Local VC fund Mistral plays key role in $1.7M financing round for software firm

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Ottawa’s Mistral Venture Partners fund gets its name from a fierce northerly wind.

Code Cubitt launched Ottawa's Mistral Venture Partners.

By David Sali

The man who launched the investment fund probably feels like he has that wind at his back right now.

“We’re ecstatic,” Code Cubitt said on Feb. 13 at Invest Ottawa headquarters, where the city’s main economic development arm was hosting an open house to celebrate its second anniversary.

“We’re a year from our first close (which raised more than $10 million). We’ve done four investments so far. We’ve assembled an absolutely rock-star team. Because we’re one of the very few funds in Ottawa, we’ve been able to attract some very senior people to help us in the fund.”

Mistral, a technology-driven fund that gives special consideration to mobile and Internet-based startups, is expected to eventually support 15 to 20 investments in the Ottawa area. The fund announced its first local investment on Feb. 13.

Along with BDC Venture Capital IT Fund, Mistral helped lead a $1.7-million round in Ottawa-based software firm Klipfolio. Other investors include FundFire, also from Ottawa, as well as BOLDstart Ventures and Acadia Woods from New York and Boston’s CommonAngels Ventures.

“A core tenant of Mistral is to make sure there’s a good connection outside of Canada, predominantly the U.S.,” Mr. Cubitt said. “One of the things we observe is that Canadian companies are often underfunded, with little prospect of getting funding outside of the country. If we can solve that problem up front, we think the odds of success are much higher.”

Invest Ottawa CEO Bruce Lazenby, who lured Mr. Cubitt to Ottawa in 2012 to start Mistral, said he’s encouraged that the fund was able to land American partners to invest in a locally based startup.

“Canadian investors who invest just as Canadians historically don’t get the best returns,” he said. “It’s when we have the cross-border opportunities that we find the best results.”

Mistral is currently working on another investment in an Ottawa firm that it hasn’t disclosed yet, and Mr. Cubitt said many more are coming down the road.

“The fact of the matter is, there’s a lot of good innovation in Ottawa – that’s why we’re based here,” he said. “There are a number of opportunities just like Klipfolio and we continue to look at literally hundreds of deals in Ottawa and the region.”

After a long period of stagnant VC growth in Silicon Valley North, Mr. Cubitt said he thinks the region is poised for a turnaround, thanks to funds like Mistral and agencies like Invest Ottawa that are raising its profile on the world stage.

“It’s not something you can turn a switch and make happen,” said Mr. Cubitt, who headed up several VC funds in the United States before moving to the capital.

“It’s a flywheel that creates momentum as you put energy into it. It’s firms like Mistral who create awareness, it’s companies like Invest Ottawa who create awareness, and it builds over time. This is not something that will happen in a year or two or even five. It’s a 10-plus-year strategy and it has to be that way because you’re creating a culture of innovation and entrepreneurship. It’ll happen.

“Ottawa has a tremendous base of innovation,” he added. “It’s a legacy that we continue today. What’s happened is the funding sources have dried up and the world has changed. But it doesn’t mean the people have left. I’m absolutely bullish – no question about it.”

Klipfolio, which makes cloud-based data visualization software, expects to boost its headcount from 16 to about 24 by the end of 2014. Its revenues have doubled each year since it launched its cloud product in 2011.

The firm’s co-founder, Allan Ville, credited Mistral’s impressive group of executive fellows, including Blaze Software founder Mike Weider, for providing key business and marketing advice as well as helping raise cash for the burgeoning company.

“One of things Mistral did really, really well was they got people around the table for us,” Mr. Ville said. “It’s somewhat of a coup that we’ve got this talent helping us.”

Mr. Lazenby said announcements like the one on Feb. 13 are just the beginning for Mistral.

“It’s going to be a great fund for Ottawa, and I’m really excited for what it’s going to do,” he said.

Sidebar: THE BOOK ON CODE CUBITT

Managing director at Mistral Venture Partners (April 2012 – present).

Venture partner at Forte Ventures, a multi-stage VC firm headquartered in Atlanta, Ga.

CEO of Zephyr Technology, a biotechnology company specializing in wireless monitoring of human vital signs and headquartered in Annapolis, Md. (August 2009 – March 2011).

Director of Motorola Ventures, the strategic investment arm of Motorola in Schaumburg, Ill. (January 2007 – August 2009).

Organizations: BDC Venture Capital IT Fund, Motorola, Allan Ville Blaze Software Mistral Venture Partners Forte Ventures Zephyr Technology

Geographic location: Ottawa, United States, Acadia Woods New York Boston Canada Silicon Valley North Atlanta, Ga. Annapolis, Md. Schaumburg, Ill.

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