We held our first-ever Investor day last week and even the most optimistic of us “DCFers” were surprised at the turnout and reception we got from Bay street. We “maxed the fire code” (club speak for “at room capacity”) with upwards of 100 investors, analysts and bankers in attendance. The purpose of the day (morning actually) was to show what we’ve been doing with the $100 million we raised last summer plus the $85 million raised before that.
There are infinite ways one could invest a $185 million portfolio, and we believe we’ve stayed true to the core strategy we’ve always communicated. The majority of the portfolio is deployed towards exciting later stage “pre-public” private technology, media and healthcare companies.
As a reminder, our strategy is based on a few key assumptions, ones which 2013 trends only reinforced:
- Resources out, growth in – The commodity super-cycle has slowed and as a result there continues to be a large fund flow in Canada from resources into other growth segments – in particular Technology, Media and Healthcare
- Scarcity of Growth – Given the limited supply of growth names in Canada, this fund flow is creating an imbalance of demand and supply for equity in new growth companies.
- Great Investable Product Cycles – We are in the midst of several tech product cycles – including Mobility, Cloud Computing, Big Data, Social Networking and the Internet of Things, all while Content continues to increase in value
- Where we add value – As a team, Difference Capital, with its expertise in capital markets, can add the most value to a private growth company when it is in its final years before becoming an IPO or M&A candidate. Our team now boasts collective experience exceeding a century of expertise in the tech, media and healthcare sectors– just look at the grey hair on some of the partners!
- Private investing opportunity – We believe Canada’s private tech universe currently offers a stronger opportunity than the public space. Both quantity and quality are trending higher as we see stronger private companies holding off on go-public transactions longer as more private capital becomes available and the hurdles and costs of being “truly” public go ever higher. Many good private names may never need to go public.
With this strategy in mind we have made some very important investments in the last few months. At our investor day we invited seven of our investee companies to present their exciting stories to demonstrate how our strategy is unfolding. These presenters included:
- BuildDirect – the leading ecommerce play in building materials (check’em out at http://www.BuildDirect.com)
- Vision Critical – leader in next generation market research (www.visioncritical.com)
- Thunderbird Films – Canada’s emerging media content play (can’t wait for Blade Runner II!) (www.thunderbird.tv)
- Bluedrop – A leader in computer-based training which has just completed an incredibly exciting transformative takeover (www.bluedrop.com)
- Baanto – developer of the next generation touch technology for all screen sizes (www.baanto.com)
- Vena Systems – The only corporate performance management systems that allows an MS-Excel front end (www.venasolutions.com)
- Virgin Gaming – the leader in online console-based tournaments for cash and prizes (www.virgingaming.com)
We also highlighted some of our other investments including BTI Systems (infrastructure for Cloud services) and QuickPlay Media (leader in TV Anywhere services). Most of these companies are in that sweet spot of late stage pre-public. For many of them, we have strong and highly-regarded co-investors including OMERS, Bain Capital, Mohr-Davidow & Wellington Financial.
These days we are more excited than ever about where we are taking your portfolio and how the major market dynamics are working in our favour.
Now back to managing that $185 million….If you want more information from our investor day, please feel free to reach out to us.
Tom Astle, CFA, P.Eng, Head of Investment Strategy, Difference Capital