ALTRUISM PAYS BACK FOR ANGEL INVESTOR
Greg Yuel considers his first angel investment to be a move to help out a family friend and fellow community member.
It was 2002 and John Cross, a well-known innovator and contributor in Saskatoon, approached Mr. Yuel and his father for some help. At the time, Mr. Cross’ biotech company, Philom Bios, was the target of a hostile takeover by a U.S. competitor.
Mr. Yuel and his father helped cultivate a consortium of friendly investors to buy shares in Philom Bios from shareholders who would have sold out to the competitor, he said.
In October 2002, the Yuels’ group, PIC Investments Ltd. and investment group Golden Opportunities Fund bought the shares from the then-Saskatchewan Wheat Pool,to fend off the takeover by the U.S. parent company of competitor Becker Underwood, an article in the Saskatoon Star-Phoenix reported.
Mr. Yuel refers to the deal as business philanthropy to help a decent man. “It certainly wasn’t a Dragons’ Den deal. We just hoped for the best, and hoped that it would turn out,” he said.
His altruistic efforts paid off. Philom Bios was a pioneer in the field of crop inoculants, a technology that helps increase crop yield by using live microbes.
By 2007, it was sold to Denmark’s Novozymes Biologicals for $6.50 a share — compared with the roughly $3.90 the two groups paid five years earlier, an article in the Star-Phoenix reported at the time.
“Our group, we did save the business, save that company from being eaten up by a competitor,” Mr. Yuel said. “We carried it along ... We got a good return, and we were happy with it.”
Saskatoon-based PIC has made investments in more than two dozen companies, including 12 currently in the queue.
With some angel investments, including Philom Bios, the group has made successful exits, while others have failed to flourish, or were outright squashed.
“The general rule of angel investing has been borne out by our experience ... Two in 10 we hit out of the park and it pays for the rest,” Mr. Yuel said.
“Two in 10 are absolute abysmal failures, and the other six just limp along,” he added.
One investment that ran dry was a dehydrated alfalfa producer, a company he referred to as a “dismal failure.” This stemmed from in adequate due diligence on PIC’s part, he said. Although he knew the agricultural company was working through industry problems, Mr. Yuel said he and the angel fund underestimated the scale of those problems.
Despite all the time and energy he invested in making it work, Mr. Yuel said, the alfalfa producer’s managing partner wasn’t interested in or willing to listen suggestions. “Our advice became a battle with that managing partner, as opposed to our successes which have been where the entrepreneur listens,” Mr. Yuel said.
Since last January, Mr. Yuel has made five angel investments — three with PIC and two on his own, for a total of $4.2-million.
The investments he made with PIC were Warman Home Centre, a real estate developer that also makes housing materials and supplies, Prairie Plant Systems, a biotechnology firm developing plant-based pharmaceuticals, and Advantage Tower, which specializes in construction, installation and engineering for the wireless industry.
On his own, he invested in Triton Triathlon Training, Web-coaching software for triathletes and other multi-sport athletes, and a startup oilfield exploration company he will only refer to as S-Gen.
Many of PIC’s investments are in agriculture or biotech, which Mr. Yuel said is the natural result of its locale rather than a preference.
He says his main criteria for investment is whether he can be of assistance.
“If I can give myself a clue as to how much we can help them, it helps identify what our lift in that investment might be. It helps identify that we might get more than our investment back.”
Once that element is confirmed, Mr. Yuel assesses whether he believes in the company’s service or product, and whether there is a market for it. He then looks for cultural fit: whether the organization’s key players are open to advice and, frankly, “is this someone you want to go to dinner with for the next four years?”
“Once we get those three silos filled, then we’re good to go,” he said. “Then it becomes a question of negotiation: how much money and how much control.”