I'm not sure if this somehow breaks the HN guidelines but needing to use flash to read this or even download the pdf if you want to is absurd.
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The Adamou Rant
Venture Capital, Government Incentives and Research In Motion.
I had a copy of Rod McQueen’s biographic account of the development of Research In Motion, Blackberry: The Inside Story of Research in Motion delivered to me recently. I congratulate McQueen on his diligence and his behind the scenes access to the company. The events that conspired to make RIM a success are well worth the read.
This book is a must read for SME’s, governments, venture capitalists and investors alike; it is an excellent behind the scenes account of the struggles that RIM faced at the early stages of development within the Canadian financing environment. RIM raised seed money through founders shares, they raised money through the hiring process, they raised money through their employees, they raised money from strategic partners, they borrowed against working capital lines and against their mortgages – and all of this before they completed their first venture round of financing. Their perserverence, and their “do what needs to be done” attitude which can best be described as fearless, should prove to be an inspirational tale of confidence to every entrepreneur and CEO in this country.
This account also highlights the hybrid nature of the Canadian venture capital industry; RIM is the perfect example of the value that the public markets bring to smart, prepared and persistant entrepreneurs. Venture capitalists and portfolio managers should take note that the traditional rules of venture capital in Canada were broken to accommodate RIM’s needs. RIM was weeks away from a bank forced shut down of their business through a liquidation of their inventory, a struggle that far too many entrepreneurs and small business people suffer through every day. They turned to traditional VC’s and got nowhere fast. They survived only because they landed in the hands of the right investment banking boutique partnered with the right venture capitalist combined with a group of public equity mutual funds and an adequate system of securities rules. There was no doubt in my mind when I first looked at RIM in 1996 that they were on to something big, unfortunately the traditional VC oligarchy at the time suffered from the same “VC group think” that prevails today: rather than looking at the realizable potential of the business, the VC’s were looking to juice their returns by taking advantage of RIM’s financial difficulties and through the imposition of complicated and one sided agreements. The VC’s were looking to join together in order to bend RIM to their collective will – rather than to take a chance on a risky venture. They were willing to see it fail, rather than to change their documentation.
So why did this deal get done? Working Ventures – the fund that employed me at the time and that was funded wholly by retail investors via government tax credits, developed into a hybrid public/private equity venture fund. Most of Working Ventures’ employees had no background in the venture capital business because the senior management team, led by James W. Hall, decided to eschew the old school VC network for new blood with new ideas. I, as a twenty something year old at the time, was able to succesfully pitch and to receive approval from senior management for a “public markets team” whose role was to leverage our strengths as venture capitalists with the money of traditional mutual funds to create an avenue for younger companies to access greater pools of capital without the sometimes oppressive requirements of private equity venture funds. Through this process, we invested in a number of tremendously succesful publicly listed companies in the mid 1990’s, including SXC Health Solutions, MKS Inc., Enghouse Systems, Leitch Technologies, Dalsa Corp., Alarmforce Inc., Hemisphere GPS, Nuvo Networks Inc., Virtek Systems and many, many others at a time when venture ...
Very interesting write-up. Though without further knowledge of the matter going to have to take some of the points with a pinch of salt. Regardless, there is universal criticism of Canadian VCs by pretty much everyone really. Including the VCs themselves.
The end result of this is that companies looking for serious investment go down south.
It's unfortunate, but necessary. And honestly, our financial climate mirrors that of our actual climate. It's colder and harsher, but if you can persevere and survive you come out a lot stronger for it. Those that want warmer weather (easier funding) go down south.
Interestingly the startup landscape in Canada is looking a lot stronger relative to how it did, relative to the US. There's a big trend nowadays to bootstrapping and a focus on revenue generation - which is precisely what Canadian startups have had to be doing this entire time.
As a survivor of a many startups you do start to get the default position that any law/deal/environment that VCs object to is automatically a 'good thing'.
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The Adamou Rant Venture Capital, Government Incentives and Research In Motion.
I had a copy of Rod McQueen’s biographic account of the development of Research In Motion, Blackberry: The Inside Story of Research in Motion delivered to me recently. I congratulate McQueen on his diligence and his behind the scenes access to the company. The events that conspired to make RIM a success are well worth the read. This book is a must read for SME’s, governments, venture capitalists and investors alike; it is an excellent behind the scenes account of the struggles that RIM faced at the early stages of development within the Canadian financing environment. RIM raised seed money through founders shares, they raised money through the hiring process, they raised money through their employees, they raised money from strategic partners, they borrowed against working capital lines and against their mortgages – and all of this before they completed their first venture round of financing. Their perserverence, and their “do what needs to be done” attitude which can best be described as fearless, should prove to be an inspirational tale of confidence to every entrepreneur and CEO in this country.
This account also highlights the hybrid nature of the Canadian venture capital industry; RIM is the perfect example of the value that the public markets bring to smart, prepared and persistant entrepreneurs. Venture capitalists and portfolio managers should take note that the traditional rules of venture capital in Canada were broken to accommodate RIM’s needs. RIM was weeks away from a bank forced shut down of their business through a liquidation of their inventory, a struggle that far too many entrepreneurs and small business people suffer through every day. They turned to traditional VC’s and got nowhere fast. They survived only because they landed in the hands of the right investment banking boutique partnered with the right venture capitalist combined with a group of public equity mutual funds and an adequate system of securities rules. There was no doubt in my mind when I first looked at RIM in 1996 that they were on to something big, unfortunately the traditional VC oligarchy at the time suffered from the same “VC group think” that prevails today: rather than looking at the realizable potential of the business, the VC’s were looking to juice their returns by taking advantage of RIM’s financial difficulties and through the imposition of complicated and one sided agreements. The VC’s were looking to join together in order to bend RIM to their collective will – rather than to take a chance on a risky venture. They were willing to see it fail, rather than to change their documentation.
So why did this deal get done? Working Ventures – the fund that employed me at the time and that was funded wholly by retail investors via government tax credits, developed into a hybrid public/private equity venture fund. Most of Working Ventures’ employees had no background in the venture capital business because the senior management team, led by James W. Hall, decided to eschew the old school VC network for new blood with new ideas. I, as a twenty something year old at the time, was able to succesfully pitch and to receive approval from senior management for a “public markets team” whose role was to leverage our strengths as venture capitalists with the money of traditional mutual funds to create an avenue for younger companies to access greater pools of capital without the sometimes oppressive requirements of private equity venture funds. Through this process, we invested in a number of tremendously succesful publicly listed companies in the mid 1990’s, including SXC Health Solutions, MKS Inc., Enghouse Systems, Leitch Technologies, Dalsa Corp., Alarmforce Inc., Hemisphere GPS, Nuvo Networks Inc., Virtek Systems and many, many others at a time when venture ...
The end result of this is that companies looking for serious investment go down south.
It's unfortunate, but necessary. And honestly, our financial climate mirrors that of our actual climate. It's colder and harsher, but if you can persevere and survive you come out a lot stronger for it. Those that want warmer weather (easier funding) go down south.
Interestingly the startup landscape in Canada is looking a lot stronger relative to how it did, relative to the US. There's a big trend nowadays to bootstrapping and a focus on revenue generation - which is precisely what Canadian startups have had to be doing this entire time.