Neal Hill

Vimac Ventures' new Ottawa consultant, Neal Hill, will play a key role raising money for the venture capital firm's latest information technology fund.

Hill, who recently returned to town from Boston, said Vimac plans to raise between US$125 million and US$150 million beginning later this year.

His new position involves keeping tabs on Vimac's Canadian investments and helping structure the firm's new fund, which is expected to close around the middle of next year.

Before joining the venture capital firm, Hill was Cognos' vice-president of marketing from 1993 to 1997.

He said his experience there taught him some crucial lessons, which he uses as a venture capitalist.

For example, young companies need to look at the process of marketing a product and break it down into a daily routine, Hill said.

This is something at which Cognos excels, making the company a credible example of what attention to detail can mean for a startup.

Hill worked for Cognos when its founder, Michael Potter, made way for the company's current chief executive officer, Ron Zambonini.

"Ron's relentless about those day-to-day details," Hill said.

"That transition taught me that the day-to-day grinding, small-scale decisions are vital, not just the big, swooping decisions."

Hill also looks for great technology, large market potential, solid management teams and great local investors when considering new investments. Vimac's latest fund is almost fully invested.

Since Hill is expected to be a director with the firm's new fund, companies will have a local contact to access some of the firm's new funding.

The firm's second IT fund will devote 33 per cent of its cash to Canadian investments.

Vimac's local investments are Adherex Technologies Inc., DataBeacon Inc., ImPath Networks Inc., Natural Convergence Inc. and Webhancer Corp.

Vimac's new fundraising efforts illustrate an ongoing trend in the venture capital industry. In Canada, in particular, venture capital firms are busy raising new funds. Last month, B.C.-based Yaletown Venture Partners closed its first fund, worth $30 million.

Veteran Canadian venture capital firm Ventures West Inc. is also raising cash for its latest fund.

A new firm such as Yaletown raising capital in a depressed market is an important sign confidence is returning in the industry, analysts agree.

Kirk Falconer, research director for Macdonald & Associates, said the emergence of Canadian pension funds in the venture capital arena is an important step in the industry's recovery.

"In Canada, pension funds have not been famous for participating in venture firms," he said.

"What's been happening is, with the (Canada Pension Plan) investment board happening on the scene, the confidence is building."

With the exception of the Ontario Teachers' Pension Fund and OMERS, Canadian pension funds are just beginning to invest in venture capital funds, Falconer said, adding Canada's VC industry has a way to go to catch its American counterpart.

"We're playing catchup with the U.S. What we can say is (this reinvestment) means the down cycle is going to end sometime soon."

- By Michael Hammond