The dream of creating a successful Canadian publicly-traded incubator to finance Internet startups has expired as it did in the U.S., where the concept was born.

Exclamation International Inc. of Toronto this week said it has given up its former business model and will focus on running one of the five companies in its portfolio, Inc.

A loyalty points trading exchange, also sells its technology to corporations with loyalty programs. The other Exclamation companies will either be sold or closed.

“We were the first one (in Canada) and it looks like we’re last as well,” said Exclamation president Christopher Barnard.

It was only two months ago that the company was declared Canada’s third-hottest startup by an investment magazine. However, that was based on its revenue performance over two years ending in April of this year.

By the end of the second quarter it reported a $3.2 million loss. This month Exclamation stock had dropped from a high last year of $5.50 to 15 cents. After the announcement, it moved up to 19 cents.

“We made a decision over the last three weeks based on market conditions our shareholders would be better off if we focused on one company that in our minds looks the most promising of the three we created,” said Barnard.

Marc Lavine, the company’s Paris-based co-founder, chairman and CEO will step aside to become vice-chairman of the board. president Rob MacLean will take his place.

Interviewed for a feature on Exclamation in the November issue of eBusiness Journal, Lavine and Barnard were confident of the company’s incubator strategy.

Backers of the concept hoped that booming North American stock markets would provide the cash their startups would need, saving them the onerous effort of private fundraising.

However, the collapse of equity markets has meant young companies have had to stay in the fold longer, eating up cash reserves. Meanwhile impatient investors are looking for safer places to put their money than Internet-related plays.

Other publicly-traded companies that failed include Itemus of Toronto, which filed for bankruptcy in August, and Intasys Corp. of Montreal, an Internet software company which closed its incubator business to concentrate on media and electronic billing.

Exclamation, traded on the CDNX, will buy the five per cent of the shares it doesn’t already own and will either sell or close the other companies it has interests.

These include majority positions in ThinOffice Inc., an application service provider, Exponential Entertainment, which is developing pool betting technology, and a half interest in, a business supplies purchasing site.

While some incubators took only a small position in the companies they built, after trouble with one of its first companies Exclamation decided to hold the overwhelming majority of shares in its portfolio until the startups needed more money.

That proved to be an advantage, Barnard said, which allowed Exclamation the ability to easily take over, which he said is the company’s biggest revenue earner.

It has agreements with Air Canada, American Airlines and Esso among others.

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