Company Logo Wednesday, January 02, 2002

Tech Capital becomes partners and mentors to entrepreneurs

Anne von Rosenbach, The Business Executive
As appeared in the January 2002 issue of the Business Executive

WATERLOO -- Tim Jackson is on the hunt for 'secret sauce.' Mention secret sauce to average individuals and they immediately conjure up visions of chicken and ribs. But, to Jackson, secret sauce is insider's code for pure entrepreneurial gold. Jackson is one of the founders of

Tech Capital Partners, Waterloo's only venture capital firm. He and his partner, Andrew Abouchar, provide investment funding for high-tech start-up companies -- companies established by entrepreneurs with talent, ambition -- and secret sauce.

Ask Jackson to decode 'secret sauce' into plain English and he chuckles.

"It means disruptive technology," he explained. "It's that unique idea that will change the way people do something. It's technology compelling enough to make a segment of the marketplace switch to a new product." And it's the key item that Jackson looks for when he considers new concepts for investment.

Through Tech Capital Partners, Jackson and Abouchar manage $35 million in two funds. Established in February 2001, the company already has three 'next-generation' technology start-ups in its portfolio -- Sirific Wireless Corp., VideoLocus Inc. and Sandvine Inc. -- and is currently negotiating to add a couple more. The two men are savvy investors and bring a track record of success to their new venture.

Before launching Tech Capital, Jackson was the CFO of Pixstream Inc., a Waterloo-based technology company that was recently acquired by Cisco Systems for $550 million, thanks to Jackson's adroit negotiating skills. Abouchar was vice-president of Working Ventures Canada Fund Inc., one of Canada's largest and most successful venture capital firms.

But it's more than smart investment strategies that has the Waterloo technology community buzzing about Tech Capital. Jackson and Abouchar have a unique management style that sets them apart from other venture capital companies. "When we invest in a company, we become partners and mentors to the entrepreneur" said Jackson. Recognizing that the scientists and engineers who come up with innovative ideas are rarely good business managers, Tech Capital takes on the job of running the fledgling companies, at least for the first year.

"We're hands-on managers," says Jack-son, "and our true value to a company is realized in those first 6­12 months." Whenever possible, Tech Capital pursues early-stage technology and tries to be the first institutional investor, so that Jackson and Abouchar can work their magic on the business from its very inception.

When Dr. Tajinder Manku, CTO of Sirific and inventor of the company's revolutionary, multi-band, wireless technology, was looking for seed money to start his business, it was exactly this personal and supportive approach that made him choose Tech Capital over other venture capital firms. "I'm an engineer, not a business guy," he said. "[Abouchar and Jackson] understood that my value was in the technical side, so they took responsibility for the business functions off my shoulders. Now, we're working as partners to make Sirific succeed."

In a world that chews through technology at a furious pace, victory--and often fabu- lous profits--go to the company that can get a product to market quickly. Acknowledging that horizons in this industry are short-term --often just 12­24 months--the Tech Capi-tal team works with portfolio companies to fast-track product commercialization. They identify potential markets, potential clients, even potential procurers of the small start-ups. They also establish partnerships with industry leaders, who help fine-tune the technology. The path to success depends on meticulously defining the product, so that the marketplace will readily accept it.

Tech Capital has narrowly defined its' geographic boundaries, focusing its investment strategies almost exclusively in the Waterloo region. This allows the innovative financiers to keep close tabs on their portfolio. Because the startups are all in close proximity, they realize economies of scale by sharing services, equipment, expertise and purchasing power. Staying local also allows Abouchar and Jackson to spot and fix little problems, before they become big ones -- a process that eliminates some of the inevitable bumps along the path to product release.

Not only do Jackson and Abouchar guide their own portfolio companies, they often mentor entrepreneurs who don't quite fit their investment profile. Jeff Butt, a founding partner of The Waterloo Networking Company (TWNC), provides a wide range of IT services, including a unique, 'virtual office' hosted network. TWNC has become a preferred service provider to the Tech Capital group and has doubled its projected growth since Jackson and Abouchar took the young company under their wing. "We added value to their clients, so they opened doors for us, gave us business advice."

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