Re-Post from Wellington Financial Blog, by Mark McQueen

Truths, Myths and the Roadmap Part Three

It seems like forever, but it was only a few weeks ago when Mark Skapinker’s interview with The Wall Street Journal was all tech folks could talk about (see prior post “Skapinker gives his homeland the Bronx Cheer part 2” April 6-09). As you may recall, one of his complaints about the Canadian tech ecosystem was the lack of repeat entrepreneurs for VCs to finance.

That claim leapt into the minds of many of us when Osama Arafat, CEO of Q9 Networks, received the Entrepreneur of the Year Award at the annual CVCA AGM in Calgary two weeks ago. For those who didn’t know, Mr. Arafat started Q9 at the encouragement of JLA Ventures and VenGrowth Partners earlier this decade. With that encouragement came a very large whack of funding. And a big return last year for all concerned, with the $17+/share sale to a U.S.-based private equity shop.

Prior to Q9, Mr. Arafat co-led Isolation Systems (an award-winning manufacturer of VPN solutions). In 1994, Mr. Arafat co-founded InfoRamp (one of Toronto’s largest and best known Internet service providers). Sounds like a repeat entrepreneur to me, despite the Skapinker myth.

As for the myth that there are a lack of VCs with the wisdom to back the next Arafat, one can’t help but notice that the VenGrowth team, for example, has been an investor in three of the last four CVCA Entrepreneur of the Year Award winners: Sandvine, Lakeport and Q9.

Isolation’s second round was backed by Covington, GrowthWorks, JLA (also the Series A funder) and VenGrowth. $13MM of total VC funding; $55.5MM M&A exit.

What about that myth, promoted by Roger Martin among others, that LSIF funds can’t make a good investment to save their lives (see prior posts “This is Roger Martin, reporting from Mars” November 25-08 and “The great LSIF myth” July 2-08)?

Straight to the dustbin.

MRM

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