A social networking firm, a mobile commerce service provider and a travel app developer were the first three start-up organizations to get a much needed boost from the $150 million BlackBerry Partners Fund.
The venture capital fund set up earlier this year by BlackBerry maker Research in Motion (RIM), media conglomerate Thomson Reuters, the Royal Bank of Canada and some 27 other Canadian investors in businesses developing mobile applications and services primarily, but not exclusive to BlackBerry devices. The group is considered to be one of Canada’s largest focused funds.
Although none of the fund’s initial recipients were Canadian companies, it’s still a good thing because the fund will rejuvenate a sluggish Canadian VC environment, according to a start-up expert based in Toronto.
Furthermore, investing in promising mobile app companies can also help RIM catch up with other mobile players such as Microsoft, Apple, Google and Nokia who benefit from a more extensive developer community, says one technology analyst. “Typically Canadian companies are the ones seeking investors. We’re turning that around and looking for viable global investments,” said Kevin Talbot, co-managing partner of the fund.
WorldMate, a company based in Israel, got $8 million from the BlackBerry fund, Motorola Ventures and AMC Communications to expand its operations.
WorldMate offers a mobile travel application that alerts users when planes or trains are delayed or canceled. Users can find and book flights or hotels nearby based on location information. WorldMate is already available for BlackBerry, Windows Mobile, Symbian and Palm OS phone users, said Nadav Gur, CEO of WorldMate.
The fund, and other partners including Qualcomm Ventures, Greycroft Partners and Monitor Ventures, invested $3.2 million in Buzzd, a location-sensitive entertainment service.
With Buzzd, users can find and read user reviews about local events and venues. The service is already available through all the major U.S. operators, but the investment will fund further development of the client version.
Digby, a provider of a mobile commerce platform, received $5.5 million in investment from the BlackBerry fund and investors at the Eye of Texas partners.
Phone users can download the software that lets them buy from retailers featured in the Digby mall, but retailers can also offer self-branded versions of the client for customized shopping, said Dave Sikora, Digby CEO. The client then links to the phone’s contacts list so users can choose an address from the list to send purchases to. While close to 90 per cent of Digby’s business is transacted on the BlackBerry platform, the company is also launching a mobile browser and iPhone version of its product, Sikora said.
Talbot said the BlackBerry fund provides capital from as low as $250,000 for mainly product development and product-to-market funding to $ 5 and $10 million for expansion capital. Key factors in the group’s choice of companies are: a good management team; marketable products or services with good design and unique competitive advantages; and a target market with a huge and fast growth potential.
The group is also looking for companies that are appropriately valued and cash efficient, according to Talbot.
These qualities, he said, will ensure that a company can weather and thrive in difficult economic times.
Gur of WorldMate, said the money his company received from the BlackBerry fund will be critical for the Israeli firm’s plans to expand its development and sales operations in North America and the eventual transfer of its headquarters to Atlanta, Georgia.
The BlackBerry fund is a welcome development in the Canadian venture capital scene, according to Jevon MacDonald, principal of the Startup North, a business advisory firm.
“VC activity in Canada has been very low. It’s heartening to find a VC of Canadian origin that is of international calibre.” A lot of funds, MacDonald said, have been shutting down due to liquidity problems and because most of their investment choices have failed.
“The BlackBerry fund ranks among the country’s largest focused funds,” he added.
MacDonald is hopeful that Canadian startups in the mobile space will become aware of the fund and apply for it. But he said mobile app development has been sluggish in Canada mainly because the market for such products and services are held back by high prices and lack of competition.
Investing in overseas and local mobile startups will prove beneficial for RIM, according to Carmi Levy, technology researcher and senior vice-president of AR Communications in Toronto. He said the Canadian mobile device company’s application efforts are “considerably younger” compared to those of its competitors and therefore lacks the “critical mass of developers.”
“RIM lags behind the likes of Apple, Google, Nokia and Microsoft in terms of app development in the mobile space. Opening up app development to a larger community will be a definite boost.”