2010 was good for business

Time to recap on 2010, for those who stop by here to hear about the actual business climate at Wellington Financial, and not just the daily market, VC or political grind.

We had a good year, in summary. The team saw a grand total of 600 opportunities, and did financial due diligence on more than 250.

Since Christman 2009, we’ve supported 10 new companies, committing $58.6 million of financing. Seven of the ten were for U.S.-based growth companies, and three were headquartered in Canada. It is remarkable to think that just two years ago, we’d not done a U.S.-based deal in our 2006-vintage Wellington Financial Fund III.

A 2009 change in the cross-border tax laws meant that we could compete in the U.S. without one hand tied behind our backs. Our market grew 12x one day, and the only challenge was answering the question: where to start?

We opened an office in California in November 2009, and that’s certainly helping to spread the word. Constant travel and marketing along the East Coast of the U.S.A. is also paying dividends. Our non-amortizing growth capital appeals to CFOs and VCs alike, just as it does in Canada.

Our team also grew in 2010, as Business Development star Emma Fisher went fulltime, Amit Rajput took on the new role of Vice-President Finance, and Daniel Bernholtz joined as an Analyst. Amit joined from Deloitte LLP in Toronto where he had been an auditor specializing in financial institutions.

We had seven exits in 2010, demonstrating the credit quality of the portfolio and the benefits of our True Growth Capital. It’s not that we ever want to see a client go, but the life and times of any capital provider is such that folks sometimes move on. Of those seven exits, three refinanced from internal cash flow, two were acquired, and two raised capital. On the M&A front, 3M acquired MTI Polyfab, and Cellfish LLC bought the traditional business of Montreal’s Airborne Mobile.

And aal Solutions, which had paid us out earlier via a bank re-fi, was acquired by competitor Pearson.

Not to tempt the Celtic Gods, but we entered 2011 with no tough challenges in the portfolio. It is a treat to treat the brutal financial and economic crisis in the past tense, at least as our world is concerned.

Within the portfolio, many of our companies thrived: Healthcare firm Agility Health, of Michigan, closed and integrated a couple of tuckunder acquisitions. Guelph Clean tech firm Biorem (BRM:TSXV) had lots of success selling into China. Canada’s largest biodiesel firm Biox (BX:TSX) went public on the TSX. BTI Systems did a great job on the sales front and raised more equity capital. Boston’s Ember set growth records and its CEO Robert LeFort was honored as 2010 Mass High Tech All-Star. Goldman Sachs filed the docs to lead the IPO of Framingham-based Glasshouse on the NYSE. Healthscreen, on the TSX, grew their topline and penetrated some new key clients. Massachusetts-based Marathon Technologies continued to succeed with their fault tolerance and availability solutions. Publicly-listed Nightingale showed important EBITDA growth. Pivot, of Jersey City, landed the five largest U.S. banks. Toronto’s Real Matters grew like gangbusters and attracted attention from some of North America’s best known VCs. Toronto’s Simex took the recession in stride and built out in new markets, such as the Bronx Zoo. Skylink continued to serve the military with remarkable uptime rates. San Francisco’s Telekenex closed a transformative acquition. Vancouver’s Vision Critical grew to 450 staff and hit a revenue record. Seattle’s WatchGuard won plenty of industry recognition. Calgary’s Wmode had a series of financial and customer successes, and has never been better positioned.

It is an honour to spend so much time basking in the entrepreneurial spirit.

2010 marked our 10th full fiscal year, and also our 10th consecutive profitable year. And we had fun, too. Everyone’s feeling good about the year ahead. Lots of capital to put out, and lots of choices to make.

MRM
(disclosure – our Fund III may hold shares and/or warrants in the companies listed above)