Archive for July 2009

Investing in start-ups “a challenging, hands-on sport”

July 31, 2009

Aug09-RossBricker2AVAC Ltd. isn’t exactly a household name but one of the products it helped bring to market certainly is. Cold-fx, might not have made it off the lab bench onto supermarket shelves if it hadn’t been for the early stage investment by AVAC, an Alberta venture capital company.
According to Ross Bricker, president and CEO of AVAC Ltd., “One of our earliest and probably our best known success story in the early days was a company called CV Technologies, now called Afexa, with their Cold-fx product. We were able to participate back in 1997-98 in helping them with their clinical trials to take that nutraceutical or their medical, natural product to market. “
Twelve years later, Cold-fx is distributed around the globe, making millions for its parent company. As for AVAC, it has now invested in 110 promising companies. The portfolio of companies that have made it to market attributes almost $400 million in revenue or commercial sales to AVAC’s investment.
“Our primary job is to help catalyze homegrown business successes in agriculture,” says Bricker as he talks about why this venture capital fund was established in 1997.
“The agriculture minister of the day thought it was important that we start to generate more value from post farmgate activity. The data that had been generated prior to that showed Alberta lagging quite a way behind. We were being known as the hewers of wood and haulers of water. AVAC was created at that time to help catalyze those companies that could value-add commodities.”
The Alberta government put up $35 million and the federal government, through Agriculture and Agri-food Canada, contributed $10 million to get AVAC up and running as a not-for-profit, private venture capital company. In recent years, an additional $79 million from the province has helped AVAC expand its role beyond agribusiness into life sciences, industrial technology, and information and communications technology. This includes the IVAC initiative, spearheaded by Alberta Advanced Education and Technology in 2007.
In the past year, AVAC has also developed partnerships by attracting three other venture capital firms to Alberta: iNovia, Avrio and Yaletown.
Bricker has been with AVAC since 2000. No stranger to the world of agriculture, he grew up on the farm and continues to farm today. His degrees in agriculture and molecular biology, combined with his extensive experience in public policy, corporate finance and strategic planning, give him unique insight into the areas where AVAC is investing and into the obstacles these new ventures face.
According to Bricker, “The reality is that investing in early stage companies is a very challenging and very high risk area. Typically governments get involved in supporting research and innovation… that’s working in universities and through tech transfer areas. But then there’s a void in terms of available resources until you get to a company that’s profitable and generating revenue. Then, you’ll see later stage of venture capital get involved. In the area that we participate, the other investors are angels, the owners themselves… (and) some interested strategic partners who are prepared and interested in supporting early stage companies. But it’s very much a challenging, hands-on sport, so to speak.”
When deciding whether to invest in a startup company, Bricker stresses the number one rule is “people, people, people. If you’ve got the right kind of motivation and the right kind of people involved, then they will make it happen. I know from our experience—and we’ve invested in just over 110 companies over the last 12 years—that almost without exception, if they were good people leading the opportunity, it does well. If we take a risk on some people who aren’t quite where they need to be, then it’s not quite so promising an outcome.”
When early stage companies come to AVAC looking for venture capital, they are usually at the pre-commercial stage. Sometimes, however, AVAC will invest even earlier, supporting research at the university level, helping the venture along from idea through to marketable product.
Says Bricker, “We’re really a patient, hands-on investor. We come alongside and conduct very rigorous due diligence, making sure the investments are sound and appropriate, even though they are super high risk and early stage. We spend a lot of time helping the entrepreneurs, make sure that what they want to do is appropriate and is feasible.”
As for amounts of investment capital, that has ranged from a few thousand dollars to flesh out an idea to over $5 million on a single company with a blockbuster innovation. AVAC’s return on investment comes as a royalty when the companies finally get their products or services to market.
So just where are these AVAC investments? Bricker shoots off examples in rapid fire succession.
“SemBioSys has two blockbuster opportunities that will have a profound impact on healthcare with being able to produce safe insulin at a lower cost from plants that is identical to human insulin for Type 2 diabetics. And their latest product is a small molecule that again is produced in plants that is effective for treatment of blood cholesterol….These have a profound opportunity to mitigate what is going to be a significant healthcare cost in the future.”
On the ICT side, Bricker points to the Internet. “One investment we made this past year was in a social networking company called Tynt, which basically has a system for layering over top of the existing Web 2.0 world some data tracking systems to help monetize for investors and advertisers what they are spending their time and money on.”
Other companies include Under the Roof, a Calgary based company creating consumer products for the home renovating market. Cadillac Coatings of Edmonton has developed a technology to powder coat wood with a super durable, eco friendly finish.
On the health and neutraceutical side, there’s SciMed Technologies which has developed kits that allow producers to test in-house the levels of vitamins A and D in milk and baby formula. Botaneco has commercialized an ingredient for cosmetics called Hydresia. It’s made from safflower seeds and is a better emulsifier than those currently on the market.
And then there’s a lot of activity and interest in biofuels and alternative energy sources. For example, Highmark Renewables markets technology that turns organic waste from feedlots and sewage systems into energy.
These are just a few. A look at AVAC’s annual report indicates an extensive list of a broad range of companies and projects at various stages of development.
“Our primary objective is to see a vibrant, well diversified industry and I’ll emphasize home grown successes here in Alberta,” reiterates Bricker. “For those companies that do succeed, they are going to generate significant economic activity, employment, and quality jobs for Albertans.”
With all this energy and activity, what could grease the wheel even more? Taking another look at AVAC’s royalty model. While it works for the early stages of venture capital investment, Bricker says when companies grow to the point where they need later stage investment from outside sources, other venture capital funds look at AVAC’s royalty as a liability and are hesitant to invest.
Discussions are ongoing with the provincial government about allowing more flexibility in how AVAC can invest. √

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Mining Trees for nano-enabled biomaterials

July 31, 2009

Aug09-CarloMontemagnoIf Dr. Carlo Montemagno has his way, no one will ever look at trees the same way again.
Montemagno is the Dean of Engineering at the University of Cincinnati. He was in Edmonton for the recent conference on nanotechnology and forest products, sponsored by TAPPI and Alberta Ingenuity.
In Montemagno’s world, trees produce more than lumber and pulp. They are a cornucopia of proteins and molecules that form the basis of nano-enabled biomaterials.
He explains, “Forest products produces a large amount of biomass but all of their focus has been on cellulose. They look at using wood, fibre and pulp and that’s what they focus on. But there is a huge amount of potential resources in terms of the fundamental biological components that support the living mechanism of the tree that we should be able to harvest and use as value-added products—products that have more value intrinsically than the actual fibre that the industry is so heavily focused on.”
Montemagno says these nano-engineered biomaterials are renewable, offering a replacement for petroleum-based chemicals which will significantly reduce the carbon and energy footprint of industry. And we can expect to see some of nano-enabled products on the market within the next five years. √

Are nano particles risky?

July 31, 2009

Aug09-JoanneShatkin2Engineering new materials at the nano or atomic scale holds great potential for improving products and industrial processes.
But what risks do these novel materials pose human health or the environment?
Joanne Shatkin addressed this issue at the recent Conference on nanotechnology and forest products hosted by TAPPI and Alberta Ingenuity.
Shatkin is an author and managing director of CLF Ventures, an affiliate of the Conservation Law Foundation in the United States.
According to Shatkin, “All the properties that make nanomaterials so exciting as new materials are really novel properties. They behave differently from existing substances that we’re used to working with. That’s what raises the concern. If they behave differently from an engineering perspective, they also may behave differently from a biological and environmental perspective. So it raises some concerns that we need to address as these materials are being developed before they go widely out into the market.”
That’s why Shatkin advocates industry and regulators take a proactive approach toward nanotechnology. “My goal,” she says, “is to try to build sustainability into these new products early on. The exciting piece about nanotechnology is that you can engineer out the properties that you don’t want. So if we are looking for those properties now… if we’re thinking about potential harm, then we can identify it early and deal with it.”
These issues are outlined in her book, entitled Nanotechnology: Health and Environmental Risks.

Optics improve nanofabrication

July 31, 2009

Aug09-MartinMoskovitsWave goodbye to silicon chips.
Thanks to advances in nanotechnology, the chips that power computers and other electronic devices may one day be made from the cellulose of trees.
But manufacturing these tiny electronic circuits at the nano or atomic scale depends on optics or new ways of dealing with light.
That’s what Dr. Martin Moskovits talked about at the recent conference on Nanotechnology and Forest Products. He is the former dean of science at the University of California Santa Barbara, and is currently the chief technology officer with API Nanotronics in New York.
“We live in a highly electronic world in which almost all of our devices are controlled by integrated circuits,” he explains. “These integrated circuits are created through a form of lithography. It’s almost like printing… but printing very, very tiny structures. It is really the backbone of the electronics industry. If you want to put more and more transistors in the same space, you need to make finer and finer features. And, for that, you need to use light of shorter and shorter wavelengths. And so we went from red light to blue light to violet light, and now we’re into the ultraviolet domain. Now, using deep ultraviolet produces certain challenges in controlling and shaping this light. That requires new optics and new technology just to support this printing with ultraviolet.”
At API Nanotronics, Dr. Moskovits specializes in the development of polarizers and optical retarders that shape and control light for the nano fabrication of circuits. √

Social Media 101

July 31, 2009

101The magic is in the trends.
Have you clearly defined a goal for your web presence beyond simple brand awareness? For folks with an e-commerce presence, that goal is seemingly simple: conversion of traffic into sales.
I assumed that many website owners had heard of Google Analytics, and had installed the free software within their website code. But, according to Benjamin Mangold, the overwhelming majority of website owners don’t use this free service to its full potential, if at all. Further, they seem to follow the non-recommended “set it and forget it” methodology to website performance. He asks, “Why go to the trouble of monitoring traffic data if you’re not going to make changes based on the findings?”
Mangold is the analytics director for Mangold Sengers, an consultancy in Sydney, Australia. He visited Edmonton in July to hold his Seminar for Success training workshop on Google Analytics. He suggests that many organizations install the software but then simply review the numbers without taking any specific actions based on what the data are telling them.
The analytics specialist estimates that nearly 80 percent of the near thousand people he trains each year are not even using the software prior to attending. I found that statistic very interesting. In other words, many people have little knowledge of what people are searching for related to their brand, product or service. Even more telling is his suggestion that organizations of all shapes and sizes are spending marketing dollars to promote their websites but to coordinate their online and offline efforts.
If you’re not already using Google Analytics, Mangold suggests these tips as a place to start. First, after installing the program, review the keyword reports on how people are finding your site. You may learn that the words are different from what your organization assumes are the standard searches. Then create a list of keywords that are more descriptive in nature, and build content around that list. “Pick a phrase and generate content for that phrase, then watch to see how this affects your website traffic,” he adds.
When asked where companies that use Google Analytics go wrong, Mangold explains “they tend to look at the daily numbers and overlook the trends. The trending is where the real value is in analytics.”
One of the clear challenges is overcoming “analysis paralysis”—figuring out how to interpret and take action on all the data that’s available. Even assigning the right human resources to the task can be a difficult task in itself. Mangold says that Google is working on simplifying the data into a more consumable structure but couldn’t elaborate further. I’m all for that. Anytime a company can increase the ease of use of one of its tools without losing critical functionality, I think they’re moving in the right direction.
As for Mangold, he says he’d love to return to Edmonton to hold another seminar soon. The motivation behind this first event was that he felt Edmontonians didn’t get much of an opportunity to attend seminars of this type, and I’d have to agree. I’ll be sure to meet with him the next time he’s in town. √

First Graduates in Aboriginal Land Stewardship

July 15, 2009

Aboriginal landThere’s no doubt about it. Industrial development impacts the environment and native communities.
But a new training program developed by the Alberta Research Council could change that.
It is called the Aboriginal Land Stewardship Program and the first two graduates are Jan Noskie of the Bigstone Cree Nation at Wabasca, and Ike Solway of the Siksika Nation near Calgary. They’ve spent two years learning skills in land planning and how to work with industry and government.
According to Noskiye, this training will help in bringing aboriginal concerns to the table. “I’m going to use these skills when it comes to negotiating with companies regarding the land. This is a very unique program because it was community based. In the past, there was never anybody in the Nation that would actually document and collect this kind of data that Ike and I will be doing. This is a major plus for our communities because now we have somebody out there documenting these sites for our future generations to see and to keep protected from industrial activity.”
Now that they have graduated from the ARC program, Noskiye will become an environmental technician with the Bigstone Cree Nation, while Solway will returnb to his position inthe Siksika Nation  land management service.

Cheryl Croucher

Smart Pants manage pressure sores

July 15, 2009

smart pantsDespite what your teacher told you in school, fidgeting at your desk is not a bad thing.
The body’s need to fidget is the principle behind the development of a new medical device called “smart underwear”.
Designed for people with spinal injuries who are confined to wheelchairs, the high tech garment stimulates muscle movement to prevent debilitating pressure ulcers.
Dr. Martin Fergurson-Pell belongs to a team of researchers working on the project at the University of Alberta.  As he explains it, “What the underwear will contain is principally stimulating electrodes to get the muscles to contract, and then secondarily will be sensors which will look at the status of the tissues and inform the stimulator when it needs to be active. So, as we find that the period of time that the oxygen has been depleted from the tissue becomes too long through measurements made with sensors in the underwear, then the underwear will create an electrical stimulation to the muscles, wich then allows those tissues to be re-nourished.”
Dr. Ferguson-Pell is a professor and dean of the Faculty of Rehabilitation Medicine. He says smart underwear is just one invention under development by the Smart Neural Prostheses Team which is supported by the Alberta Heritage Foundation for Medical Research.

Cheryl Croucher