Skypoint Capital Corp. of Ottawa, is poised to become an important player in Canadian capital, and its model for developing early stage companies could change the dynamics of the data and telecommunications industry.
Skypoint is a Canadian venture capital fund specializing in the data and communications sectors. Its major investors include the CBC Pension Fund.
Skypoint's model is similar to what is so successfully delivered in Boston and California by venture firms with depth and experience in particular sectors for very early stage companies. The partners, Leo Lax, Andrew Katz and Stephan Opalski, offer investees technical and business experience and a large network,.
Frederic Charpentier, president of one of the investee companies, BitFlash Graphics, says, 'I've known Leo Lax since 1982. His knowledge and experience is what attracted me to Skypoint. The difference between Skypoint and an ordinary institutional investor is like the difference between a publisher's warehouse and a specialty bookstore. I can get advice and assistance, as well as almost instant access to markets.'
The combined know-how of Lax, Katz and Opalski is a strategic advantage for this year-old venture capital firm. Their experience turns the risk of investing in very early stage companies into a lucrative opportunity. Lax, an engineer, was instrumental in starting more than 17 Newbridge affiliates. Katz, a chartered accountant, has 13 years of experience in the high tech industry. And Opalski is an engineer with an intricate knowledge of telecom and datacom technologies.
In addition, Skypoint's area of specialization, the information and communications market, is exploding.
'It's the right time to be investing in this industry,' says Katz. 'The data communications market is by 20% to 25% each year. The size alone is over US$50 billion. By investing in leading edge companies we can re-invent the market.'
Skypoint increases speed to market of its investee companies by introducing them to a vast international market at an early stage. The partners are able to introduce their companies to leading telecom and datacom companies that are expected to comprise the investee company's first customers. This early introduction to customers allows the company to tailor its product development, greatly reducing the initial risk associated with product introduction.
The investors are very excited. Debra Alves, the strategic investments portfolio manager of the CBC employees' pension fund, feels that Skypoint can capture the enormous opportunities in the telecom industry. 'We invest in these types of small strategic investments because they have strong return potential that, even through they represent a small percentage of our portfolio, can impact our overall returns.
'Skypoint is positioned to not only take advantage of growth in that industry, but also to change its profile.'
Claude Haw, VP of business development at Newbridge Networks Corp., which is also a major investor, agrees with the profit potential of Skypoint. But, he adds, 'Newbridge is just as, if not more interested in getting insight into new areas of business that may provide opportunities for our affiliate program.'
PATRICIA PARULEKAR
Ottawa, July 1999
© 1999 Silicon Valley NORTH