Atlantic Canada’s Newsmaker of the Year in Tech: An Influx of Institutional Capital

Robert Niven walked into the BDC Venture Capital to fund R&D and expand its sales team.

The Halifax cleantech company, which is pioneering a low-carbon process of manufacturing concrete products, was part of a healthy trend that developed in the Atlantic Canada startup community in 2013 – a growing flow of institutional money coming into the region from elsewhere.

This trend is no accident. The Atlantic Canadian ecosystem has been improving since two companies founded in New Brunswick, Radian6 and Q1 Labs, announced exits in 2011. In fact, there was a succession of new programs and events unveiled in 2013 alone that are focused on attracting capital from institutional investors.

“There are three reasons this funding has happened this year, and I think it started with Radian6 and Q1 Labs winning the CVCA Deal of the Year awards back to back in 2011 and 2012,” said Gerry Pond, Chairman of East Valley Ventures investment and mentorship group in Saint John.

Pond also said that the Atlantic Canadian ecosystem now features more incubators, accelerators and support organizations than ever before, and they are nurturing the quality of company that attracts capital. Finally, he said the “next generation” of angel investors in the region, such as Clarity Founder Dan Martell, has excellent ties with funders outside the region and are helping to develop these links.

Most institutional investment in Atlantic Canada has traditionally come from by local VC institutions, such as provincially backed GrowthWorks Atlantic.  In 2012, for example, there were no announcements of institutional financings of more than $1 million from outside the region.

This year, the biggest investment deal was actually a buy-in from a private equity firm – Toronto-basedVanedge of Vancouver; and Halifax’s Innovacorp.

Analyze Re, a Halifax company that provides risk assessment for reinsurers, raised almost $1.4 million from Innovacorp, BDC Venture Capital of Montreal and Rho.

BDC first invested in Analyze Re by offering $150,000 convertible notes to select graduates of thetopLog of Halifax.

Another development this year that is helping with follow-on funding is the launch ofAffinio of Halifax.

Finally, the development of growing Atlantic Canadian companies got a boost from the opening of the incubatorsStartup St. John’s in Newfoundland and Labrador complements the establishment of these startup houses. 

CarbonCure’s Niven warns that recent exits have not quite created the recognition for Atlantic Canadian startups that you might expect.  “However, our tech startups are emboldened with unprecedented confidence, access to capital and experience,” he said. “While the threshold is the same, our startup communities are just much better equipped to close the deals. Success breeds more success.”

This article was originally published on Entrevestor, a site which produces daily news reports on the Atlantic Canadian startup community.