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 A New Look. . . Forward
If I listen to my friends in corporate communications, they would say that writing this piece for distribution to all of the technology senior management in BC in the middle of July is, well, bad timing. The reason for concern is that I am doing my first and only "advertorial", where I talk about what I am doing. So for the few of you not on vacation or the few more of you I haven’t run into on the street over the past few months, here’s the news:
After 12 years of being on the "buy" side of the technology finance industry, I am jumping to the "sell" side with Capital West Partners. Greenstone Venture Partners has four remaining investments that I am dedicated to for at least 18 more months. At this stage, these companies are large and growing, gaining value every day. However, in order to stay current in technology and continue to do what I love, which is help entrepreneurs in BC’s technology industry, I needed a new hat to wear.
Capital West is a mid-market, boutique investment bank firm born from the sale of Pemberton Securities to Royal Bank back in 1990. For 18 years, they have focused on late stage capital raising and M&A transactions in and around Vancouver, assisting the sale or capital raising of notable companies such as lululemon, Spectra Foods, Aritzia, Sierra Systems, Studio B, and Intrawest. My role is to focus exclusively on the technology and media industries, giving the local market its first technology only, transaction specialist. There are many choices for entrepreneurs seeking advisors for late stage capital raising and M&A, both locally and in the US. I hope that my roots in the technology industry here will lead any of you seeking transaction advice to include me on your list.
The venture capital industry in Canada is not as robust as it used to be. Locally, sources of new funds are scarcer than they have ever been. Greenstone is an example of why this is happening. We raised money at the peak of the market and invested into the trough; without a long track record of investments, and with many failures early in our fund, the chances of raising another fund went to zero. Yet, the remaining companies, of which we own large equity chunks, are doing well. Well enough that, with some fortunate timing (finally!), the fund could turn out be one of the best performing funds of its vintage (as impressive as that may sound, it’s like being crowned the least ugly in the beauty pageant). Voila! A track record. You would think I would charge back and raise more money... but it will be too late. So another venture capital manager, one with significant experience and maturity, is gone. We need to support managers in this country, allowing for early failures. It is a hard business to learn and an even harder one to be very good at. So, here is my plea to make sure that newer managers at Yaletown Venture Partners, BC Advantage and seasoned veterans like Discovery Capital all get a kick at the can to raise significant capital. In the end, it will help all of us.
As for M&A news, technology transactions are up after a dismal first quarter. The collapse of the credit market and its subsequent effect on leveraging buyouts has not affected technology as much as other industries. Technology transactions are typically corporate strategic deals, not financial ones. The age-old "build vs. buy" decisions for larger technology companies to keep up with rapid innovation have not diminished. As a result, consolidation is happening in many technology markets and will continue to happen.
And if you do run into me on the street, I am the guy with the suit and tie. No really, that’s me. It’s a different look, but I like the feel of it.
By Brent Holliday, Partner, Greenstone Ventures Partners. He can be contacted at bh@greenstonevc.com
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