Going in ‘reverse’
Reflections on raising financing
LeoNovus, which develops technology that delivers Internet content to televisions, was born out of a reverse takeover in November 2010.
Then known as Personal Web Systems, the firm was acquired by Work Horse Capital for $5.8 million, with the merged entity also raising a private placement of $3.1 million.
Chief executive Gordon Campbell was there through the discussions of the deal and shared his impressions with Ottawa
Technology’s Elizabeth Howell.
ON HOW IT ALL BEGAN:
“It wasn’t really a classic pitch insomuch as it was more of an introduction. Dan Willis is our chief architect. He’s Canadian. Dan had started a company called Adscape Media in Ottawa and because it was doing real-time advertising inside games, he felt he needed a presence in Silicon Valley. His company was later acquired by Google. After the acquisition, he joined us.
Dan went up to Canada to start to put a group together in Ottawa, and was introduced to ( Work Horse CEO) Mike Inskip by a mutual acquaintance. ( Mr. Inskip) was looking to do some financing of technology startups, so the introduction led to more discussions. Mike came down and visited us here, and when he visited, I guess he liked what he saw.”
ON THE PITCH:
“ You need to be able to explain it in a few minutes, or an hour, or anywhere in between. If you boil it down to our vision, it is that all of our displays will connect to the Internet and will benefit from that capability and functionality. That’s on the very simple side of the explanation.
Then, of course, you can go to the other side of it where you’re talking a little bit more in-depth about the capabilities and the different things: how smart agents can go out and search for the content on the Internet, and things like that.
If you only have a few minutes, you need to distil it into the most important elements to try to get the message across. If you have more time, you can flesh out the story more.”
ON THE NEXT STEPS:
“I think from start to finish, it was something like six months. It’s not an overnight process.
You have to have your financials. If you haven’t been auditing them – which we did – you have to go out and find an auditor. You have to have a business plan in place. You have to go through the legal due diligence where you have to make sure that you’re a corporation in good standing.
We went into the process reasonably well-organized; we’ve been through the IPO process several times before, whereas some startups, they may be new at this.”
SUGGESTIONS FOR STARTUPS:
“If you have a compelling product and compelling vision and really good people, I think it’s much easier to finish a financing round than it is if you’re missing any of those elements. In some cases, you may have a compelling vision, but it may be too far out on the cutting edge to get investors.”