Financial Post – Big payoff for investors in New Brunswick

By Christine Dobby – Financial Post | link to original article

or proof that taking a chance on tech startups can pay off, look no further than the New Brunswick Innovation Foundation’s return on its investment in Radian6.

The corporation announced Wednesday it made $9.25-million from the sale of its stake in the Fredericton, N.B.-based social media monitoring company in May 2011.

That comes after the NBIF provided seed financing with an equity investment of $50,000 in Aug. 2006 and kicked in a further $276,973 in venture capital in Dec. 2008.

U.S. enterprise cloud computing company Salesforce.com announced an agreement in March to acquire Radian6 for US$276-million and US$50-million in stock. The sale closed in May.

The transaction netted the NBIF more than $8.9-million over and above its investments in Radian6.

That’s a combined internal rate of return of 170%, 28 times the value of its original investment, the NBIF said Wednesday.

The money will go back into the non-profit corporation’s venture capital fund.

Other Radian6 investors, including Summerhill Venture Partners, Brightspark Ventures and BDC Venture Capital, also saw a big pay day on the transaction, which was named 2011 Deal of the Year by the Canadian Venture Capital Association on Sept. 21.

Summerhill led an initial $4-million institutional round of financing in April 2007, followed by a secondary round of $5-million in Dec. 2008.

When the Salesforce.com deal closed, the three institutional investors received a combined $205-million, representing an internal rate of return of 142% and 22.8 times the original investment, according to a statement from the CVCA.

“Watching Radian6 transform itself from a small startup company to the global leader in social media monitoring —  in just five years —  has been very exciting for us, and a constant reminder of why NBIF was created,” said Calvin Milbury, president and chief executive of the foundation, in a statement.

The NBIF is an independent corporation founded in 2003 that provides research and venture capital financing to New Brunswick businesses.

The foundation had a venture capital investment portfolio of just over $5-million, including its Radian6 investment, as of March 31, 2010, according to its 2009-10 annual report.