First Stone a Boost to Innovative Area Entrepreneurs
By the end of 2017, if all goes as it should, there will be 20 to 25 new entrepreneurial endeavours up and running in Prince Edward county creating innovative products, providing unique services and helping an excitingly diverse group of business owners bring their dreams and ideas to reality.
And it will be due, in large part, to the backing of a new venture capital firm created to offer long-term financial, logistical and mentorship support to entrepreneurs who have ground breaking ideas, solid business plans and the energy, capability and sustainability to make their dreams succeed – First Stone Venture Partners.
A joint initiative between the federal government (administered by the Prince Edward-Lennox & Addington Community Futures Development Corporation, aka PELA CFDC) and 12 experienced venture capital investors, First Stone began with the idea of converting 10,000 square feet of space at an empty former hotel at 35 Bridge St. in Picton into a shared workspace for small companies.
“Over time PELA CFDC kept trying to convince the owner of the building to do something constructive with it. Eventually an anchor tenant was found for the building and then some matching federal funding was found to help bring in what are essentially start-up technology companies to be based out of the building. And the idea took off. So I said to them ‘let me create a company and I will get some partners,’ and it has morphed from three or four partners to 12. And the federal government said that since it worked, they would give us $5 million to match $5 million in private money. So now we have this $10 million [Upper Canada Equity} fund and we’re planning on investing in 20 to 25 start-up companies,” explained C.J. Thompson, partner and director of operations for First Stone, who explained that there is an important and fundamental difference in the way this venture capital firm operates, compared to other similar projects.
“A typical venture capitalist opens up a fund and they expect to shut it down within four to seven years and sell everything off at a profit. We’re not looking for that exit. We’re looking for a long-term sustainable business where the entrepreneur that we’ve invested in takes a salary like anyone would. And in terms of the types of business, we say ‘tech’ because it’s a scalable and sexy sector but, honestly, we want anything that will come here and create jobs and long-term employment. And tech is a component for that, but for some of our companies it’s sometimes tech built on the ideas of an older industry.”
Entrepreneurs seeking to partner with First Stone go through a vetting process which eventually leads to a pitch. Thompson was at pains to let folks know that this isn’t a local version of Dragon’s Den, and that many of the companies that approach the investment group have already been scouted.
“For starters those of us hearing the pitches aren’t competing with one another for the deal. And I wouldn’t say we are harsh but we’re certainly honest, direct, realistic and practical with the entrepreneurs, which is something they need to hear because you don’t want to lead people on or give them false expectations. We all bring a lot of experience to the table so we’re really there to help,” he said, adding that some of the team of investors actually spend time on the road seeking out potential companies to bring into the First Stone fold.
“There is an entire ecosystem out there of entrepreneurs and start-up events and conferences. We are at as many as we can get to so before an entrepreneur comes to us to pitch to the group, there’s usually at least one and probably a couple of us who have seen them pitching elsewhere, in front of a bigger group. It’s a really good way to vet them before they come in because we know what works for us and we know what works for our government partners. So, we sometimes will have had plenty of conversations with them to help them if we think they would be a fit for us to give them tips on how they should approach our group.”
One example of a company that has come under First Stone’s wing is Komodo Open Lab.
“They have a device called a Tecla which was created by this kid from Mexico who was at the University of Toronto. It’s a little box that is attached to the wheelchair of someone who is paralyzed from the neck down, for example, and however they can activate this device – sometimes it’s by blowing into a tube, or moving the back of their head – they can literally now operate their cell phone, their TV or their home thermostat and more. This company has taken a situation where a person may have next to no direct, independent interaction with the world and now they can surf the internet or even write blogs and articles and generally have more control over their day-to-day lives. It’s amazing,” Thompson said.
“And Pro Angler has developed an app that helps you track the movements of fish and the weather, currents, wind, all that sort of stuff in real time. It’s currently only for salt water fishing and so almost all their revenue is coming from the U.S. but it’s the number one fishing app now. All these fishing charters and shops call in and give reports on how the fish are biting in certain areas, like a fish traffic report. And I know they are thinking of expanding it to fresh water as well. One of the partners was a real fishing guy and the other was a tech guy and marketing whiz, and the two of them teamed up and that’s how it started. They just needed investment to help them scale and some connections that the partners in First Stone could provide.”
Thompson was born and raised in Prince Edward County and spent much of his career as an investment advisor and specialist, but is committed to building the entrepreneurial sector within the Bay of Quinte Region.
“We want all the companies we work with to be successful. I grew up in The County so I want them to be successful and build out their businesses here. Essentially, I don’t see why we’re not going to be the largest employer in the area once we fill out our roster of businesses. I was an investment guy and it was tough for me to build the scale that I wanted coming back to this area, but when I found out about the innovation centre and I had some success on my own financially, I knew I wanted to be a partner here. I ended up selling my business so I could go all in on this because I believe in it. And it’s my hometown so that’s also kind of tugging at my heart,” he said, adding that lifestyle and cost of living and doing business in Prince Edward County and the broader Bay of Quinte region should be attractive for any potential entrepreneur.
“Think about being a business owner and how expensive it is to live and operate in the city. Imagine trying to pay employees in the city because there is such a high cost of living – unless 19 of them want to shack up in a bachelor apartment. When companies come here they realize they can lower their workforce costs but that those employees will actually be able to afford a house. It’s amazing,” he said.
“And I don’t have to tell you that with all the beaches and the beautiful natural surroundings coupled with the cost of living, its clearly a much nicer place to live. Plus, we are still right along the corridor between Toronto and Ottawa. The train station’s just up the road, we’re close to the American border – it’s perfect.”
For more information on First Stone Venture Partners, the businesses they currently work with, and the PEC Innovation Centre, visit www.fsvp.ca.