Saturday, January 24, 2004
Partners in the business of spotting potential
Kevin Crowley, RECORD STAFF
There is an interesting tale to be told about Tech Capital Partners and its new home.
Tech Capital is the Waterloo-based venture-financing firm run by partners Andrew Abouchar and Tim Jackson, with the able assistance of associate Jacqui Murphy.
They began looking for a bigger office last year when their original quarters in a building near Phillip and Albert streets became a bit too snug.
Since they fund technology start-ups, they wanted to stay fairly close to the University of Waterloo.
Still, they didn't rule out the downtown. After all, it's not that far from UW. And besides, there's lots going on in downtown Waterloo these days. Just think of the Perimeter Institute for Theoretical Physics, the Centre for International Governance, and the new twin-cinema project taking shape in the former Allan Rigby furniture store, to name a few developments.
While scouting for office space last year, Abouchar and Jackson learned that the TD Canada Trust building at 8 Erb St. W. was for sale. They didn't realize it at the time, but the building had a long history in the money business.
It was home to the Waterloo Trust and Savings Co. from 1913 until the company was sold to Canada Trust in 1968. In early 2000, Canada Trust was itself taken over by TD Bank. Last year, TD Canada Trust announced plans to move the branch down the block to a new building constructed by First Gulf Developments.
The upper floor of 8 Erb St. W. hadn't been used in years and the layout was cramped and boxy. But Abouchar and Jackson are in the business of spotting potential. They bought the entire building with the intention of occupying the second floor and renting out the ground floor. They inked a deal early last year but didn't take possession until Oct. 30. That gave them plenty of lead time to plan their renovations.
And renovations were definitely needed.
The heating didn't work, the wiring was suspect and the names stencilled on the doors were preceded by the word "Mr." -- a relic of a more formal era and an indication of just how out-of-date the office was.
Under the guidance of site supervisor Dave Hudspeth, the second floor was transformed into a modern office befitting the uber-cool world of high-tech venture capital.
And it was done in six short weeks.
Now when you mount the steps from Erb Street, you enter into an open space filled with light and dominated by a large painting made of acrylic and stainless steel by Elora artist Joel Masewich.
A tenant has been signed up for the ground floor, and although Tech Capital hasn't identified the person yet, they say he plans to operate an upscale restaurant.
All of this strike me as particularly significant, especially when you consider how active Abouchar, Jackson and Murphy are in the community.
All three have chosen to live in the K-W area despite having loads of opportunity elsewhere.
They are also very involved in many local groups and activities.
Jackson, for example, is president of the Food Bank of Waterloo Region. He is also a minor soccer coach, a member of the Waterloo Region Children's Museum board and he's active in Junior Achievement.
Abouchar is on the board of the K-W Symphony, while Murphy is involved in neighbourhood activities and has taught business courses at her alma mater, Wilfrid Laurier University.
All three of them are frequent speakers at university and industry forums, and they play a lead role in events such as the recent "Chapter One" conference, which was designed to encourage budding entrepreneurs and researchers to commercialize their technology.
"We're pretty dedicated to this community," says Abouchar. "We saw a business opportunity here but instead of running it remote control from Toronto, we wanted to do it hands on from here."
He and Jackson met in the late 1980s at the University of Waterloo, where they were both involved in student politics.
Abouchar graduated in mechanical engineering and Jackson in accounting, but they both went on to become chartered accountants in Toronto.
Abouchar returned to Waterloo in 1999 to manage Waterloo Ventures, a labour-sponsored investment fund.
Jackson re-connected with Waterloo in 1998 when he took a job as chief financial officer with a start-up called Pixstream Inc.
After commuting from Toronto for two years, Jackson decided to move his family here because, as he says, even if Pixstream didn't work out, the community was a great place to raise kids and there was lots of opportunity in the local tech industry.
As it turns out, Pixstream worked out in a big way.
Tech giant Cisco Systems of California bought the Waterloo start-up for a whopping $554 million in late 2000, just before the tech bubble burst.
Jackson, who was interim chief executive of Pixstream at the time, decided to take his share of the Cisco deal and go into business with Abouchar.
Their idea was to create a venture-capital firm that would advise and invest in a select group of early stage, Waterloo startups.
They soon realized they needed someone on the team who could provide marketing strategy and hands-on marketing skills. They turned to Murphy, who had performed those duties at Pixstream.
Although there are other tech investors in Waterloo, Tech Capital Partners is the only local firm to manage institutional money.
They currently manage two venture capital funds: the $5-million Waterloo Ventures fund, which is now wholly-owned by GrowthWorks of Vancouver. And the $30-million Waterloo Tech Capital fund, which includes Tech Capital's own money as well as that of institutional investors such as the Ontario Municipal Employees Retirement System and the Business Development Bank of Canada.
Abouchar, Jackson and Murphy put a lot of emphasis on the fact that they are in Waterloo and can therefore provide hands-on assistance to budding entrepreneurs.
Aside from investing money in early-stage companies, they can put a management team and marketing strategy together while the professor, researcher or grad student concentrates on their technology.
There's certainly a financial incentive for Tech Capital to be so community minded. But the $15 million they've invested in local startups has brought about $75 million into the community through outside investments.
"From a strategic perspective, it's good to be active in the community," says Abouchar. "But we do want to help build the quality of life here, too."