You’d almost be tempted to say that the Canadian early stage VC industry is on a roll.
A $65-ish million purchase price (I’m told, anyway) for Toronto’s Rypple Inc., from none other than Salesforce.com, is a nice exit indeed with just $13 million invested (hat tip Matt Hartley) over two VC rounds, including the initial seed funding. Assuming the VCs (Edgestone, Bridgescale and Extreme Venture Partners) owned, say, 30 or 40% for their ~$11 million collectively invested — a 2.5 or 3x return in the space of a year or two makes for a fabulous IRR.
For co-founders Dan Debow and David Stein, this counts as their second exit in just four years, with the US$227M acquisition of their prior deal (Workbrain) seeming like a distant memory to many of us; my, how I feel older post-financial crisis. Think Greg Kiessling, Phil Deck, Mark Burton…. These are the names of a few of the members of the small club of Ontario entrepreneurs who can count multiple successful tech exits to their name, and Dan and Dave are in fine company with today’s news. And in Canada, where we are told there are no repeat entrepreneurs. Dan and Dave are young enough to do at least two more; not that Salesforce is going to ever let them go, mind you. But their Double Gold track record will definitely serve to encourage the hundreds of local entrepreneurs who slave away each day in the hopes of similar success. The ecosystem needs mentors and these two fit the bill.
On the VC side of the equation, this quick success earns Bridgescale its first high profile home local run since they put the pedal to the metal on the Canadian investing theme. I might be dreaming, but perhaps the Canadian LPs who were supporting Bridgescale’s new fund effort could call around to their buddies and make the Continental fund strategy finally come to pass (see prior post “Bridgescale and Edgestone demerge” Sept 20-11), now that Rob Chaplinsky and his partners have demonstrated that they, indeed, are executing their plan exactly as billed.
As the original VC investor, Edgestone reminds us how important it can be to “dance with the woman that brung ya”. You see, Bryan Kerdman was also an original backer of Workbrain, so he was the natural first call when the Rypple guys decided to try to do it again.
Unfortunately, Edgestone Ventures didn’t receive timely support for their new fund (# III) from the key government investors and 3rd party managers who are paid to preserve a VC industry in Canada (see prior posts “OVCF confirms $20 million for EdgeStoneâ€™s venture fund” Apr 9-09 and “Bridgescale Partners and Edgestoneâ€™s Venture Fund to team up”? May 27-10). Despite making a good return on Fund I, with great prospects for Fund II. As such, the team has gone their separate ways. The Rypple news reminds us how unfortunate that outcome is. Mr. Kerdman is now doing Angel deals via www.bryker.com, with Fixmo (see prior post “Fixmo lands US$23.4M from Kleiner Perkins, Paladin and Horizons” Nov 27-11), Guardly and Betterez being three high profile recent examples. Laura Lenz is now at Mars and Derek Smyth was recruited by OMERS Ventures; clear evidence that the rest of the ecosystem knew how good the Edgestone venture team was.
For the guys at Extreme Venture Partners, all you can say is that their aura grows stronger by the day. If I ran an Alternatives program at a Canadian pension fund, I’d be banging down their door in the wake of Bumptop, Fixmo, Kontagent and now Rypple. There’s only room for a couple of institutional LPs in a Canadian seed stage VC fund, given the relatively tight size of the next fund, and these guys must be one of the hottest dates in the country on the back of another great success.
Congrats to everyone involved. This one might actually get the ball rolling.