Espresso Capital welcomed Ben Forcier as Partner with primary responsibility for Atlantic Canada. Ben has extensive experience in technology finance as aformer VC partner, investor relations professional, finance professional, and Director on technology company boards. His background and experience provide a welcome addition to Espresso’s unique technology financing solutions in venture lending.

Ben began his career at BCE Inc. in treasury management which then led him to roles in business development and venture investment at Bell Canada and BCE Capital (VC). More recently, he was Vice-President of Investment of Innovacorp, a seed and early stage venture capital fund and start up incubator.  At Innovacorp, Ben secured co-investors participating in rounds of financing that totaled over $35 million, put in place a successful EIR program and expanded Innovacorp’s scope by implementing a strategic fund of funds investment strategy.

In addition to his duties at Espresso Capital, Ben is also an advisor to a number of technology companies in Atlantic Canada and is on the Board of Nova Scotia-based Medusa Medical Technologies. Originally from Montreal, Ben is based in Halifax and has been living with his wife and two kids in Nova Scotia for the last 9 years. During the summer months, Ben spends time with his family along the Northumberland Strait in New Brunswick or golfing in the Dieppe-Moncton area.

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We are thrilled to announce that at this year’s International Startup Festival 2012 (www.startupfestival.com), one deserving Startup will leave with an investment of at least $50,000! And the award won’t be limited to one of the Startups selected to pitch on a main stage; any Startup present and badged for the event will be eligible to win.

A group of angels and VC investors, including the Festival’s Founders Phil Telio and Alistair Croll, Anna Goodson, Rory Olson, and Danny Knafo, quickly jumped at this opportunity and banded together as equal partners to create the prize.

The prize will be an investment in a Startup, in the form of an entrepreneur-friendly convertible debenture (reasonable interest rate with no cap on valuation). Terms and conditions with details will be posted on our website soon.

Montreal’s Chris Arsenault, managing partner at iNovia Capital, will curate the process, including forming a selection panel made up of representatives of the fund, along with an equal number of independent but startup-savvy judges. We will be sure to create ample opportunities for any badged startup to get in front of one or more of these judges. But ultimately, the event will imitate real life and startups that want the $50K (or more) will bear the responsibility of seeking out these decision makers.

The fund is not closed, so any Angel or institutional investor interested in participating in the fund, should contact us at info@startupfestival.com

There you have it. The International Startup Festival 2012 will deliver insightful speakers, a wide profile of users and influencers to network with, pitching opportunities of all kinds – all wrapped in a true Montreal summer, Festival atmosphere. And now topped off with a chance to walk away with a $50,000 investment. Register here www.startupfestival.com

For more details please contact Philippe Telio: phil@startupfestival.com

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Why only a bold government move can boost the country’s short supply of VC financing

Canada is among the most generous countries in the world in its financial support of research and development for its emerging technology companies. Its support for business R&D as a percentage of GDP is the second highest of any OECD country and ahead of that of the U.S. It is not surprising that Canada’s emerging technology companies are a fertile source of some of the world’s richest R&D.

In stark contrast, the VC financing that is essential for commercializing that R&D remains in severely short supply. While fundraising by Canadian VC firms picked up ever so slightly in 2011, companies still invested significantly more than they raised. This continuing gap is unsustainable and highly predictive of inadequate future VC investing. As a result, much of that R&D (not to mention the billions in government money that fund it) is going to waste and will never produce Canadian products, jobs and exports.

In the absence of VC financing to convert that R&D into economic value, the Canadian government’s generous support for R&D is akin to a vast program for creating advanced aircraft when there is no fuel to fly them. These government R&D expenditures have effectively become a subsidy to U.S. businesses that acquire the most promising of these capital-starved but R&D-rich Canadian companies cheaply, then reap the financial rewards by commercializing that R&D and bringing those companies to industry leadership.

The solution

The Canadian government must act as a catalyst to intervene on a one-time basis in a bold and fiscally-responsible way to jump-start a self-sustaining, market-driven, independent private VC industry by creating a fund of funds program that possesses the financial strength, top-tier investment management and global connectedness to successfully commercialize the R&D of its emerging technology companies.

This newly created fund of funds, in turn, would proactively organize 10 new VC firms and select the most highly qualified Canadian GP managers for each through a rigorous national RFP process. Each of these 10 new VC firms would be capitalized with a total of $200 million. Of this $200 million, the Canadian government as an LP would contribute $80 million (40 per cent), conditioned on each VC firm’s raising an additional $120 million (60 per cent) from foreign and Canadian LPs. These VC firms would also be required to recruit top tier (top-quartile/-decile) performing U.S. or other foreign GPs to partner with their Canadian GPs. The result would be 10 new VC firms with a total of $2 billon under management in an innovative partnership of the public and private sectors.

Foreign LPs would be motivated to invest in these 10 new VC firms due to those foreign LPs’ successful experience in investing in prior VC firms managed by these same participating top-tier foreign GPs. In short, these top-tier foreign GPs would bring their loyal LPs with them to Canada. As an added incentive to ensure that result, these LPs would be given the right to buy out the Canadian government’s 40 per cent LP interest in each VC firm within six years, at cost plus interest. Because this buyout right can greatly enhance the LPs’ ROI, it would be a significant additional draw for attracting them to invest in the 10 new VC firms.

Implementation

This new fund of funds program would position Canada to successfully commercialize the R&D of its most promising emerging technology companies while avoiding the Canadian VC industry’s past mistakes:

1.     The top-tier foreign GPs for the 10 new VC firms would be chosen in a rigorous international RFP process to ensure they possess top-quartile (hopefully, decile) prior performance. Studies demonstrate that top-performing GPs show a significant “persistence” in achieving recurring strong performance in future funds and account for virtually all of a VC industry’s positive performance.

2.     The top-tier foreign GPs selected would bring with them their “connectedness” to major global customer markets, strategic clusters, pools of international capital and serial entrepreneurs. This connectedness would address a vulnerability of some Canadian VCs and entrepreneurs arising from their lack of immersion in, and experience with, global markets and clusters and the strategic customers and competitors therein. Think of these foreign GPs as “aligners” and “bridges.” They will have the global knowledge and experience to work with their Canadian GP partners to help portfolio companies better align their products with what is needed by the market.  They will also be bridges to global markets, strategic clusters and international capital pools, and to the myriad of customer, capital, distribution, marketing, technology and employee opportunities therein.

3.     Two hundred million dollars is the right amount of funding for each of the 10 new VC firms. The roughly $100 million, on average, currently under management by Canadian VC firms is a serious handicap for taking emerging technology companies through their growth cycles into industry leadership and an IPO or M&A. In addition to having “deep pockets” to invest large amounts in potential big winners, VC firms in the $200-million range also possess enough funds to attract and retain sufficient staff with a high level of experience and specialized expertise.  This financial heft can also relieve the pressure on VCs to sell portfolio companies too early at too low a price. It is not surprising that studies have shown that VC funds with about $200 million under management have the strongest investment performance over time.

4.     The new fund of funds program would also avoid the structural flaws of some of the labour-sponsored and government funds in the past. The compensation of the GP investment managers in the 10 new VC firms would be at VC private-industry competitive rates, ensuring these firms’ ability to attract and retain top-performing investment managers. This compensation system heavily rewards achieving IPO and M&A liquidity events that generate ROI, thereby aligning interests of VC investment managers with those of their portfolio companies’ senior management and stockholders. There would be none of the kinds of tax incentives and restrictive investment rules that have distorted investment behaviour of certain labour-sponsored and government VC funds in the past in ways that diminished investment performance.

5.     The 10 new VC firms would have some flexibility to co-invest outside of Canada with leading foreign investors to maximize investment opportunities and global connections. This recognition of the imperatives of globalization and interdependence in our contemporary world of borderless capital and customer markets will enhance ROI and lead to these foreign investors co-investing in Canadian companies with the 10 new VC firms.

6.     Each of the 10 new VC firms would possess highly specialized domain expertise in a single sector:  IT, healthcare or cleantech. This focus on companies in high growth industries will help maximize the new VC firms’ ROI while facilitating creation of clusters.

Results

What distinguishes this proposed fund of funds from others is that it will proactively organize and staff the 10 VC firms in which it invests under a well-planned blueprint. If these 10 new VC firms are implemented as outlined, the result will be significant ROI for participants and large numbers of sustainable Canadian jobs and exports. In addition, it is likely the Canadian government would receive back most, if not all, of the money it invests plus interest. The goal is not for Canada to make money on its LP interest, but to provide strong incentives for investing in and growing Canadian companies.

A further likely result is that Canadian institutional investors would be attracted back to the VC asset class.  Without the return of institutional investors, there is no sustainable solution for the Canadian VC industry.  Finally, the program’s success would result in a long-term self-sustaining private VC industry in Canada – with huge consequent economic benefits for many years. This is the definition of a fiscally responsible government investment, both on its merits and when weighed against the unacceptably high cost of failing to take action.

While this $800 million in federal money may sound like a lot, in reality the government will be investing annually in relatively more modest amounts – approximately $100 million each year for five years ($500 million total) with the balance of $300 million invested over years six through ten for follow-on rounds. Much of this last $300 million would not be needed if a significant number of the VC firms’ investors exercise the buyout rights, with most of the money already paid out coming back to the government instead.

This program would be a quintuple win: for participating LPs and GPs, Canada’s technology companies, the Canadian government and the future of the Canadian VC industry.

Stephen Hurwitz is a partner at Choate, Hall & Stewart LLP, Boston. His full paper on this subject can be accessed at www.choate.com/media/pnc/0/media.3040.pdf.

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Attendees to Receive BlackBerry PlayBook Tablets Preloaded with Conference App

The CVCA – Canada’s Venture Capital & Private Equity Association has chosen Montreal to hold its 2012 Annual Conference (May 23-25), one of the largest gatherings of the private capital industry in North America. Confirming its role as a leading source of advocacy, networking, information and professional development, CVCA is giving each attendee a BlackBerry® PlayBook™ tablet from Research In Motion (RIM) preinstalled with an app designed for the conference. CVCA is the first association to give PlayBook tablets to all conference attendees as the primary source of conference materials along with an official conference mobile app.

The official conference app will contain the conference agenda, speaker bios and other conference information, and will allow the participants to ask questions of moderators and interact with other conference attendees through social media.

“We are proud to work with RIM to offer our conference participants a one-of-a kind mobile experience. This innovative approach aims at enhancing networking opportunities, and the dissemination of information about issues, industry trends and deal flow,” states Chris Arsenault, 2012 Conference Co-Chair and Managing Partner, iNovia Capital.

“The BlackBerry PlayBook combines powerful web browsing, multimedia and multitasking capabilities with top of the line communication features and productivity enhancements. It also provides users with access to a diverse and rapidly growing portfolio of apps spanning enterprise, gaming, publishing, multimedia and social,” said Alec Saunders, Vice President, Developer Relations and Ecosystems Development at RIM. “We are happy to work together with CVCA to enrich the conference experience with the powerful and ultra portable BlackBerry PlayBook.”

The CVCA Annual Conference is the premiere networking and professional development event for Canada’s venture capital and private equity industry and repeatedly sells out with over 650 industry professionals and influencers from across Canada and around the world. This year’s theme is “Venture Capital & Private Equity: Outperforming the Markets”. For more information the program and confirmed speakers, please visit www.cvca.ca.

CVCA

The CVCA – Canada’s Venture Capital & Private Equity Association, was founded in 1974 and is the association that represents Canada’s venture capital and private equity industry. Its over 1900 members are firms and organizations which manage the majority of Canada’s pools of capital designated to be committed to venture capital and private equity investments. The CVCA fosters professional development, networking, communication, research and education within the venture capital and private equity sector and represents the industry in public policy matters.

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L’Association canadienne du capital de risque et d’investissement (l’ACCR) a choisi Montréal pour tenir sa conférence annuelle 2012 (23-25 mai), l’un des plus importants événements de l’industrie du capital d’investissement en Amérique du Nord. En tant que chef de file en défense des intérêts de l’industrie et fournisseur d’occasion de réseautage, d’éducation et de développement professionnel pour ses membres, l’Association remettra à chaque participant une tablette mobile BlackBerry® PlayBook^MC de Research In Motion (RIM), sur laquelle sera téléchargée l’application officielle de la conférence. L’ACCR est la première association à offrir des tablettes mobiles PlayBook et une application officielle à l’ensemble de ses participants comme première source d’information pour la conférence.

L’application officielle de la conférence contiendra le programme de la conférence, les biographies des conférenciers et d’autres renseignements sur la conférence. Elle permettra aux participants de poser des questions aux modérateurs et d’interagir avec les autres participants présents à la conférence par le biais des médias sociaux.

« Nous sommes fiers de collaborer avec RIM pour offrir aux participants de la conférence une expérience mobile unique en son genre. Cette approche novatrice vise à améliorer les possibilités de réseautage et la diffusion de l’information sur les enjeux, les tendances de l’industrie et les flux d’affaires », a déclaré Chris Arsenault, co-président de la conférence de 2012 et associé directeur d’iNovia Capital.

« La tablette BlackBerry® PlayBook^MC combine une navigation sur le Web de haute performance, des capacités multimédia et multitâches et les meilleures caractéristiques de communication et d’amélioration de la productivité. La tablette permet également aux utilisateurs d’avoir accès à un portefeuille diversifié et en croissance rapide d’applications en tous genres, qu’il s’agisse d’applications pour les affaires, de jeux, de publications, ou de multimédia et réseaux sociaux », a déclaré Alec Saunders, vice-président des relations développeurs et du développement de l’écosystème de RIM. « Nous sommes heureux de collaborer avec l’ACCR afin d’enrichir l’expérience des participants de la conférence avec notre puissante et pratique tablette mobile BlackBerry® PlayBook^MC. »

La conférence annuelle de l’ACCR est le premier événement de réseautage de développement professionnel pour l’industrie canadienne du capital de risque et d’investissement. Dans le passé, la conférence annuelle s’est maintes fois vendue à guichet fermé auprès de plus de 650 professionnels de l’industrie et d’influenceurs à travers le Canada et partout dans le monde. Le thème de cette année est « Le capital de risque et le capital-investissement – plus performants que le marché capital de risque et investissement privé : surperformer les marchés ». Pour plus de renseignements sur le programme et les conférenciers confirmés, veuillez visitez le www.cvca.ca.

ACCR

L’ACCR – L’Association canadienne du capital de risque et d’investissement a été fondée en 1974 et représente l’industrie canadienne du capital de risque et d’investissement privé. Elle compte au-delà de 1900 membres, soit des sociétés et des organisations qui gèrent la majorité des capitaux canadiens mis en commun et destinés aux investissements en capital de risque et en capitaux propres. L’ACCR favorise le perfectionnement professionnel, le réseautage, la communication, la recherche et l’éducation au sein du secteur du capital de risque et d’investissement et représente l’industrie dans le cadre de dossiers de politiques publiques.

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CVCA – Canada’s Venture Capital and Private Equity Association today congratulated the federal government for its support of the innovation ecosystem in its 2012 budget.

“In particular, we were pleased to see that the federal government has taken decisive action to address the acute shortage of venture capital by committing $500 million to the industry.” said Gregory Smith, President of the CVCA and Managing Partner of Brookfield Financial, “We look forward to working with the federal government in determining how best to structure its support in the months ahead.” added Mr. Smith.

In a broader sense, the CVCA also noted other aspects of the budget that will help grow the leading-edge technology sectors of the economy, including:

• The Western Innovation Program
• The Canadian Innovation Commercialization Program
• The Forest Innovation Program
• The doubling of IRAP’s allocated capital
• The College-Industry Innovation Fund.

Finally, the CVCA noted with deep interest the proposed changes to the SR & ED tax credit program. “We are pleased that the federal government has opted to keep the structure of the SR & ED program largely intact. We do support making the program more effective and will be examining the proposed modifications closely.” said Mr. Smith.

Gregory Smith, President of the CVCA and Managing Partner, Brookfield Financial

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LINK TO CONFERENCE WEB SITE

Dear friends,

The CVCA annual conference is the premiere gathering for relationship-building and insight into the current state of Canada’s venture capital and private equity industry. With over 600 limited partners, fund managers, and industry influencers from across Canada, the U.S. and around the world in attendance – the CVCA Annual Conference is one of the largest gatherings of the private capital industry in North America.

The CVCA Annual Conference sells out in advance every year – register early to guarantee your participation.

LINK TO ON LINE REGISTRATION

The Theme

This year’s theme is “Venture Capital & Private Equity: Outperforming the Markets”. Since the beginning of time, investors have focused on stocks and bonds, shifting their allocations between these traditional asset classes with the times. Alternative assets like private equity and venture capital were rarely considered and poorly understood, since the traditional assets were considered safe and reliable. But the world has changed: major equity markets have traded sideways with growing volatility through the past several years, and fixed income investments are near zero real returns. The traditional model is broken as investors rethink the risk/reward equation and look for alternatives.

Private equity and venture capital can provide exactly what investors are looking for today: strong returns and companies that will take a leadership position in an increasingly competitive global economy. This is the opportunity to create new companies and transform existing ones. Active management by highly skilled private investors is the secret sauce. These investors jump right into their portfolio companies, working alongside management to truly transform these businesses. How do they do it? The 2012 CVCA Annual Conference will show you! How do they do it? The 2012 CVCA Annual Conference will show you!

The Agenda explores the timely topics that are central to driving forward in Canada’s venture and private equity industry.  Plenary sessions, and dedicated break-out PE and VC sessions, will dive into the challenges, changes, and opportunities in the current fundraising, investing, and exit environments.

Networking is important to you.  Our conference offers abundant networking opportunities beginning with a welcome cocktail event our first evening, a Networking Lounge throughout the conference to meet up with your industry colleagues, plus the conference mobile app makes connecting with other attendees and speakers easy. Thursday’s programme will conclude with a Gala dinner featuring CVCA’s “Entrepreneur of the Year” Award presentation, followed by our popular scotch-tasting event.

Attendees return year after year for the invaluable benefits of networking with key industry leaders and for the topical issues presented and discussed. Participants and sponsors at this prestigious event include the following: Private Equity Investors ● Venture Capitalists ● Limited Partners ● Institutional & Corporate Investors ● Investment Bankers/Intermediaries ● Placement Agents ● Security Exchanges ● Government & Academic Institutions ● Specialized Service Providers: Legal, Accounting, Financial, Insurance & Executive Search Advisors.

REGISTER TODAY! LINK TO CONFERENCE WEB SITE

I hope you will join us in Montreal!

Sincerely,

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Cher collègues,

Nous sommes heureux de vous informer que vous avez le privilège de profiter du taux des membres de CVCA pour le colloque annuel 2012 de CVCA qui aura lieu à Montréal du 23 au 25 mai 2012.

LIEN VERS LE SITE DU COLLOQUE

Le colloque annuel de CVCA constitue une réunion de première importance pour renforcer les liens dans l’industrie du capital de risque et du capital-investissement, ainsi qu’être au courant de ses plus récents développements. Rassemblant plus de 600 bailleurs de fonds, gestionnaires de fonds et personnes influentes dans l’industrie de partout au Canada, des États-Unis et de partout au monde, le colloque annuel de CVCA est l’une des plus grandes réunions de l’industrie de l’investissement en Amérique du Nord.

Chaque année, le colloque annuel de CVCA fait salle comble : réservez tôt pour vous assurer de pouvoir participer.

LIEN VERS L’INSCRIPTION EN LIGNE

Thème du colloque

Cette année, le colloque a pour thème « Le capital de risque et le capital-investissement : plus performants que le marché ». Depuis toujours, les investisseurs ont mis l’accent sur le capital-actions et les obligations, variant la répartition de leurs investissements entre ces catégories traditionnelles d’actifs selon le moment. On tenait peu compte des autres actifs, comme le capital de risque et le capital-investissement, qui étaient peu compris, puisqu’on croyait les actifs traditionnels sécuritaires et fiables. Le monde a changé depuis : au cours des dernières années, les principaux marchés boursiers n’ont pas montré de réelle tendance si ce n’est une volatilité accrue, et les investissements à revenu fixe ont offert des rendements s’approchant de zéro. Le modèle traditionnel est brisé, et les investisseurs réévaluent l’équation entre le risque et le rendement en cherchant des solutions de rechange.

Le capital-investissement et le capital de risque peuvent offrir précisément ce que cherchent les investisseurs aujourd’hui : des rendements solides et des entreprises qui deviendront des meneuses dans une économie mondiale de plus en plus concurrentielle. C’est là l’occasion de créer de nouvelles entreprises et de transformer celles qui existent. Le secret repose dans une gestion dynamique par des investisseurs privés hautement qualifiés. Ces investisseurs jouent immédiatement un rôle actif au sein des entreprises de leur portefeuille : ils collaborent avec les équipes de direction pour véritablement transformer les sociétés. Comment le font-ils ? Vous le verrez lors du colloque annuel 2012 de CVCA !

Le programme explore les sujets qui sont aujourd’hui au cœur de la force motrice de l’industrie canadienne du capital-investissement et du capital de risque. Lors de séances plénières et de séances dédiées au capital-investissement et au capital de risque, nous explorerons les défis, les évolutions et les occasions des environnements actuels du financement, de l’investissement et des sorties.

Le réseautage est crucial pour vous. Notre colloque offrira de nombreuses occasions de réseautage : après le cocktail de bienvenue de la première soirée, un salon de réseautage sera à votre disposition pour rencontrer vos collègues tout au long du colloque. L’application mobile du colloque facilitera les rencontres avec les autres participants et les conférenciers. Le programme du jeudi se terminera par un dîner de gala lors duquel sera décerné le prix de « L’entrepreneur de l’année » CVCA, qui sera lui-même suivi de notre populaire événement de dégustation de Scotch.

Les participants reviennent d’année en année pour profiter des avantages précieux du réseautage avec les meneurs de l’industrie ainsi que pour les sujets présentés qui font ensuite l’objet de discussions. Les participants et les commanditaires de cet événement prestigieux comprennent : des investisseurs de capital-investissement ● des investisseurs de capital de risque ● des commanditaires ● des investisseurs institutionnels et d’entreprise ● des banquiers d’investissement ● des agents de placement ● des représentants des bourses ● des institutions gouvernementales et d’enseignements ● des fournisseurs de services spécialisés : services juridiques, comptables, financiers, d’assurance et conseillers en recrutement.

INSCRIVEZ-VOUS DÈS AUJOURD’HUI ! LIEN VERS LE SITE DU COLLOQUE

Au plaisir de vous voir à Montréal !

Cordialement,

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First published on the nextMontreal blog and in the Spring 2012 Private Capital Privé magazine

In October 2010, the CVCA released a report entitled “Think Canada (Again).” It is obvious that the PE and VC markets were paying attention, and have spent the past 18 months heeding the call. Call it a reawakening, rebirth or revolution – call it whatever you want, but the story is simple: Canada is back, and back in a big way.

In the world of venture capital, the most noticeable sign of change has been the influx of U.S. investors seeking out early stage opportunities and backing Canadian category leaders in pursuing aggressive growth strategies. The launch of organizations such as the C100 kick-started this trend, helping secure over $400 million in cross-border venture capital since inception. These Canadian deals included industry titans such as Sequoia Capital, Kleiner Perkins Caufield & Byers, Andreessen Horowitz, Accel Partners, Greylock Partners, Bessemer Venture Partners, and Union Square Ventures (amongst others), all of whom made significant investments in Canadian start-ups in 2011.

In fact, over 30 high profile Canadian companies capitalized on this trend in the past year, numbers not approached since the heady days of the dotcom boom years. Montreal-based Beyond the Rack, Toronto-based Fixmo and Ottawa-based Shopify made the largest splashes at the end of 2011 by raising almost $80 million between them (post). However, unlike some of their turn of the century counterparts, these companies raised capital on the basis of quickly rising revenue growth curves and extremely profitable business models. There are no signs of this foreign interest abating, as strong Canadian companies looking to accelerate their path to market leadership continue to attract the attention of investors eager to back the best and brightest entrepreneurial teams, regardless of location.

” For more insights, don’t miss hearing about what the main actors have to say at the CVCA Annual Conference in Montreal, May 23 to 25.”

Early bets
Of course, it’s not just U.S. VCs who are taking advantage of the dynamic growth of the Canadian startup ecosystem. Early bets on talented entrepreneurs by CVCA members have provided the bulk of early stage financing for Canadian companies raising follow-on capital from foreign funds. Local funds have profited handsomely from this renaissance in Canadian tech startups that saw nearly $2 billion in early-stage exits in 2011 alone.
A whole new generation of talented founders is now being mentored by experienced advisors and investors through incubator/accelerators such as Vancouver’s GrowLab, Montreal’s FounderFuel and Toronto’s Extreme Startups. Events such as the Canadian Innovation Exchange (CIX) and the GROW Conference are cementing the bonds between the Canadian entrepreneurial and investment communities, as well as providing a showcase for the talented and experienced leaders who are at the forefront of each. The foundations are now in place for an explosion of value creation over the coming few years, the rewards of which will flow back into supporting the growth of future Canadian success stories.

Canadian private equity funds have also been hard at work, reasserting their standing amongst the world’s best investors and operators in the buyout industry. Canadian firms were buoyed in 2011 by the rebound of the broader M&A market. According to data compiled by PwC’s Deals Team, Canadian deals represented 10 per cent of the global M&A market in 2011, up from seven per cent at the 2007 market peak. The overall value of Canadian acquisitions into the U.S. outpaced the value of U.S.-led deals in Canada in for the first time ever. Domestic funds were still very active in Canada, with involvement in 215 deals worth $52 billion. This represented 28 per cent of all Canadian M&A activity, measured by value, up from market share in each of the three years prior. Unlike their foreign counterparts, Canadian PE buys outpaced sales by $7 billion, signalling a robust appetite for continued growth.

Headline making deals such as CPPIB’s active participation in the $8.5-billion sale of Skype to Microsoft and OMERS Private Equity teaming up with Berkshire Partners to buy Onex Corp.’s Husky Injection Molding Systems for $2.1 billion were just a few of the transactions that propelled the Canadian PE industry to the forefront of the international stage. Low debt yields, government austerity measures, public market volatility, and a baby boomer-driven family succession wave are just a few of the factors uncovered by PwC that are expected create even more opportunities for the Canadian PE industry, proving that it indeed is a force to be reckoned with in the coming years.

CVCA 2012 Conference
And now, this spring, CVCA members and industry leaders will congregate in Montreal to focus on sustaining this momentum well into the future. We will host our  industry’s outperformers. The city provides the ideal setting for such a gathering, having long served as a symbol of Canadian excellence around the world in finance,  aerospace, transportation, entertainment, commerce, technology, pharmaceuticals, telecommunications and fashion.

With strong public and private sector commitments to both the VC and PE industries, Montreal is also in the midst of redefining itself as a global hub for  entrepreneurship and investment activities. Canada’s entrepreneurial capital is fostering an environment that is conducive to creating opportunities by leveraging  traditional industry expertise, access to capital and extended personal networks to carve out a global leadership position for both its entrepreneurs and investors.  Initiatives being held in Montreal the same week as the CVCA Annual conference, such as the Cirque du Soleil and Sid Lee sponsored C2MTL event, the  FounderFuel Demo Day and C100 AccelerateMTL events, are testament to the commitment of our local potential and recent performance.

In light of these developments, perhaps it is appropriate that instead of inviting others to “Think Canada,” we encourage ourselves to “Think Global.” We stand on the verge of an era in which Canadian entrepreneurs and investors can carry their domestic strength to the international arena, and stand as shining examples for the rest of the world. All eyes will be on Montreal from May 23 to 25, 2012 to see if CVCA members are indeed up to the challenge.

“We stand on the verge of an era in which Canadian entrepreneurs and investors can carry their domestic strength to the international arena – Chris Arsenault”

See you in Montreal in May!
Chris Arsenault is Co-chair of the CVCA 2012 Conference
and Managing Partner at iNovia Capital

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Dear Editor,

I read Preston Manning and Jack Mintz’s article (“What Venture Gap?”) in the March 8 edition of the Post with great interest and some puzzlement.

From my perspective, a significant gap has emerged in the balance between the supply of, and the demand for, venture capital financing in Canada. This gap needs to be addressed for Canada to develop the world-leading high technology companies we require to improve our lackluster record in successfully commercializing the innovations that are bubbling through our incubators, research institutions and universities. In this regard, it is worth recalling that venture capital has proven itself to be the essential building block in the U.S.,Israel, Canada and elsewhere for the development of  high growth  companies across the entire spectrum of high technology industries from  information and communications to pharmaceuticals and clean tech.

On the supply side, venture capital investing volumes are a fraction of what they were over a decade ago. In 2000, the venture capital industry invested just under $6 billion while last year that number stood at just $1.5 billion. For entrepreneurs and their companies this situation means that they are only able to raise about 40% of the capital available to their U.S. counterparts. This under funding is causing many of our most talented entrepreneurs to go to where there’s greater capital availability – namely, the U.S. – and remain there, to the detriment of the Canadian economy.

Ultimately, venture capital investments are driven off the amount of capital available to venture funds themselves. Here too, worrisome trends have developed. Major funders have all but disappeared and the venture capital industry itself is in a capital drought. For instance, in 2011 not a single dollar from outside Canada found its way into our funds.

On the other hand, demand for risk capital is surging. Governments have laid the basic foundation by their huge support for R & D through a plethora of effective support programs, the most notable of which is the SR & ED one.  Importantly, there has been considerable growth of business incubators and accelerators across the country, much like the well-known MaRS Centre in Toronto, whose activities are fostering the development of a new and vibrant generation of high technology entrepreneurs.

To sum up, venture capital supply and demand are incontestably out of synch.

And, we need to act.

Yours truly,

Gregory J. Smith

President, CVCA

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