$213MM Protus exit today's stark reminder of "The Way We Were"

Best read while listening to The Way We Were.

Not that it comes as a surprise, but J2 Global’s acquisition of Ottawa-based Protus is still great news for the Ontario VC industry. With a $213 million takeout price, and maybe $23.7 million invested all-in, a 9x return on capital is a true victory, even if it took the decade to get there.

Protus provides the highest quality software as a service (SaaS) communications tools for small-to-medium-businesses (SMB) and enterprise organizations, including award-winning MyFax, the fastest growing Internet fax service; my1voice, the cost-effective, feature-rich virtual PBX phone service that travels with the user from phone to web; and Campaigner and CampaignerPro, software-as-a-service email marketing solutions with advanced automation features.

BMO Capital’s old Small Business Capital Program and BEST Fund put in the first $2 million in September 1999. 10 years to the day, okay yesterday, BEST, the original Covington team and Edgestone’s Bryan Kerdman’s did a $5 million round. Another whack of dough flowed into the company’s jeans in February 2003.

It’s a shame that if Protus came along as a new deal today, things would be different. BEST and Covington are of the LSIF motif, a structure that Ontario put the boots to in 2005 (see prior post “The great LSIF myth” July 2-08). And Edgestone’s Kerdman retired from the business earlier this year with the acquisition of Edgestone’s VC fund by Bridgescale (see prior post “Bridgescale Partners and Edgestone’s Venture Fund to team up?” May 27-10).

Obviously, new pools of capital, with new players at the helm, can only be good for the Canadian start-up ecosystem. But there’s something about retaining experience that would also serve entrepreneurs, the VC industry, and its investors, well.

Sadly, people with meaningful miles on their Ontario VC tires appear to be shut out of the current capital raising environment. Deals like Protus come as a stark reminder of how much talent and momentum has been lost over the past 36 months.

MRM