Venture capitalists scale back

Last year Minhas Mohamed’s MM Venture Partners invested in eight companies.

But thanks to the collapse of the values of technology companies, so far this year the company’s only put money into two.

“Sometimes in the morning I wake up and feel very depressed,” the Toronto investor said at a panel discussion during Venture Fair 2001, a financing forum organized by the Toronto Venture Group.

However, Mohamed and other venture capitalists said there are signs Canadian entrepreneurs have learned hard lessons from the failure of dot-coms and Internet startups over the last 12 months.

The quality of the 41 companies who pitched to investors Thursday was better than last year’s event they agreed, noting even young companies are doing what vencaps want –working at quickly building good management teams, customers and revenue.

“The opportunities were great today,” said John Albright of J.L.Albright Venture Partners of Toronto.

Carlo von Schroeder, a general partner at Boston-based Weston Presidio Capital, said the turnout of both entrepreneurs and investors “tells me this area is very strong.”

Still, Mohamed said it will take most of today’s startups another four years before they’ll be ready to go public. That’s bad news not only for entrepreneurs but also for venture firms, who want to get their investment back as soon as possible.

That’s the reason why VCs are more cautious today with their investments, panellists said. All agree there’s money in Canada for good companies, but VCs are taking their time before writing cheques.

A committee of 26 venture capitalists chose the presenting companies, some of which were members of their investing portfolio.

Telbotics Inc. of Toronto, which has started making a $50,000 two-piece video robot system that lets children in hospital have live communication with their schools over the Internet, was named best early-stage company. It’s looking for $10 million over two years.

“I hope this will make the VCs who didn’t see my presentation think they missed something hot,” said company president Michael McHale.

Edmonton’s YottaYotta Inc., which is finalizing a carrier-class storage system, was named best established company. The firm is looking for $100 million in third round funding.

CEO Steve Mattioli noted it’s the company’s fourth venture show award in six months.

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Howard Solomon
Howard Solomon
Currently a freelance writer. Former editor of and Computing Canada. An IT journalist since 1997, Howard has written for several of ITWC's sister publications, including Before arriving at ITWC he served as a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times.

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