Eric Jordan likes to compare the challenge of raising venture capital to doing an Iron Man marathon.
"It's not easy. You have to really believe in yourself. From the outset, you have to find investors who also believe your company can win," says the co-founder and former chief strategy officer of PureEdge, a leading provider of electronic forms-based business-process-management software and services. In the summer of 2005, IBM acquired the highly successful Victoria, B.C.-based company, a part of the corporation's strategy to bolster its information integration, content management and management software portfolio.
Reaping the benefits
In 2002, PureEdge Solutions attracted over $9.75-million (U.S.) in its fifth round of venture capital financing, an investment that was led by BDC Venture Capital. Today, Jordan believes that PureEdge truly benefited from a healthy injection of cash. Using the additional funds, the company was able to expand its sales force, step up marketing efforts, strengthen some of its existing products and hire a CEO. "Looking back, I think getting the right people on board was essential for this company's success," says Jordan. The co-founder also feels that venture capital organizations such as BDC can help entrepreneurs build credibility with their industry peers and other financers. "Having your name associated with an important investor like BDC is definitely a plus for a company's image. You can think of it as a good housekeeping stamp of approval," he says.
With more than 30 years in the venture capital business, BDC Venture Capital could also offer PureEdge its experience gained by helping hundreds of entrepreneurs turn their companies into success stories. "You want to be working with an investor that has some real insight into your company's needs and goals. In the case of BDC, you have the reassurance that this organization has helped so many other young companies succeed. We were able to benefit from their hands-on expertise and strategic direction," he says. BDC Venture Capital offers entrepreneurs value-added services such as senior executive hiring, benchmarking and establishing best practices.
One of the pluses of dealing with BDC was also having an account manager sitting on the Board of Directors. "It's clearly advantageous to have a strong Board of Directors working in the best interest of your company," he says. At the time, Jenny Yang, director, BDC Venture Capital, sat on the firm's Board of Directors. "Jenny Yang was a real industry veteran and we benefited from her extensive background with technology-based businesses," he says.
Meeting the criteria
"From the get-go, PureEdge showed that the company met our demanding criteria," recalls Yang. "PureEdge was certainly poised for rapid and long-term growth. They had a great product that boasted a distinct competitive advantage and a solid management team behind it," she says. "Large corporations and governments were ready for online business processes and we knew that the company already had a long list of customers for its XML e-forms software." At the time, the privately owned firm counted the U.S. Airforce, the Securities and Exchange Commission and JPMorgan Chase among its clients. "PureEdge made it to the top of our list because we could see the huge market potential," she emphasizes. "When we assess prospective ventures, we're looking for companies that have the potential to achieve dominant leadership in their marketplace."
"I think we definitely had the kind of track record that venture capital investors want to see. And BDC fit our needs as well," adds Eric Jordan. Before the investment, PureEdge was showing flattened sales and needed to raise additional funds to reposition the company and drive more growth. "We were looking for cash, and of course that was our big motivator. But we were also attracted to BDC Venture Capital's extensive experience with technology-focused companies," he says. Today, BDC has a highly specialized team of investment managers who have senior executive experience in the areas of sales, marketing, business development, production, management, and research and development.
Ultimately, PureEdge was acquired by IBM, which Jordan feels was the next step for the company. "IBM was looking for a solution to complement its existing products. At the time, there were other larger players entering our market, and it just made good business sense to become a part of IBM," he concludes.
Content in this section is provided in partnership with the Business Development Bank of Canada. BDC provides entrepreneurs with financing, venture capital and consulting services. To find out more go to BDC.ca.