Investors quietly funding local firms

Courtney Symons
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“Do things. Tell people.”

Laurie Davis, managing director of the Capital Angel Network. (Provided photo)

These words are one of the first things one sees when taking the rear entrance into Shopify’s headquarters on York Street in the ByWard Market. Harley Finkelstein, Shopify’s chief platform officer, says his company lives by these words.

He explained to a room of investors Monday that they are words they too should live by.

“You’ve gotta tell people what you’re doing,” he said. “The deals you’re doing, you should wear it on a t-shirt almost.”

Although capital in the capital has been hard to come by for some time, Mr. Finkelstein said investors only perpetuate that perception by not sharing details about the investments they are making locally.

As Ottawa investors discussed their activity in the region, it became obvious to all attendees that money is changing hands here.

The Capital Angel Network, led by Laurie Davis and Parm Gill, is an alliance of around 100 angel investors in Ottawa that work together, but make individual investment decisions. In the past 14 months, they have invested $14.7 million into 17 companies. While they didn’t provide a full list, local recipients include ActiveDox, eSight Corp., Renaissance Repair and Supply, Granite Networks and Wedding Republic.

Code Cubitt, head of the new Mistral Venture Partners, discussed the $35-million fund he will soon close. Mistral will invest $50,000 to $100,000 in 15 to 20 companies, then sit on the board of directors for a year to track its progress. In order for the companies to secure follow-on funding, they are required to get capital from an American syndicate partner, which will give them better chances of success, Mr. Cubitt said.

When asked how Ottawa investment opportunities compare to those in Silicon Valley, Mr. Cubitt said that although local sales and marketing forces aren’t as strong, the tech talent is “on par or better.” He compared it to Canada’s vast supply of natural resources – they’re valuable, but they need processing. That’s why Ottawa’s sales and marketing presence needs to be stronger, he said.

Invest Ottawa chair Jeff Westeinde said he has committed $1 million to the Mistral fund. Although he has been an investor for many years, he has stuck to what he knows – environmental companies. By allowing Mr. Cubitt and the Mistral fund to do the due diligence, his money can go towards other promising sectors including mobile development, he said.

Dan Larkin, part of American investment firm Darius Capital Co., was in the audience and said his fund provides $20 million to $100 million non-equity based loans, and has completed four deals worth $250 million this month alone.

The recently launched fund provides loans to high-tech companies with eight to 10 per cent interest and has an international reach. After attending the investors event, Mr. Larkin said he would be looking to Ottawa for investment opportunities.

Mr. Finkelstein said that part of the problem in Ottawa and elsewhere is the length of time it takes to do due diligence, a process that should be streamlined for greater success.

“I think we can destroy other cities in terms of deal flow and return on investment,” he said.

Yet as the suit and tie-clad investors discussed the need to come together with local entrepreneurs to discuss opportunities, there was nary an entrepreneur in sight.

The event was hosted by Welch LLP, Labarge Weinstein and RBC.

Organizations: ESight, Renaissance Repair, Mistral Venture Partners Darius Capital Co. RBC

Geographic location: Ottawa, York Street, Wedding Republic Silicon Valley Canada

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