The gently rolling hills and coulees around Springbank are home to more than just hibernating gophers and lucrative real estate value these days.
Four entrepreneurial residents of the picturesque community, located on the western edge of Calgary, are creating their own VenCap Valley with a startup investment company focusing on early-stage financing in the explosive high-tech sector.
Within the next two weeks, SpringBank TechVentures is preparing to close its first financing round, which has raised $15 million to invest in companies developing infrastructure like hardware or software in the wireless-Internet convergence and broadband areas.
“We all live in Springbank,” laughs Barb Richardson, on how fellow company principals Andrew Kyle, Barry Poffenroth and Shawn Abbott decided on the name. “And we like the connotations of springing a bank — we’re really getting in before the banks on most of these deals.”
Banking on their own extensive backgrounds in starting up successful businesses, the four launched SpringBank TechVentures in September — just before the markets bottomed out in the high-tech sector. No matter, says Richardson — the downturn has simply created a more attractive environment for investors.
Many of the early-stage companies that seven or eight months ago might have been tough to get into because they were so popular and their valuations were so high, all of a sudden are easy pickings, she says.
“But it’s kind of a double-edged sword,” she says. “It’s a little bit tougher to raise the funds right now, but it’s a lot more attractive to invest in the companies. We’re very excited about the investment opportunities we are seeing.
"VCs who raised all their money in January and February raised their money much quicker, but then they invested in companies when the valuations were outrageous. A lot of them are really hurting right now.”
“Considering we hit the market at the very worst time,” she adds, “we’ll still be successful in launching the fund, even though it’s taken a month longer than we hoped.”
The four partners have invested about $2.5 million themselves, and have set a final goal for the fund of about $25 million. They’ll target their investments towards 12 to 15 companies in the high-tech sector, anywhere from half a million up to $2 million per company, and along with the equity provide strategic advice, business plan acceleration, board representation and their investment banking connections.
Richardson believes the depth of experience between the four founders will help SpringBank thrive. Forty-five-year-old Andrew Kyle’s former company, MetroNet Communications, merged with AT&T Canada last year in a $7-billion deal, while his executive colleague Richardson, 38, won a national Trailblazer of the Year award earlier this year for her work on the execution of the merger.
Poffenroth, 45, was the senior vice-president with property developer Urbco Inc., while Abbott, 34, has provided angel capital to several successful Alberta technology start-up companies and served on their boards of advisors or directors.
“A lot of VCs are started by ex-bankers, so they understand the business and financial side very well, but they’ve never had the entrepreneurial experience of launching a successful business,” says Richardson.
She believes there are tremendous upsides to investing in “enablers” — high-tech companies developing infrastructure to support new technology, and that more people in the future will use wireless PDA-type devices than PCs to access the Internet.
“The underlying technologies to support that, just don’t exist today,” Richardson says. “It’s too slow, too expensive, you can’t get a big enough screen, or enough data. We’re really looking at companies that are developing technologies that are really going to enable those trends.”
The company plans to start investing right away, and then start a second stage of financing to increase the fund’s size.
Web Watch:
www.sbtechventures.com
