • TiEQuest provides a strong start to the winners with a higher probability of success in their venture.
  • TiEQuest judges and mentors are successful entrepreneurs and experienced investors/fund managers who provide a very high level of mentoring to the contestants with no cost to the contestants.
  • TiEQuest provides its winners with in kind services and support from its vast network of In-Kind Sponsors. These services include Intellectual Property advisory, Legal and patent services, Access to Government Sponsored Funds, and IT advisory. These services are provided free to the winners.
  • TiEQuest maintains and monitors the progress of its contestants and provides any help that it can even after the competition is over.

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