Wellington Financial Launches $300 Million Fund V

It has only been three years since we closed our $200 million Fund IV, but we are about to press release the first close of Wellington Financial Fund V, our new $900 million investment program.

Wellington Financial Fund IV, capitalized with $200 million of re-circulating equity capital in 2012, was a successor fund to three previous entities. Fund IV committed more than $225 million via 28 growth capital transactions over a 3-year period.

Fund V is already well on its way to reaching its “hard cap” of $300 million of re-circulating equity commitments. As you can imagine, we are honoured to have earned the sustained confidence of institutional investors, entrepreneurs and their venture capital partners. Fund V positions our firm to provide entrepreneurs with anywhere from $2 million to $40 million of growth capital per company. Entrepreneurs need comfort that firms such as ours can grow with them as their needs evolve, and this new fund can do just that.

That’s the real change between Funds IV and V: the ability to grow with firms as they pass from being sub $10M revenue businesses to upwards of $50M or even $100M in revenue. That’s when capital needs start to get very meaningful, and CFOs would far rather stick with the folks who got them there then start over in a new relationship.

With this latest fund, we have raised over $700 million of capital from the private institutional limited partnership community since 2004 –- more than any other early / mid stage innovation-focused fund in Canada during the same timeframe. Our new vehicle is positioned to support the occasional private equity-backed transaction, too.

We are also announcing today the recent addition of Ash Vaidya as a Partner in the Silicon Valley office. Mr. Vaidya, a graduate of Cornell University, has a wealth of experience in the venture debt industry on both sides of the border. He joins Wellington’s existing California-based team of Paul McKinlay (Silicon Valley) and Eric Speer (Santa Monica).

Wellington Financial Fund V will continue to follow the same proven model by assisting both public and private companies with a demonstrated customer following, minimum of $5 million in trailing revenue, talented management and well-defined growth strategies.

Thanks to every one of our limited partners for the ongoing support and confidence in our team!


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Wellington Financial Fund III portfolio co. Wmode acquired by Silicon Valley-based AppDirect

I must admit that October 2006 seems like a long time ago.

That was the month we closed a $5.5 million financing for Calgary’s Wmode, our third financing in a fund that was just a few weeks old at that point. We went on to complete 50 different financings in Wellington Financial Fund III, and the fact that several members of that cohort have been acquired in the space of the past few months (Softgate, Bluestreak and InterAct911) speaks to the energy and focus that their management teams have brought to bear over a considerable period of time.

Wmode is a leading technology and service company in the connected device, mobile and app-ecosystem sector. Wmode operates a comprehensive suite of managed services for the recruitment, development, management, discovery, delivery and payment of mobile apps, content, and consumer services. Clients include large telecommunication device manufacturers and enterprises.

There aren’t enough tech investors in Calgary, and one can hope that this successful exit will encourage other Angels and institutions to invest in the local innovation economy. Wmode was able to productively and cost-effectively use our fund’s capital for almost 6 straight years, and our True Growth Capital will always be substantially cheaper than either the cost of equity, or the implied 20%+ IRR of a royalty financing, for example. But that doesn’t mean we don’t need VCs and other equity partners.

They Silicon Valley-based buyer in question is backed by VCs from both sides of the border. Although the deal was signed last summer, it only became public a few days ago.

The folks over at Grenville Royalty Corp. came on to the Wmode scene in November 2013, and announced their return on Wmode under the guise of the company bringing in “new investors”. Since we backed the management team 7 years prior to this particular royalty financing, long before it was EBITDA positive, I thought it would only be fair for us to round out the story.

Congrats to Bert Bertolin (CEO), Bob Woodward (CFO) and the Wmode investor base. You did it!


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Wellington Financial Provides US$13M Growth Capital Financing to Aquam Corp

It has been a busy August and September here at Wellington. Over the next few days, you’ll start to have a sense of exactly why…. Today we announced a US$13 million venture debt financing for Aquam Corporation, a world leader in water infrastructure support, rehabilitation and diagnostics.

Aquam is the parent company of Oshawa-based Nu Flow Technologies, an innovative small diameter pipe lining manufacturer, pipe lining installer Nu Flow, and global pipeline assessment and inspection technology provider JD7. Together, these entities address aging water infrastructure in the developed world through lower cost, less disruptive, and longer lasting solutions. In the United Kingdom, Aquam provides standpipe hire and ancillary services to large water utilities.

Aquam is a leader and innovator in a number of water-related services businesses around the world. Our non-amortizing True Growth Capital was the right type of financing to help the company get to the next level. The Innovation Economy is a large bucket, and applied water technologies are definitely at the forefront.

Aquam is backed by Walsingham Fund, Turtle Creek Asset Management, and GLH Asset Management.


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Kasting 4 Kids event breaks the $1M mark for Holland Bloorview Kids Rehabilitation Hospital

Life can’t be all about work, which is why we’ve always made community and charitable involvement a priority.

If you were one of the 650 people at the Canadian Art Foundation’s fundraiser last night, you’d have seen our logo among the corporate sponsors for what was probably our 7th or 8th consecutive year. The Foundation helps bring as-yet undiscovered artists into the consciousness of collectors, galleries and the media, which is something any early-stage entrepreneur can sympathize with. Our firm’s walls are dominated by the art of emerging and established Canadian artists: oil, acrylic, photographs, neon; a bit of everything. And with a few hundred meetings each year, the art gets exposed to plenty of eyeballs.

Many of our portfolio companies share our passion for the greater good, and today seemed like an appropriate day to highlight one of them. Real Matters, a leading provider of property insights to the North American mortgage and property and casualty (P&C) insurance industries, recently announced its charitable foundation had raised $1 million since the 2010 launch of Kasting 4 Kids, its annual fundraiser for Holland Bloorview Kids Rehabilitation Hospital.

Over the past six years, leaders in Toronto’s financial and professional community have stepped up making the Kasting 4 Kids event one of the largest fundraisers in support of Canada’s largest children’s rehabilitation and complex care teaching hospital.

Wellington Financial

Holland Bloorview is a global leader in applied research, teaching and learning, and client and family centred care. It pioneers innovative treatments, therapies and technologies that give children with disabilities the tools to participate fully in life. Serving children from birth to 19 years old, the hospital has approximately 580 inpatient admissions and 55,000 outpatient visits each year from across the province, Canada and around the world.

Jason Smith, President and CEO of Real Matters, is the founder of Kasting 4 Kids and pulled it all together. It’s not that golf isn’t a great mechanism to raise money, but Jason is right that fishing is ultimately more relaxing. Even fly fishing. And it doesn’t take 5 hours to get it into the hole.

Many early stage entrepreneurs don’t have the financial resources and contacts that Jason does, but there are lots of ways that your own team can have a positive impact on the community. Try the Executive Sleep-out at Covenant House. Plant some milkweed with the PortsToronto team. Sign up for Bullfrog Power’s renewable energy.

Or just a take a moment to thank Jason and his team for making the Canadian innovation economy look good.


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PE HUB article on Wellington Financial’s 15th anniversary

ICYMI, here is an article by Kirk Falconer about our firm’s 15th anniversary that appeared online yesterday.

Wellington Financial’s McQueen spots opportunity in an uncertain market

Mark McQueen, president and CEO of specialty finance firm Wellington Financial, sees opportunity for private debt providers as a result of volatile equity markets, especially if continued uncertainty creates challenges for tech companies seeking risk capital.

“You sense a mood among private investors on the equity side who are sensitive to shifts in stock markets,” McQueen told peHUB Canada. “As we see from time to time in the wake of big equity corrections, there’s always the possibility of retrenchment.”

Stock values have recently swung back and forth due to China’s economic slowdown, commodity price declines, and other factors. A report by Buyouts, a peHUB Canada affiliate publication, suggests uncertainty born of the correction is causing private equity investors to step carefully, and may delay some transactions.

McQueen feels this situation could open doors to alternative capital sources, including innovation-focused lenders like Wellington.

“Technology companies need to raise financing in good times and bad,” he said. “If the IPO window is shut, companies with great growth profiles will be looking for the most efficient way to raise capital,” he said. “I think there’s an opportunity for us to play a role.”

Toronto-based Wellington, which this month celebrates the 15th anniversary of its first growth financing, provides term, venture and amortizing loans to Canadian and U.S.-based companies, the bulk of which are in technology sectors. Transactions range from $2 million to $30 million in size and typically engage companies with current year revenue in excess of $5 million. Most of these are venture-backed.

Wellington’s investment pace has been steady over ups-and-downs in market cycles, McQueen said. He believes this owes to consistent demand for a “flexible, less dilutive and cost-efficient capital solution” that offers an all-weather alternative to traditional bank debt and equity.

McQueen believes Wellington has an additional advantage in its experience and knowledge about innovative ecosystems. These qualities count for a lot in a period of uncertainty, he said. They may also account for Wellington’s recurring partnerships with VC firms and entrepreneurs on both sides of the Canada-U.S. border.

The firm’s current fund, Wellington Financial Fund IV, has so far made $43 million of loan commitments this year, putting it on track to match the $90 million deployment of 2014. Much of this activity has been in the United States, where 32 of the last 40 financings were located.

Intensified U.S. deal-making is the result of Wellington’s lending model, which “helps companies through a non-amortization structure,” McQueen said. The firm also had the good luck “of showing up on the heels of the financial crisis, when American VCs were looking for new partners.”

Wellington has been just as active exiting portfolio investments. To date this year, it has chalked up five closed and pending realizations. They include Bluestreak Technology, a video solutions platform bought by Espial; Xactly, a sales incentives software company that wrapped up an IPO on the NYSE; and Maxymiser, a marketing cloud tool acquired by Oracle.

Liquidity events will augment the firm’s “already attractive” risk-adjusted returns, which since inception have averaged net 9.5 percent, McQueen said.

McQueen believes there is room for more exits in the near future, despite uncertainty: “It shouldn’t drive away the best technology buyers.” He is less optimistic about technology IPOs.

McQueen co-founded Wellington in 2000 with Ken Rotman, managing director of Canadian private equity firm Clairvest Group. The publicly listed Clairvest, which also manages institutional partnerships, has been Wellington’s lead investor, helping it to raise a total of $440 million via four funds. The largest, Fund IV, raised $200 million in 2013.

Over time, the firm has led close to $600 million in private debt financings from its offices in Toronto, San Francisco and Santa Monica, Calif.

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