See you again, Chicago

Fixing Toronto Part 16

From what I could tell yesterday, the Twitterverse was dubious about the utility of Toronto Mayor Rob Ford’s business mission to the City of Chicago. In part, this disbelief seemed to be fed by a subset of the journos who accompanied the civic and business leaders on the trip. The absence of “signed deals” was the most obvious complaint, something that the media used to see when Jean Chretien would take a planeload of businesstypes to some foreign clime.

Perhaps this cynical subset of the Dead Tree Media (DTM) doesn’t know how business works, or are at least in disbelief that Mayor Ford might actually have had a good idea. Given Councillor Doug Ford’s longstanding business and personal links to Chicago, it should be no surprise that the Mayor’s first delegation wound up there. Having not been to Chicago since the mid-1990s myself, with no excuse to point at for the oversight, it was a welcome destination.

According to a well-timed press release from Bank of Montreal, “Ontario exports more to Illinois than 45 other U.S. states and all countries other than the United Kingdom.” That’s a lot of local jobs. Occupied by people who buy newspapers.

Here’s why I went to Chicago, for what it’s worth.

Our firm provides financing for growth companies, primarily in the Innovation space; been doing it since 2000. If you are a midstage company in the software, hardware, wireless or clean tech world, Wellington Financial wants to know about you. We opened our first US office in California in 2009 and began the lifelong effort to meet all the right VCs, advisors, lawyers, software execs that the U.S. can muster. It was the right thing to do. Compared to Canada’s $1.5 billion 2011 VC total, American VCs invested ~$24 billion in new venture capital last year alone. That makes for a lot of targets for us, in a variety of distinct regional ecosystems: Northern California, Southern California, Northeast, Mid-Atlantic, Southeast, Austin….

This effort takes time, what with >900 U.S. VC firms and >3,500 different companies funded in 2011.

And all you can do, despite the wonders of the telephone and Skype, is get on a plane and try to find useful people to visit. The marketing trip started out in Boston in 2009, and wended its way through Palo Alto, Santa Monica and Virginia. Eventually, it took me to places like Pittsburgh, Durham, Princeton, New York, Raleigh, San Jose, Los Angeles, Atlanta, Washington D.C., Newton…. You get the picture.

Some trips worked, and others were a waste of time. The latter category helps you focus on the former. Five of my colleagues have done their own repeat missions, focussing on places like Boston, New York, New Jersey, Virginia/DC, Florida and California. We’ve been title sponsors of conferences in Virgina, for example, and colleague Mark Usher’s on the board of directors of the Florida Venture Forum. As you can imagine, staff and an office in California helps cover that far-off market.

In 2007, our firm did 15 transactions in Canada and not a single deal in the United States. After some active U.S. marketing efforts by our modest, but merry, 12 person band, 20 of our last 25 financings have been with U.S.-based, VC-backed innovation companies. We closed a $5 million deal just yesterday in California as a matter of fact. We’ve now worked with many of the highest profile VCs in that country, including ABS, Battery, DFJ, Foundation, Globespan, Intel Capital, JMI, Oak Investment Partners, Polaris, Sequoia (of Apple, Oracle, Cisco, YouTube and Google fame), Sierra, Sigma, Tudor, Updata….

When we announced our 4th fund earlier this month (see prior post “Wellington Financial Announces $177 Million Fund IV” Sept 5-12), plans were laid for a 2nd U.S. office and more staff south of the border. We’ve been warmly welcomed everywhere, and the administration in The Commonwealth of Massachusetts, for example, hasn’t missed the fact that in less than 3 years we’ve created/preserved more than 3,000 high-paying U.S. jobs during a difficult economic period.

Chicago isn’t on the same scale as Palo Alto when it comes to tech deals. But it is strong enough to warrant a five month old State-backed Accelerator in the Merchandise Building, with 165 different start-ups already calling it home. Far more than you’d ever find at Toronto’s Mars Discovery District. Chicago looks to be a very comfortable place to do business as a Canadian, with so many obvious institutional and cultural similarities to our hometown.

I didn’t come home with any deals, but no one should expect otherwise. I definitely know I have to go back this Fall, and follow-up with the few initial relationship leads that I came across. Something that wouldn’t have happened had Bob Deluce and George Cohon not taken up the Mayor’s offer to lead the mission.

Let’s do another one in April, Mr. Mayor. This time to Boston. If I were you I’d ask TD’s Ed Clark (Bank North) and Manulife’s Don Guloien (John Hancock) to lead the show (if they’re not free, I’ll do it), along with Porter’s Bob Deluce, once again. I’ll be there, and this time I hope to bring a few of our Toronto-based portfolio companies with us.

MRM
(disclosure: this blog, as always, reflects a personal view and is not meant to represent the views of the TPA, its Board/Staff or the federal government)