Thursday, September 02, 1999
'Seed' fund will help area's young tech firms; Waterloo Ventures to focus its investment attention on 'early-stage' computer companies
Mike Strathdee, Record staff
A Waterloo company is preparing to unveil a $5 million seed capital fund which will invest in small area technology firms.Waterloo Ventures will formally launch its efforts on Sept. 23, at a late afternoon reception. The location of the event has yet to be finalized, said fund manager Andrew Abouchar.
Abouchar is managing the fund on behalf of Working Ventures Canadian Fund, one of the largest labour-sponsored investment funds in Canada.
The project has been established under Ontario's Community Small Business Investment Fund, a program that allows labour-sponsored venture capital funds to avoid paying penalty taxes they have incurred after failing to meet government investment deadlines.
Community investment funds of up to $10 million are designed to address the needs of companies which are too small to be able to get financing from larger venture capitalists and other traditional lenders.
Waterloo Ventures is the third community business investment fund in which Working Ventures has put money.
Two other funds, the Sunnybrook Working Ventures Medical Breakthrough Fund in Toronto and the Working Ventures Canadian Medical Discoveries Queens' Scientific Breakthrough Fund Inc. in Kingston, are already up and running.
Canadian Medical Discoveries, another labour-sponsored fund, is a co-investor with Working Ventures in the latter fund.
Waterloo Ventures, incorporated last December, was to have been formally launched in February.
Abouchar, a former vice-president at Working Ventures, became the manager at the beginning of August after Tobi Jenkins, the person originally hired to run the fund, stepped down.
Jenkins remains as chairwoman of the seven-person Waterloo Ventures board.
Under the provincial legislation, community investment funds must be sponsored by a municipality or educational institution. Wilfrid Laurier University and Conestoga College agreed to co-sponsor Waterloo Ventures after being approached late last year.
University of Waterloo was approached about participating and has had a series of discussions with Working Ventures. But UW had a number of concerns about its liabilities and responsibilities, as well as the narrow focus of the fund.
Waterloo Ventures will focus on early stage computing firms, such as Internet service applications and enabling technologies, Abouchar said. "We do need to focus somewhere."
Abouchar, a 1988 graduate of UW's mechanical engineering program, is familiar with business financing needs and this area. He spent five years at Cooper's and Lybrand in Toronto, doing accounting and management consulting work.
He then moved to Working Ventures, doing a mix of technology and other investments, as well as earning his chartered financial analyst designation.
Other members of the Waterloo Ventures board include: venture capitalist Richard Black of Helix Investments; Peter Schwartz, chief executive officer of Descartes Systems; Jim Balsillie, chairman of Research in Motion; Jim Whittaker, vice-president of investments at Working Ventures; and Ron Craig, a business professor at WLU.
Waterloo Ventures will play a role of plugging entrepreneurs into a network of venture capitalists, Craig said.
"A number of the high-tech companies have to go through a number of (financing) rounds before they take off."
Working Ventures will likely invest $250,000 to $500,000 in any one company as an initial investment, Abouchar said. The fund is limited to putting a maximum of 20 per cent of its assets in any one deal.
"The first thing we need to do is get more seed capital in the community, and the way to get more seed capital is with (Waterloo Ventures) success."Abouchar has already looked at half a dozen deals, and expects to see many more in coming weeks. "My objective over the long run is to be top of mind for entrepreneurs who want to get something started."