Busy angels make a real difference
Goggles that help visually impaired see among iGan Partners’ projects
In a recent study on angel investing activity in 2014, the National Angel Capital Organization ranked Toronto-based iGan Partners as Canada’s busiest angel group — No. 1 for total capital invested and No. 3 for number of investments.
You’d be forgiven, for not knowing who they are, although they won’t be unknown much longer. Comprised of a group of angels who have been investing together for a decade, iGan Partners is now completing a $50-million raise for a second fund. And at least one of the seven companies in its first fund could become a household name: eSight Corp. produces a high-definition headset that helps the legally blind go back to work, rock-climb, or see their loved ones for the first time.
iGan founder Sam Ifergan, is an electrical engineer with an MBA from McGill. After working at NCR and then Mercer Consulting, he started investing with friends in real estate and technology. He had a gift for startups: of his first four investments, he says, “Two were successful, one did well, and one was a dismal failure.”
VisualSonics, which develops advanced ultrasound-image technology, was the big winner. Founded in 1999 by medical physicist Stuart Foster, it reached commercialization in 2003 after Ifergan invested $1.5 million. By 2010, the firm had 100 employees and was bought by U.S. ultrasound company SonoSite for $75 million.
That year, Ifergan and fellow angels Geoff Matus, Michael Stein, Michael Aron formed iGan Partners to formally manage a tech fund of startups. Javier Flores joined later. The terms: they would invest only in digital health and business-to-business software, and in companies where they can make a difference.
Ifergan contends Canada’s “ecosystem for building tech companies is damaged.” Most angels contribute less than $1 million to startups, but that’s not enough to get them to commercialization or regulatory approval, which is where venture capital funds typically get involved. A firm in early-stage limbo “is the type of company we love,” he says. And because of the scant competition, “We usually get a good deal.”
The founders pooled $10 million of their own capital and $50 million from outside investors. Half of that came from individuals and family offices outside Canada.
iGan’s first fund boasts eight companies. The B2B cohort includes numerical search engine Quandl, lawenforcement platform SceneDoc, video-exchange platform Vemba, and fundraising site FlipGive.com. The health-side comprises eSight, biomedical research platform ScienceScape, bacterial-imaging company MolecuLight, and microultrasound pioneer Exact Imaging. Ifergan says most were pre-revenue when iGan met them and are all now earning revenue — several raising more rounds of capital.
Ifergan says he’s satisfied with the portfolio’s performances so far. Four companies are exceeding expectations, two are meeting them, and two are a little behind. But iGan is patient money. “Because most of the capital is our own, we’re not swinging for the fences,” he says. “We’re really happy with a double or a triple.”
For a home run, look to eSight. Even its CEO Brian Mech, who joined eSight in April, thought the company sounded too good to be true. Its headset, which resembles virtual-reality goggles, uses proprietary hardware and imageprocessing algorithms to create enhanced images for people with what’s called “low vision.”
With this aid, new mothers have seen their children for the first time, and wounded veterans can see the faces of their spouses after decades of blurs and shifting shadows. (You can watch these viral videos at esighteyewear.com.)
The firm was founded in 2006 by Conrad Lewis, a veteran Ottawa tech executive (Newbridge, Mitel) who wondered if the photons that powered telecom could be adapted to enhance vision. He poured millions into development, but the company was running short of cash when Toronto tech investor Abe Schwartz (Polaris, Cedara) got involved. He invited iGan to the table.
Two years later, iGan has invested $9 million in eSight. “We plowed enough capital in there to re-energize the company and give it the ability to recruit the right talent,” Ifergan says.
With Mech at the helm and Schwartz as chairman, the company launched its first eSight Glasses in May. However, the headset and its hand-held control unit cost US$15,000, an issue for patients who’ve been underemployed most of their lives. Long-term, eSight expects health plans will cover the costs, especially if it means many low-vision patients can join the workforce. “This is cheaper than a Seeing Eye dog,” Ifergan says.
Mech hopes to distribute the glasses through ophthalmologists. When retinal specialists see what eSight can do, he says, “The network will build itself.”
Meanwhile, iGan expects to complete funding this month of its $50-million Rowanwood Fund II, to create a second cohort of tech stars. “Our pipeline is full,” Ifergan says.