We want to build an innovative economy

By Geoff Bird – Telegraph Journal | link to original article

The New Brunswick Innovation Foundation announced on Thursday it earned a colossal windfall from the sale of its stake in Radian6.The non-profit foundation said it netted $9.25 million through Salesforce.com's (NYSE:CRM) acquisition of the Fredericton-based tech firm, money that it is using to reinvest in other New Brunswick firms.

Radian6, which specializes in social media monitoring, was sold in March in a deal that was worth $276 million in cash and $50 million in stock.

The transaction was a boon for several of Radian6's big investors and was won the 2011 Deal Of The Year Award from the Canadian Venture Capital Association. The acquisition was, in fact, the most profitable of all of Canada's venture capital deals in the last five years.

It is the biggest return the NBIF has ever had on any investment.

“It puts New Brunswick on the map internationally,” said Calvin Milbury, president and CEO of the Innovation Foundation. “It tells investors that we can indeed grow companies here in New Brunswick.

“It's also a real shot in the arm for entrepreneurs in our province. It's highly motivating for them to see that local entrepreneurs have started a company like Radian6 and achieved a phenomenal exit.”

The Innovation Foundation helped launch the company in 2006 with a seed equity investment of $50,000. Two years later, it invested another $276,973 in venture capital.

The Innovation Foundation's two investments generated a combined internal rate of return of 170 per cent – 28 times the value of the original investment.

A “home run” in venture capital investing produces a return of 10 to one, Milbury said.

Summerhill Venture Partners, Brightspark Ventures and BDC Venture Capital also made substantial investments in Radian6. Combined, they received $205-million after the sale, 22.8 times the size of the original investment.

Richard Remillard, executive director with the Canadian Venture Capital Association, said exits like that of Radian6 have a “snowball effect” in their home community. It creates a large pool of wealth and expertise that is re-invested in other start-ups, led by individuals that Remillard called “serial entrepreneurs.

“A win like this has the ability to draw other investors to the area who profited with that company,” he said. “I wouldn't be surprised to see sniffing of the ground and turning over covers.

“It should provide the whole industry a real shot in the arm,” he said.

Milbury said the money validates the New Brunswick Innovation Foundation's creation, proof that its business model is working.

“Our business is innovation,” Milbury said. “We think our future economic prosperity is very much tied to the success we have as a province in being innovative.

“This should help a lot more entrepreneurs across the province,” he said.

The foundation said that as a non-profit corporation, all of the investment money will be used to further its mandate by replenishing its venture capital fund, allowing for more investments in New Brunswick's innovation-based companies for years to come.

“We want to build an innovative economy,” Milbury saidThe New Brunswick Innovation Foundation announced on Thursday it earned a colossal windfall from the sale of its stake in Radian6.