A mating ritual got under way at the Nova Scotia Westin in Halifax on Wednesday as the Atlantic Venture Forum brought together dozens of Atlantic Canadian entrepreneurs with investors from across North America.
The third annual forum is a meeting place at which startups from the region can link up with potential investors. There are 21 startups — 12 seed-stage companies and nine more advanced growth-stage companies — presenting to the group, but there is also an array of other startups attending to meet with possible funders. The literature given out at the forum provides fascinating insights into the growth prospects of these companies.
At least 28 investment entities are attending the conference, and they include regional, national and international funds. According to the official program, the out-of-town groups include the likes of GrandBanks Capital of Boston, BDC Capital and Real Ventures of Montreal. And though the Atlantic Canadian community features younger startups than other locations, several investors have noted the progress the region has made in a few years.
“It’s more focused overall,” said Ron Warburton, managing partner with BDC Capital. He mentioned that three years ago, Atlantic Canadian startups tended to think of their market as Canada. “Now you’re looking at becoming world-class companies, and that’s a bit of a change in mindset.”
BDC has invested in 12 Atlantic Canadian graduates of the PropelICT accelerator and also has invested in such companies as Radian6, Q1 Labs and Analyze Re.
Sunil Sharma, managing partner of Extreme Venture Partners in Toronto, noted how much more “capital efficient” companies are in Atlantic Canada than elsewhere. Commercial leases and core business expenses are less than in a market like Toronto, and wages for technical people tend to be lower.
“Early hires in Atlantic Canada are probably 30 per cent less expensive than in Toronto, and when you compare that to the U.S. it’s even more dramatic.”
One interesting thing about the forum is presenting companies are asked to reveal financial details of their companies, providing a rare snapshot of how the region’s leading high-potential companies are performing. Consider the growth-stage companies pitching at the forum. Six of these more advanced companies provided revenue data to the delegates, and their total revenue rose three-fold to about $2.1 million in 2014. They’re now about halfway through 2015 and have a pretty good idea how this year will shape up. They’re forecasting revenues this year will grow more than two-and-a-half times to $5.6 million, and more than double next year to $12.5 million.
The 12 seed-stage companies had no revenue or virtually no revenue in 2014, but nine are forecasting sales this year totalling about $1.8 million. As a group, the 12 companies are expecting $17.8 million in 2016.
Not all of them are going to meet these goals. But the growth-stage companies showed in 2014 that these companies can double, triple or quadruple sales in a year. These 21 companies are lean, employing fewer than six employees each, on average. And investors — predominantly private investors — have already sunk a total of $22 million into these ventures with the expectation they will meet these sales targets and grow in coming years.
In total, the 21 companies are looking for $51 million in investment to help them grow further. As the forum continues today, they’ll be trying to link up with the investors in attendance.