Archive for May, 2011

Attracting foreign entrepreneurs

Canadian investors push for a Startup Visa to compete with aggressive new policies in other parts of the world

Curated content: First written for the Summer 2011 edition of the Private Capital Prive Magazine

by Chris Arsenault, iNovia Capital

No entrepreneur wants to start a business if he runs the risk of being expelled from thevery country in which it has been launched. This is the situation facing two Romanian citizens after embarking on a social network business in Vancouver. The two businessmen were participants in Vancouver’s Bootup Lab Seed Accelerator program last year, where they raised half a million dollars in venture capital for their company. They have already hired one employee and are now looking to hire a second one.

But despite their best efforts, the two men were unable to obtain an entrepreneur visa and will be forced to leave the country by the end of the year. One is in Canada on a business visa, which has already been extended twice, and the other has a work permit from another employer that lasts only until December.

“These guys were engineering interns at Google and Microsoft before they came to Vancouver,” says Boris Wertz, founder of W Media Ventures and one of their investors. “They could have gotten a job in California, but preferred to stay here and launch their own business. Instead, they have spent a third of their time trying to regularize their situation, without success.”

Current Canadian immigration rules require a foreign entrepreneur to own at least $300,000 in personal fixed assets and have no less than two years experience heading a company in order to qualify for an entrepreneur visa.

These rules do not reflect the new reality of startups launched by bright young entrepreneurs straight out of university, with little money in their pocket, like Mark Zuckerberg when he founded Facebook, says Wertz.

A new visa

That is why Wertz, along with Danny Robinson and Maura Rodgers from Bootup Entrepeneurial Society, issued a proposal to establish a new visa in Canada for foreign entrepreneurs in the knowledge-based sector.

Called Startup Visa Canada, the new scheme would require a foreign entrepreneur to raise seed capital of $150,000 from qualified venture capitalists in place of the $300,000 current personal assets requirement.

The entrepreneur would also need to get a one-third equity position in the company, be actively involved in its management and create at least three full-time equivalent jobs over the course of a two-year program period.

“There is so much talent out there, in Asia, in Europe, in Australia, (people) who might not have $300,000 in their pocket,” says Wertz. “We need to be able to attract these bright people so they can start their business here and generate wealth for Canada.”

The group began a petition and now has 400 signatures supporting the Startup Visa proposition. Signatories include more than 50 venture capital funds, such as iNovia Capital, Real Ventures and W Media Ventures, Canadian tech organizations, such as the Canadian Innovation Exchange, as well as leading Canadian entrepreneurs. A letter was also sent to Minister of Industry Tony Clement, calling on him to start a pilot-project with the new rules.

CVCA- Canada’s Venture Capital and Private Equity Association is behind the initiative as well. “We believe startups to be the driving force behind job creation and prosperity,” says executive director Richard Rémillard. “We need to be more attractive to foreign entrepreneurs.”

“We will run out of engineers, mathematicians, physicists and other knowledge industry people needed to spur innovation,” adds Jean-Sebastien Cournoyer, partner at Real Ventures,

a new $46-million seed fund created last year and backed by angels, entrepreneurs and the government of Quebec. “Innovation is global, and so is the talent. If we want to be a competitive hub for Internet companies, we must remove barriers such as this one.”

Canadian immigration rules do not reflect the new reality of startups launched by bright young entrepreneurs straight out of university, with little money in their pocket

Around the globe

Rémillard says Canada has to move quickly because aggressive legislation is being introduced elsewhere in the world to attract and retain the world’s brightest. On March 16, for instance, the British parliament approved changes to the immigration rules that came into effect on April 6.

Under the new rules, the standard investment threshold for an entrepreneur will remain at £200,000, but the government will allow high-potential businesses to come to the U.K. with £50,000 in funding from a reputable organization. As well, entrepreneurs will be allowed to enter the U.K. with their business partners so long as they have access to joint funds.

In addition, a new type of visitor visa will be created for prospective entrepreneurs coming into the U.K. They will be permitted to enter the country so that they can secure funding and make arrangements for starting their business before they transfer to an entrepreneur visa while there.

There will also be 1,000 visas per year available for “exceptional talent,” i.e. people who will be let in for three years and four months without requiring sponsorship by an employer.

Furthermore, the new rules give more flexibility to investors: they will be able to spend up to 180 days per year, rather than 90, outside the U.K. without affecting their right to settle there.

In Singapore, entrepreneurs can obtain their visas in only five weeks – compared to a year or two here in Canada – with a minimum US$50,000 investment.

In Chile, a new program lures entrepreneurs with a one-year visa and an investment of just US$40,000.

Closer to home, a Startup Visa Act was introduced in the U.S. in February 2010 by senators John Kerry and Richard Lugar. In the latest version of the bill, entrepreneurs living outside the country will get a visa if a qualified U.S. investor agrees to financially sponsor their entrepreneurial venture with a minimum investment of $100,000. Two years later, the startup must have created five new American jobs and have raised over $500,000 in financing or be generating more than $500,000 in yearly revenue.

The bill also addresses the situation surrounding workers on an H-1B visa, or graduates from U.S. universities in science, technology, engineering, mathematics or computer science. If these graduates have an annual income of at least $30,000 or assets of at least $60,000, and have had a U.S. investor commit investment of at least $20,000 in their venture, they get a visa. Two years on, the startup must have created three new American jobs and have either raised over $100,000 in financing or generate more than $100,000 in yearly revenue.

What’s more, foreign entrepreneurs whose business has generated at least $100,000 in sales from the U.S. can get a visa. Two years later, the startup must have created three new American jobs and either have raised over $100,000 in financing or generate more than $100,000 in yearly revenue.

With rules like these, one can easily think of a situation where a bright Canadian student would prefer to launch his company in California instead of in Canada.

Many well known investors and startup promoters are behind these changes, including Brad Feld (Foundry Group), Eric Ries (IMVU), Paul Graham (Y Combinator) and even Canadian Paul Kedrosky (Kauffman Foundation). They are launching a campaign to gain political support for the bill, using social-lobbying tools to gather tweets, Facebook posts and SMS messages and hand-deliver them to Congress.

Where will Canada be when the bill gets passed?

Check out the full Summer Magazine Edition of Private Capital Privé at http://www.cvca.ca

Entrepreneurs giving a helping hand to younger entrepreneurs

by Chris Arsenault

I love drive and initiative. Don;t wait, do it and see what happens approach to life’s challenges. Ok, in this case, the deadline to apply is really short (May 25th) but you have to give it to these young entrepreneurs, they reached out and they are making things happen.

“The Young Entrepreneurs’ Club is an initiative to help foster youth entrepreneurship in Canada. It is a 10-week launchpad program that brings Canada’s top young entrepreneurs together on a weekly basis to learn from an established expert. At the end of the summer, they will pitch their businesses to a group of investors. YEC will accept 10 young Canadians that are high potential founders to form a ‘class’ of other young entrepreneurs going through the same thing, connect them with 10 top Canadian entrepreneurs and CEOs (confirmed speakers include a founder of Grocery Gateway and CEO of Claymore Investments) who will provide weekly education over a 10 week period, and culminate in a pitch session where participants have the opportunity to pitch their refined business ideas to angel investors.”

Think of it as 10 x 10 x 10 + 1: 10 founders, 10 prominent speakers, 10 weeks,  1 culminating pitch session to angels.

Applications in the form of resume and cover letter are due May 25th. Please visit www.youngentrepreneursclub.ca for more information

More info on the Young Entrepreneurs’ Club:

The YEC team is currently made up of Jennifer Turliuk, Ahmad Iqbal, Jeremy Einhorn and Rameez Gulam. Jennifer, Ahmad, and Jeremy each at one point ran the Queen’s Entrepreneurs’ Competition, Canada’s largest international undergraduate business plan competition, which has been featured in the New York Times and has $25,000 in cash prizes. They are experienced with supporting entrepreneurs and know what is needed to make them successful.

Jennifer Turliuk

Jennifer Turliuk holds a Bachelor of Commerce from Queen’s University and is the Assistant Brand Manager of Tide at Procter & Gamble, where she leads the digital strategy for all the Fabric Care brands and the launch of the biggest initiative in 27 years on P&G’s biggest brand, Tide Pods (laundry unit dose). She has 3 years of experience organizing Canada’s largest international undergraduate business plan competition, the Queen’s Entrepreneurs’ Competition, most recently as Co-Chair. Jennifer subsequently developed a concept for a wireless internet startup while on exchange in Australia that led her to place second in two international business plan competitions (in Canada and Brazil) and be written up in the New York Times. She also has her own DJing business (www.djturly.com) and has DJ’d at many events and nightclubs including one of the top ten black tie events in the world (according to David Letterman). In her spare time, she enjoys kiteboarding and salsa dancing.

Ahmad Iqbal

Ahmad is a third culture kid, having lived in eight countries before arriving in Canada to attend Queen’s School of Business. During his schooling in Kingston, Ahmad invested his time and energy into the Queen’s Entrepreneurs’ Competition trying to help other young innovators achieve their business goals. It was here Ahmad was bit by the entrepreneurship bug and since graduating has embarked on his own journey to build a successful business. He is currently a partner in Atendy.com; he and his business partner have recently opened a satellite office in China. Ahmad has high hopes for YEC and would like to see it established as Canada’s premier club for business savvy risk takers.

Jeremy Einhorn

Jeremy received his Honours Bachelor of Commerce at Queen’s University where he specialized in Sales Communication and Strategy. He currently works at the Medcan Clinic where he is focused on exceeding client service expectations and business development. Prior to his time at Medcan, Jeremy helped jump-start a public relations practice that created and implemented customized advertising campaigns for small businesses. Jeremy recently chaired an advisory board at the Safehaven Project for Community Living, an organization dedicated to providing care for children with multiple disabilities and complex medical needs. He was also heavily involved with Canada’s largest international undergraduate business plan competition, the Queen’s Entrepreneurs’ Competition, most recently as Co-Chair.

Rameez Gulam

Rameez is currently completing a degree in Chemical Engineering at McMaster University. Simultaneously, he is currently working Full-Time at Unilever Canada in Supply Chain as a Planner for Hellmans and Becel. Rameez founded his first startup in 2009 where he implemented Small Business advertising strategies, and received an Ontario Summer Company Award. He has also competed in Impact’s Apprentice and been involved with several Undergraduate Business and Technology conferences. He is currently a mentor at McMaster where he emphasizes the need for students to complement their education by being involved and gaining experience. Rameez is an organizer for McMaster’s LipDub this summer. He loves volunteering; locally for the Toronto Raptors, and has also led students to participate in Habitat for Humanity’s Collegiate Challenge in Miami, FL.

Please visit www.youngentrepreneursclub.ca for more information

The largest gathering of Venture Capital and Private Equity firms is heading out to Vancouver

By Chris Arsenault, Managing Partner iNovia Capital

I’ve been an active board member of the CVCA – Canada’s Venture Capital & Private Equity Association – for many years, with somewhat of a focus on helping make the annual main event a unique and uttermost valuable gathering of the minds that define our private capital industry.

I’m predicting that this year’s event will set new groundbreaking records. In fact, I think that this year’s event will break every record we have logged at the CVCA! And why you may ask? Because this year’s event speakers and attendees are made up of the most active and opinionated leaders in our industry.

We have the largest group ever of Limited Partners attending, coming from across North America, Europe and Brazil, which, in turn, is attracting practically every Venture & Private Equity Fund Manager and General Partner in the country.

This year’s Annual conference is being held from May 25-27th in beautiful Vancouver, British Columbia, at the Westin Bayshore.

The speaker lineup is amazing and includes:

Leo DeBever, CEO and Chief Investment Officer, Alberta Investment Management Corporation (AIMCo)
Barry Gonder, Managing Partner, Grove Street Advisors, LLC
Doug Pearce, CEO and Chief Investment Officer, British Columbia Investment Management Corporation (bcIMC)
Maurício da Rocha Wanderley, CIO, Valia

Sebastien Burdel, Principal, Coller Capital Ltd.
Alan Hibben, Managing Director, Mergers and Acquisitions, RBC Capital Markets
John McCoach, President, TSX Venture Exchange
Andrew Rippy, Managing Director - Investment Banking, Pacific Crest Securities

Blair Cowan, Vice-President, Corporate Finance, CIBC
Vipon Ghai, Managing Director, Manulife Capital
Mark Jenkins, Vice-President and Head of Private Debt, CPP Investment Board
Greg Woynarski, Managing Director and Head of the Global Debt Capital Markets Group and Global Co-Head of Credit Capital Markets Group, Scotia Capital

Chris Arsenault, Managing Partner, iNovia Capital Inc.
Jeff Clavier, Founder and Managing Partner, SoftTechVC
John Ruffolo, Senior Vice-President and Head of Knowledge Investing, OMERS
Boris Wertz, CEO, W Media Ventures

Frank Dennis, President and CEO, Swiss Water Decaffeinated Coffee Company
Brett Hodson, President and CEO, Corix Group of Companies
Peter Luit, President and CEO, Livingston International

Tim April , Managing Director, Fund Investments, BDC Venture Capital
Jacques Bernier, Managing Partner, Teralys Capital
Jennifer Brooy, Vice President and Head of Equity, Export Development Canada
Melissa McJannet, Managing Director, Northleaf Capital Partners
Todd Tessier, Vice President, BC Renaissance Capital Fund

Stephen Dent, Partner, Birch Hill Equity Partners
Kelly DePonte, Partner, Probitas Partners
Aaron Gershenberg, Managing Partner, SVB Capital
David Henderson, Managing Director , XPV Capital Corporation
Tim Kelly, Partner, Adams Street Partners

Susan Long McAndrews, Partner, Pantheon
Dave Mullen, CEO and Head of Private Equity North America, HSBC Capital (Canada) Inc.
Deanna Brown, CEO, Federated Media Publishing Inc.
Matt Klainer, Business Development Manager , Google
Michael Shim, Vice President, Mobile Partnerships, Groupon

Jim Orlando, Managing Director, OMERS Private Equity
Scott Stedman, Partner, The Yucaipa Companies

Gary Rubinoff, Managing Director, Summerhill Venture Partners
Chris Wormald, Vice President – Strategic Alliances, Research In Motion
Paul Deninger, Senior Managing Director, Evercore Partners

Jennifer Morais , Senior Principal, Funds and Secondaries, CPP Investment Board
Jim Pittman, Vice President, Private Equity, PSP Investments
Rakesh Saraf, Portfolio Manager, Private Investments, Alberta Teachers’ Retirement Fund Board
Lincoln Webb, Vice President, Private Equity & Infrastructure, BC Investment Management Corporation

Miguel Ferreira, Head of International Markets, Tarpon
Tim Formuziewich, Managing Partner, Brookfield Brazil
Miguel Perrotti, President, Invest Tech
Maurício da Rocha Wanderley, CIO, Valia
Duncan Littlejohn, Managing Director for Latin America, Paul Capital Partners
Michael Woolhouse, Senior Principal, Private Investments, CPP Investment Board

Sidney Chameh, Chairman, ABVCAP Founder and Partner, DGF Investimentos
Martin Pose, Partner, TozziniFreire Advogados

David Snow, Founder & CEO, Privcap

Bing Gordon, Partner, Kleiner Perkins Caufield & Byers
Don Mattrick , President, Interactive Entertainment Business, Microsoft
Neil Young, CEO, Ngmoco

Stephen Todd Walker, Managing Director, Oppenheimer & Co., and Author of ‘Wave Theory for Alternative Investments’

And yes! The rumors were well-founded. Entertainment before the traditional Scotch Tasting Evening on the 26th will be provided by none other than “Great Canadian Entrepreneur and Entertainer Howie Mandel”

HOWIE MANDEL

Howie Mandel, one of the biggest names in comedy, will entertain us after dinner. Howie Mandel has remained a constant force in show business for over 30 years. This summer he embarked on his latest endeavor as a judge on NBC’s hit talent competition series “America’s Got Talent” alongside Sharon Osborne and Piers Morgan. Howie recently received an Emmy nomination for “Outstanding Reality/Competition Host” for “Deal or No Deal” and a Daytime Emmy nomination for “Outstanding Game Show Host” for the syndicated version of the show.

So if you are not registered and are looking for “the place to be” later this month, then LINK TO CONFERENCE WEB SITE, SPEAKER LIST & AGENDA and register today – we are almost sold out!

See you in Vancouver!