NBIF building on Radian 6 success

By Peter Moriera, Entrevestor.com | link to original article

Any year that features a 2,800% gain on an exit would be a pretty good year for a fund manager, but Calvin Milbury believes the Radian6 exit was only one facet of a successful year for the New Brunswick Innovation Foundation.

During an hour-long interview in NBIF’s boardroom in Fredericton on the first day of fiscal 2013, Milbury discussed the sale of Radian6 to Salesforce.com, which bagged $9.25 million for NBIF, and the exit of Q1 Labs, which wasn’t an NBIF portfolio company.

They were the highlights of the fiscal year that ended March 31, but Milbury was more interested in talking about the less well-known segments of NBIF operations, especially its roll in commercializing research. “Our sweet spot is to bridge the gap between research and enterprise,” he says. “In fact, half of our venture capital portfolio is made up of companies that benefited from our research funding.”

NBIF isn’t a government agency; it was incorporated as a not-for-profit organization that received $20 million from the New Brunswick government and $10 million from other sources a decade ago. Its mandate is not just to develop innovative businesses but also to fund applied research at post-secondary or research institutions.

Milbury seems happiest when discussing projects that marry both halves of this mandate. For example, NBIF often provides financial assistance to researchers being recruited to the province, giving them up to $100,000 to establish their laboratories. By doing this, NBIF helps bring top talent to New Brunswick and build research capacity, which in turn develops more researchers at the province’s universities.

These academia fundings seem to bubble up into young companies. Milbury is quick to note that many of the companies NBIF invests in, such as SmartSkin Technologies, KnowCharge, Inversa, Green Imaging, CyberPsyc, and Scene Sharp, have links to researchers in New Brunswick universities or other institutions.

While NBIF is meeting its goal to wed research and entrepreneurship, it’s exceeding many of its other targets. For example, its target in each VC investment is to bring in $5 from a co-investor for each dollar it invests. In fact, its co-investors have placed seven times as much money as NBIF in the companies they’ve backed.

Another example: NBIF aimed to make six to eight venture capital investments in 2011 but ended up making 12. These included:

1. CyberPsyc Software Solutions, Fredericton, a $100,000 investment alongside other investors, including Gerry Pond, for a total funding of $250,000. CyberPsyc produces 3-D animated games that expose people to something they fear as a means to treat a phobia or anxiety.

2. Inversa Systems Ltd., Fredericton, $250,000, which was matched by an equal investment by Moncton-based Technology Venture Corporation. That money unlocked a $2.1-million Atlantic Innovation Fund award from the Atlantic Canada Opportunities Agency. Inversa manufactures inspection equipment that allows engineers to see inside large structures without taking them apart.

3. KnowCharge, Fredericton, $200,000. Its co-investor was the First Angel Network, which sank $438,000 into the company. KnowCharge makes paper that protects sensitive electronics from the harmful effects of static discharge.

4. Spinzo, Saint John, $100,000. Spinzo has developed a new online group-based buying and selling platform for consumers and merchants.

5. Zaptap, Fredericton, $100,000. Zaptap’s software allows consumers to “zap” a product label in a store with their smartphones and immediately receive such information about the product as technical specifications and warranty details.

Other fundings that have been announced include: Scene Sharp Technologies, $100,000; Enovex Technology, $50,000; Populus Global Solutions $36,076; and SmartSkin, $40,000.

Those are just a sampling of the work that was done by NBIF in the past year, and the coming fiscal year promises to be just as busy. For one thing, NBIF will organize its biennial Breakthru competition for innovative companies this year. What’s more, the exits of Radian6 and Q1 Labs have excited entrepreneurial fervor in New Brunswick, and NBIF is being approached by more start-ups than ever, with no apparent dilution in the quality of the proposals.

“My view is that the Radian6 and Q1 stories are just the first chapter of the next story,” says Milbury. “That’s what excites us at NBIF—the momentum that’s building.”