Peter Eddison, of Autoskill International. Photo by Darren Brown

While Peter Eddison didn't walk away from his meeting with a group of U.S. investors with the second-round financing in his pocket, that didn't mean his trip to Boston last week with a group of Canadian companies wasn't successful.

With the company in the middle of its search for investors, the Autoskill International Inc. chief executive jumped at the chance to tell his story to Boston financiers and make some contacts in the venture capital community south of the border at the same time.

"Any chance to tell potential investors about what it is we are doing is very valuable to us. A trip like this one allowed us to make a first connection with some VCs that I would never have had the chance to meet, and that was valuable," he said. "It is always great to expand the network of people you talk to and get increased exposure to other investors. We thought it would really complement the activities that we had underway."

After being approached by organizer Pricewaterhouse-Coopers about the Boston event, Autoskill, which makes literacy software, submitted their plan and ended up being one of the 20 companies selected to make the trip.

PricewaterhouseCoopers sent a nationwide call to find start-ups interested in making their pitch to Boston VCs. Fifty-one companies applied, with 30 on the technology side and 21 in biotechnology. Nine of the 20 that made the trip were from Ottawa. A number of Canadian investment firms were also invited.

Pricewaterhouse-Coopers' idea was to use some of its connections in Boston to introduce Canadian companies and investors to U.S. venture capitalists, which it hoped would encourage cooperation in the future.

It was the second trip in about six months, after another group went to Washington, D.C., last fall.

"At our accounting firm, we are always saying we have relationships with U.S. VCs, and this is a way to leverage them. It's kind of a neat idea and if we can get some profile for Ottawa from it, we will be happy. It should happen more often and we plan on doing it again," said Bruce Raganold, PricewaterhouseCoopers LLP client services director.

"One of the reasons I think this is extra important is that there was a lot more U.S. VC activity during the bubble and they shied away from Ottawa afterward – we have to get them back here."

So, the accounting firm decided the best way to do it would be by connecting U.S. and Canadian VCs while, at the same time, highlighting the best investment opportunities in Canada. But the trip wasn't simply an altruistic move by PricewaterhouseCoopers, as stimulating more activity in Canada would potentially increase its business.

The Ottawa companies on the trip were Autoskill International Inc was joined on the trip by Cyrium Technologies Inc., Imascope Inc., Information Mediary Corp., Iotum Corp., Solace Systems, Trialstat, Trigence, and Variation Biotechnology Inc.

Canadian VCs heading to Boston were: BDC Venture Capital, Bright Spark, Celtic House, Desjardins Venture Capital, Fonds de solidarite FTQ, Growthworks, Latitude Parners, MMV Financial, RBC, RBC Ventures, VenGrowth Private Equity Partners Inc., and Ventures West.

Autoskill and the other 19 companies were also given coaching by both PricewaterhouseCoopers and U.S. law firm Goodwin Proctor before the meetings in Boston.

While the trip is about business, the participants also took some time to attend the Toronto Maple Leafs vs. Boston Bruins game last Thursday.

While many of the CEOs spent the game going over their pitches in their heads, it also gave them almost three hours of uninterrupted time with investors.

Prior to the game, the executives spent most of Thursday going through dry runs of their pitches with their coaches. On Friday morning, the each company got its 12 minutes in the spotlight in front of the U.S. investors.

While the tech sector is rebounding, attracting more U.S. investors to Ottawa specifically and Canada in general has become more difficult for a number of reasons, said PricewaterhouseCoopers tax partner Cliff Taylor.

With valuations not reaching the stratospheric heights of a few years ago, there's less cash available for start-ups because the multiples no longer support larger investments. New rules for labour-sponsored funds also reduced the amount of money that's available to be invested.

Another problem that companies in Canada have begun to face is increased competition from new players, such as China, India, and Israel, which continue to attract cash away from North America.

So, convincing investors to look north instead of east means making connections among entrepreneurs and investors on both sides of the border.

"When VCs invest, they usually go in bunches – you have a lead investor and then two or three others that come along – and typically the U.S. VCs like to have Canadians as well when they deal with Canadian companies," said Mr. Taylor.

"I think it's a great opportunity for Ottawa and for its technology companies and there was a lot of interest from companies in the trip."

While Mr. Eddison feels there are plenty of VCs interested in investing in Canadian technology-based businesses, he also believes they want to see concrete opportunities from companies that have a proven track record of executing.

Companies need to have a product that is real, a compelling story, customers lining up, and a solid business plan before VCs will even start to sniff, he said. And, once negotiations begin, it's often more about finding the right fit than attracting money.

"Busy people don't spend their time doing things unless they are interested — otherwise they are wasting their time. And, it's not the amount of people you speak to, it's the quality of the conversation," Mr. Eddison said.

"All of the companies that went down had good stories to tell and the people were all interested. This was much more than a casual chat at a cocktail party, this was qualified people listening to qualified people, so I think this event will prove to be very valuable."

By Jeff Pappone

Special to the Ottawa Business Journal