Seed financing for technology startups is a risky business.

More and more wired companies are bursting on to the market, but few venture capital firms and investors are willing to weigh in with the financing these companies need to succeed.

“We really felt the technology space in Canada was grossly under-served,” says Launchworks president Stephen Kenny. “We wrapped ourselves in the flag to ensure Canada participated in the knowledge-based economy, but we also felt we could build something.”

What Launchworks has built, according to Kenny, is a unique model in the venture capital space.

Launched in February of 1999, the company says it is trying to address the shortage of risk capital available in Alberta and across the country. By its estimates, 60 to 70 per cent of companies are left out in the cold — stuck between family money and the next round of financing.

“We see a lot of companies get in that gap and they can’t get access to funds and resources,” he says. “So they do things like go public too quickly, but they’re an early-stage company and they get orphaned out there all the time.”

For Launchworks, it is that desperate demand that may go a long way to securing the firm’s future in the venture capital space. Admittedly, the less than two-year-old company is aggressive, pushy and prepared to take a risk.

“We understand coming in that management teams aren’t flushed out, that boards aren’t flushed out,” Kenny says. “We go into these deals knowing there are shortcomings . . . we go in knowing that stuff isn’t there.”

For Launchworks, filling in those blanks is all part of its investment philosophy. Partners receive between $500,000 and $3 million in financing, which typically converts into a 25- to 45-per-cent equity position. By controlling less than 51 per cent of a company, Launchworks is able to maintain influence instead of authority.

“That’s important because we want to make sure entrepreneurs have passion,” Kenny says. “If you take too much away from them, you can mitigate that passion.”

Since August of 1999, the venture capital firm has completed 10 deals. In its third round of financing, Launchworks has secured $32 million. The still-private company says it plans to go public as soon as the market situation improves and feels by then, its niche will be even more secure.