Bridgewater exit another LSIF success story

News item: Amdocs to acquire Bridgewater for $8.20/share

If you bought the Bridgewater (BWC:TSX) initial public offering at $5.50 in 2007, you’d have done just fine despite a very difficult domestic tech market climate over the past four years. If you were a VenGrowth unitholder, which owned 15% of Bridgewater pre IPO, you’re even happier now that the Amdocs takeover news is out. One of Terry Matthews’ investment vehicles owned 13% pre-IPO, and Bridgewater is another case study of the positive impact that both VenGrowth and Mr. Matthews have had over the past 15 years on a wide variety of Ottawa-area tech plays.

Whenever our firm checked in with the Bridgewater management team, there was always something great happening on the development side. That requires capital and vision, of course, and the McGuinty government’s decision to put VenGrowth and the rest of the LSIF industry out of business in 2005 means that the next Bridgewater may not happen. Even Terry Matthews’ new vehicle (see prior post “Matthews lands $100MM for new fund” Feb 2-11), Roman Road, appears to have been unable to secure a commitment from the Provincial government’s Ontario Venture Capital Fund. And Mr. Matthews personifies local job creation and technological advancement.

It has been half a decade since Ontario decided to depart from the LSIF path, unlike Quebec, B.C., Saskatchewan, Nova Scotia…. The Bridgewater deal is just the latest reminder (see prior post “Covington does it again” Sept 22-10) of the positive impact that the LSIF industry had on Ontario’s innovation ecosystem.

It has been almost four years since the McGuinty government launchd the OVCF (see prior post “$165MM MRI Fund: blessing or curse?” Dec 3-07), and two fund investments have closed so far: Georgian Partners and XPV; which means OVCF has actually closed on perhaps $40 million of its $205 million available to commit and deploy. (The recent commitment to BlackBerry Partners Fund II has yet to close, although that’s expected shortly.)

Ontario’s large LSIF funds (Covington, Growthworks, VenGrowth and VentureLink) would’ve closed probably 250 new company investments in that same four year period, creating thousands of new jobs, if they’d not been chopped at the knees in the retail fundraising market.

At a breakfast meeting earlier this week, Ontario Finance Minister Dwight Duncan said the OVCF fund “hadn’t worked out like we’d thought”. For Ontario’s entrepreneurs, that is probably the understatement of the decade.

MRM