What is VC?

Venture  capital (VC) is money invested in high risk startup companies on behalf of institutional investors like pension funds, insurance companies, endowment funds, foundations and wealthy individuals A good venture capital fund should generate returns equivalent to investing in a bank account with a 30% interest rate VC's make money when a startup goes public (IPO) or is merged or bought by another company. They also are paid fees to manage the investment fund Photo credit Chris Albinson

Chris Albinson and Anthony Lee are professional risk takers.  They work as venture capitalists in Silicon Valley, investing money in high-tech startup companies in exchange for equity.  

It's a tricky business, massive sums of money are involved, 'potential' and 'risk' preface every conversation, 'business failure' is 90% guaranteed. Not surprisingly, venture capitalists (VC's) were an unpopular lot when the dot.com bubble burst in 2000. But Albinson and Lee's new project, C100, seems to be an olive branch of sorts.   

Albinson is from Kingston, Ont., at the eastern mouth of Lake Ontario.  He invested in his first start up as a student at University of Western Ontario and arrived in Silicon Valley in 1999 via Russia and a 'credential-making' job at Newbridge Networks with Welsh-Canadian billionaire Sir Terry Mathews.

He is now a Managing Director at Panorama Capital on famous Sand Hill Road -- the high tech equivalent of Wall Street.

Silicon Valley is named for the silicon chip industry that sprung up there in the 70's. It starts at the southern part of the San Francisco Bay Area and remains the driving force in the high tech world.

Albinson says, "I thought I was coming for two years, but Silicon Valley is as close to paradise as I've found on the planet."

Lee was born in Sudbury, Ont., but grew up in Vancouver out on the West Coast. He spent his pre-Silicon Valley years racking up academic cred all over the U.S.; Princeton on the East Coast, Stanford on the west. He actually had no idea what venture capital was when he first arrived in the valley in 1994. However, by the time he joined his current VC partners at Altos Ventures he'd more than got the hang of it.

Albinson and Lee had never met before their initial get-together at the Canadian Consulate General in San Francisco a month after the Winter Olympics wrapped up in Vancouver/Whistler.

Ironically, it was the Canadian Olympic Committee sponsored 'Own The Podium' campaign that made them realize what a small group with the right support could do.

'The Israelis and Indians think of their ex-pats in Silicon Valley as a national asset, they cultivate and actively support these communities and try to connect aggressively with back home because they see the flow of ideas, capital, and people building businesses as a way of helping their economy' - Albinson Logo courtesy C100

What emerged from those meetings was C100, a non-profit member-driven organization that aims to help Canadian tech entrepreneurs bring their ideas to market.

It is made up of top Canadian executives - Victoria, BC native and former Yahoo president and COO Jeff Mallett is a Charter Member -- who work at major tech high firms like Apple, Microsoft, Google and Ebay.

They have joined together with start-up CEOs and venture capital investors from both sides of the border to help mentor, coach and advise Canadian entrepreneurs on how to make it big in business.  

"There's a lot of talented Canadians here we just never took advantage of, and a lot of  Canadian entrepreneurs who wanted an underground railroad into Silicon Valley," says Lee, "it was just the right thing at the right time."

Speaking by phone from Silicon Valley, Albinson and Lee point to The Indus Entrepreneurs from India and the California Israel Chamber of Commerce as the model for C100. These large valley-based ex-pat communities recognized that being part of the ‘tribe’ is both a business opportunity and a way to give back.

That's why Albinson and Lee are trying to connect with Canadian business incubators, venture firms and the Canadian government; they are trying to discover which of Canada's 16,000 startups have the most potential.
 

SnowSeekers: A C100 success story ... maybe
SnowSeekers is a website and smart- phone app that lets snowsport-lovers plan the perfect winter holiday. CEO Jim Barr says snowseekers can get news and updates  from 33 destinations in BC and Alta. Weather/snow conditions, happening hotels and restos, cool apres ski stuff plus much more. (@World.ca likes the 'powder alarm') To get your free SS app go here: Snowseekers.ca Photos courtesy Jim Barr

So how does it work? Twice a year, 20 of Canada's most promising high tech startups are invited to Silicon Valley to take part in an event called "48 hours in the Valley."

Invitees meet with C100 charter members, exchange ideas, receive advice and generally get a push in the right direction. Jim Barr CEO of Edmonton-based SnowSeekers attended “48 hours” in June this year:

“Being in the Valley puts it on a whole other level, we spent a morning at Facebook, we went to a cocktail party with folks from Google and Motorola .. it’s a phenomenal opportunity because now we've got connections in the valley … just to have those guys in your rolodex, it’s amazing”

C100 also run and/or co-sponsor meet-and-greet events all across Canada throughout the year. A recent Accelerate TO event in Toronto saw 650 businessmen and women take in Entrepreneur Workshops, the Investor Pitch Panel, and an evening Charity Gala & Keynote at the Royal Ontario Museum.

And last week in Toronto, they launched their next big idea; their first CleanTech conference. Albinson and Lee say C100 and events like these are all part of helping to re-invigorate Canada’s high tech sector.

In 2010, their efforts got a huge boost. The Canadian government eliminated an onerous tax rule that had effectively made Canada a no-go zone for foreign venture capitalists. Albinson and Lee say American VC's are already seeing Canada as a more attractive place to invest.

Lee says, "There is an awareness in Silicon Valley that there are great businesses up in Canada. In the last 12 months, companies like Bessemer, Matrix, Union Square, Sequoia, Kleiner Perkins, the best names in the VC business, are making fairly early stage investments in Canada, and that is unprecedented."

CleanTech The Next Big Thing
High tech VC's have Canadian CleanTech in the crosshairs. Canada is a world leader in solar, wind, biomass, hydropower, biofuels and so on Canada employs over 43,000 people in 700 CleanTech companies, almost as many as the mining industry Canadian CleanTech revenues totaled $9 billion in 2010, by 2020 this sector will be worth an estimated $60 billion Photos: Canadian Press

Nearly 100 Canadian companies have been mentored by the C100 to date. So far, they have received $350 million in investment capital. Facebook, Google, and IBM have all bought Canadian companies this year contributing to almost $2 billion in tech exits. Lee says 2011 has been the best year for Canadian entrepreneurs in two decades. Although the success of C100 should not simply be measured in dollars and cents.

C100's broader goal is to change the perception about the brand of Canadian entrepreneurship. Albinson and Lee think Canadian entrepreneurs need to draw more attention to their successes and to publicly promote the idea of 'being the best' or 'being number 1.'  That's why both like the 'Own The Podium' program so much;  it is unapologetic about putting Canadians on top.

Albinson and Lee say that quintessential Canadian reluctance to toot our own horn is actually bad for business. It sends the wrong message.

The right message, according to Albinson and Lee, is to communicate to investors that Canadians are building world-class high tech companies like Flickr, Radian6, Hatsize and Club Penguin. They believe these ultra-successful Canadian companies can compete with anyone, anywhere. 

Albinson and Lee would like C100 to be seen as part of a gigantic new opportunity for Canada. They say we need to stop looking at the migration of Canadian citizens around the world as 'brain drain.' Rather, we need to see it in terms of 'brain flow' or 'circulation.'

Venture capitalists are going where they can get the most bang for their buck. Resources of all sorts -- labour, capital, innovation -- are no longer limited by geography, they circulate. Albinson and Lee say we need to embrace this global trend, we need to reach out to our ex-pat communities, affirm their citizenship, help them grow, and then find ways to leverage the home-field advantage.