The Investment Accelerator Fund (IAF) has been among the active seed players in Ontario startups, investing $5.4-million in 12 startups since December. To get a better idea of IAF mandate and approach, I talked with Managing Director Barry Gekiere.
When was IAF created?
It was set up in 2008 as part of a three-prong initiative by the Ontario government as a follow-up to labour sponsored funds to stimulate activity in the tech sector. It was set up to invest $7 million a year, with a restriction of making $500,000 investments. It gives us the ability to 12 to 15 investment per the year. The goal is to take companies funded by angels and friends and family, and provide them more capital to commercialize or attract venture capital. We measure our success in helping companies find follow-on investment because if other investors coming to the table post-investment, they have a better chance of success. We have had $119-million raised in the investments we have done.
What kind of milestones are you seeking in potential investments?
Like any venture firm, it’s the size of market opportunity, the quality of the management team, and how much capital they will need to get them to commercialize. The majority of companies are pre-revenue with a completed product or they’re doing beta tests, and we help them to commercialize. They have early customer traction or just about to receive customer traction.
How is the IAF’s funding structured?
We have until March, 2015. We are keeping the same investment pace, which is all you want to do – 12 to 15 a year. We are allowed to reinvest the proceeds. We’ve had five exits and $4-million in proceeds to reinvest.
You have an aggressive investment mandate? Is is difficult to fill the pipeline?
It hasn’t been to date. it ia good balance. We are a generalist fund across three sectors. We’re also part of the Ontario Network of Excellence. There are seven to nine across Ontario, so what they are doing is working with early stage companies, mentoring them and giving them advice. We get to pick off the best coming out of the regional excellence centres. We network with a lot of venture firms, and get referred to companies that are a bit early. We’ve had success because we fill the gaps. We don’t compete with other VCs. If a follow-on deal, for example, is oversubscribed, we will back off.