Times Colonist

Flock North receives $15 million

Tech pick-me-up helps attract more venture capital

- KATIE DeROSA

A $15-million injection into a U.S. company’s Victoria arm signals that the city’s high-tech industry can still attract muchneeded venture capital, says a leading expert in the local tech sector. It also emphasizes the fact that even amid a major credit crunch in the U.S., there is always money for new ideas and top talent.

The San Francisco-based social web browser Flock has secured $15 million in venture funding led by U.S. powerhouse Fidelity Ventures. Most of that money will go to Flock North, the company’s research and developmen­t branch in Victoria, as it hires new engineers to continue innovative research and developmen­t, said Flock’s vice-president of engineerin­g Clayton Stark.

Flock’s financial pick-me-up represents a major boon for the entire high-tech community, said Dale Gann, vice-president of the Vancouver Island Technology Park which houses many of the city’s top companies.

“I think that for Victoria to raise $15 million in one deal, that's really significan­t in the space we’re in.” Strong venture capital funding like this can signal to other investors that Victoria can breed the creamof-the-crop talent it takes to build a successful company, added Gann.

Half of Flock’s 40 engineers and researcher­s work out of the Victoria office which opened last year. Flock ranked sixth on PC World’s Top 100 Products of 2008, falling just behind major names like Facebook and Apple iPhone on the on global computer magazine’s list.

Last year, venture capital from California firms alone hit $13.8 billion, compared with the $2.3 billion from Canadian firms and $230 million shelled out in B.C., emphasizin­g the fact that local companies are all vying for investment­s from rich investment banks south of the border.

Mark Heesen, president of the National Venture Capital Associatio­n — a Virginia-based trade associatio­n that represents the U.S. venture capital industry — said economic woes won’t necessaril­y tighten the venture capital’s purse strings because firms invest in a company with a vision five or ten years down the road. “The economy today is not as critical as what the economy is going to be several years down the pike.”

Where the economic climate does play a role, said Heesen, is for a later-stage company that a firm continues to shepherd along. The market downturn might make it more difficult for that company to go public or be bought out by corporatio­ns that have had to adopt more conservati­ve buying strategies.

GenoLogics CEO Michael Ball, whose company raised $5 million in funding in 2005 and another $5 million in 2006 financed by Seattle-based OVP Venture Partners, said the major challenges for Victoria companies in acquiring venture capital is that the investors are sometimes looking for a 10fold return on their money.

In order for a company to deliver that, they have to grow to a large size and sell to a very large market, he said.

His company provides lab and scientific data management solutions in the pharmaceut­ical and biotechnol­ogy markets

In the case of Flock, the company says its user base has increased by more than 250 per cent and revenue has grown by more than 400 per cent since the beginning of the year.

Stark hopes the latest round of financing will be the company’s last, that it will be enough to bring it to profitabil­ity.

But with $30 million in private equity to date, Stark said venture capital investment, especially from the U.S., has been essential to the company’s growth.

“It’s a lifeblood,” he said. “We're fortunate that exactly what we're doing is significan­t right now.”

Right now, venture capital firms are keeping a close eye on developmen­ts in green technology, an area that has become a market trend in Victoria, said Kelly Edmison, CEO of the Vancouver-based venture capital firm, Pender Growth Fund.

One example, he said, is Carmanah Technologi­es which went from $4 million a year in revenue to $60 million under their wing. Edmison said his firm is now considerin­g investment­s in other Victoria companies that have been making advancemen­ts in green tech but he could not say which ones.

In April, the B.C. government launched a $90-million venture capital fund to give a boost to emerging companies in the tech and life sciences sector. Gann said the Renaissanc­e Capital Fund is a boost for local firms trying to garner internatio­nal attention and investment in their product.

“Victoria is realizing it can develop good ideas, wrap a good management team around it and attract really good talent to the area and secure venture capital for its idea,” said Gann.

 ??  ?? Clayton Stark hopes the latest round of financing will be enough to bring the company to profitabil­ity.
Clayton Stark hopes the latest round of financing will be enough to bring the company to profitabil­ity.

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