Difference Capital

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Funding World Class Venture Companies

Written on March 10th, 2014

What does it take to build world class venture backed growth companies? $75 to $100 million on average by one measure. A recent study by CB insights highlights that the average amount raised by about 600 private tech companies in the pre-IPO stage (valuations over $100 million) to be over $100 million.

World Class venture companies in our view are those that have the near term potential to have a billion dollar valuation, over $100 million in sales, have rocket-ship growth, kickass margins and big competitive advantages. These are not companies that will RTO into some promoted shell on the TSXV, but do a $50+ million cross border NASDAQ/TSX offering or be bought by one of the 10 tech giants for some eye-popping valuation.

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What we are doing with $100 million

Written on January 27th, 2014

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.

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DCF Portfolio Company BuildDirect Raises $30 Million Led By Mohr Davidow Ventures

Written on January 21st, 2014

Huge news this morning from one of the recent additions to our portfolio: BuildDirect announced that it has raised $30 million, led by Menlo Park-based Mohr Davidow Ventures. Recall we made a $5 million investment (Click Here for DCF Press Release) in November of this past year. It’s obviously validating to see such a large raise so soon after our investment.

By our count, this makes BuildDirect the third-largest (behind HootSuite and Shopify) Canadian private technology financing (excl. cleantech) of the past year. This hasn’t gone unnoticed by the media – within a few hours of the release numerous sites including the Globe and Mail, the Wall Street Journal and Forbes ran articles highlighting the raise (Click Here for Forbes Article)

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Difference Capital’s Two Most Recent Investments, Vena Solutions and BuildDirect, Recognized With Awards

Written on November 11th, 2013

We just closed on our investment in Vena Solutions (Announced this past Tuesday; See Release) and the company is already making us look smart – on Thursday night the company received the People’s Choice Award, the “fan favourite standout innovative solution of the year”, at PwC’s Vision to Reality Awards. Competition was stiff, including impressive growth companies such as: Bionym, Frank and Oak, Global Relay Communications, Method Integration and Thalmic Labs. CEO Don Mal, CTO George Papayiannis, and President Rishi Grover were on hand to open the TSX Exchange the following morning.

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Start-up Nation, eh?

Written on October 23rd, 2013

Is it just me or has Canada gone gaga over start-ups? I recently attended a couple of events for tech start-ups.

One was in Toronto and sponsored by the C100 organization (www.thec100.org)– a group founded by some ultra-successful Canuck tech entrepreneurs with deep connections to Silicon Valley, that want to help foster the next generation of tech superstars here in the great white north. How popular was the event? Well put it this way – it filled the former Maple Leaf Gardens!

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Tweet This – The upcoming Twitter IPO is more important than Facebook’s

Written on September 18th, 2013

If the Twitter IPO gets done and gets done successfully, it will signal a full-on late-nineties style tech bull market. Kiddie up! Yes Facebook, LinkedIn and others were key to firing up the long dormant Tech IPO machine, but Facebook’s raunchy debut left tech investors smarting for a full year and only now are they starting to smile again – see the chart below.

But now that no one is losing money on Facebook, and other smaller tech IPOs have generally been successful and investors generally have nowhere else to go with their risk capital, (Resources? – no, Energy? – not really, Emerging markets? – yuk, Bonds? – double yuk, etc.) the Tech IPO machine could really kick into high gear and Twitter could be a great measure of this.

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The Tech World is Going Private

Written on August 15th, 2013

Blackberry is likely to go private or be bought. Dell is trying to go private. Vancouver based Hootsuite raises $170 million as a private company not an IPO. Facebook stayed private as long as it could. Even Apple is buying back $100 billion of its own shares (with a little push from Carl Icahn). The tech world is increasingly moving out of the public markets into the private markets.

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The New Mad Men of Advertising

Written on August 1st, 2013

Anyone else notice that some of the biggest names in tech are really just modern advertising companies? Google’s search-driven ad business is by far the largest and then there is Facebook’s rapidly growing targeted social advertising. But even Amazon is really just a smart marketer (with logistics) and many of the other big Internet names like Twitter are also advertising driven. About 22% of global advertising is now digital according to eMarketer and this is expected to grow significantly.

So how is the old advertising world coping with the arrival of this new threat? Judging by the $35 billion merger we just saw announced of advertising giants Omnicom and Publicis, it is scrambling to cope with the rapid changes.

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TV and Tech – A World of Opportunities

Written on July 22nd, 2013

This week, for the first time ever, television shows not aired on traditional TV networks, have been nominated for Emmy awards. Of particular note is Netflix’s House of Cards (Kevin Spacey) which just received several nominations and is the first original online show to receive a primetime Emmy nomination.

Who woulda thunk a few years ago that “Internet TV” would soon be producing content on par or better than the big traditional networks. To watch this content you need an internet connection and a Netflix account – not a Rogers or Bell cable package. And when Netflix launches a series like House of Cards, it releases all the season’s episodes at once. You watch them when you want, from whatever device you want, from wherever you are. Unlike traditional linear TV, when we all had to make sure we were in front of the tube at 9pm every Wednesday nights to watch Bubbles on Trailer Park Boys (oops, did I just say I watched Trailer Park Boys!)

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Lessons from Blackberry

Written on July 4th, 2013

Blackberry (i.e. RIM) may not be Canada’s most valuable tech company (especially after the last few days) but it is still by far the most visible. And that’s unfortunate. Because its troubles continue to mask a sector we think is in full revival. If we look at the three month performance of the many other Canuck tech names [See chart] you can see this clearly.

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