Specialized firms and well-established angel investors helped one-time Vancouver entrepreneur Glenn Ballman hit the financing jackpot in Seattle.
And some say the success of Mr. Ballman's Onvia.com Inc., which made a dazzling debut on the Nasdaq Stock Market this week, points to a need for similar networks to support Canadian startups.
"Vancouver has always had a lot of wealth," said Artie Buerk, a partner with Seattle-based Buerk Craig Victor LLC, which links startup companies with wealthy individuals. "But it's come from diverse fronts, and there's nobody to tie the pieces together."
Mr. Ballman founded Onvia.com in Vancouver in 1996. Originally operating as Mega Depot Inc., the company moved its headquarters to Seattle in mid-1998, and was renamed Onvia.com in May, 1999.
Members of Vancouver's financial community say new incubators, high-tech legal teams and even specialized marketing firms are popping up in Vancouver, but still lag behind many U.S. cities.
"To be fair, Seattle is about three to five years ahead of us," said Rory Holland, a director with Vancouver-based Internet incubator IdeaPark Ventures Inc. "I would say given the climate of the Vancouver market now, if [Mr. Ballman]were shopping that deal now, he may have got it done."
On Wednesday, Onvia.com went public, nearly tripling in its first day of trading from an opening price of $21 (U.S.) to a close of $61.50. Yesterday, the stock closed down 87 cents to $56.31.
Even after that dip, Mr. Ballman's 10.6 million shares are still worth nearly $600-million.
The biggest winner in the initial public offering was U.S. venture capital firm Internet Capital Group Inc., which saw its stake, based on yesterday's closing price, hit $968.6-million.
Mr. Ballman has said previously that Canadian financiers turned him down when he was trying to raise money for Onvia.com, an on-line network geared to small-business users.
Yesterday, several members of Vancouver's relatively small financial community said they had not been approached by Mr. Ballman. But they admitted that even if they had, Mr. Ballman would have faced a tough sell.
Mr. Ballman was attempting to raise money in Canada during 1996 and 1997, Mr. Holland noted, when Canadian venture capitalists were just beginning to wrap their minds around the dot-com phenomenon.
By contrast, Seattle was already hot. Mr. Ballman reportedly sought legal help from Venture Law Group, a firm that specializes in high-tech companies.
Mr. Ballman also tapped some of Seattle's renowned angel investors, who typically have links to large venture capital firms.
Mr. Buerk of Buerk Craig Victor deals with wealthy individuals who put from $25,000 to $100,000 into startup companies. One of his associates arranged for a group of angels to invest in Primus Knowledge Solutions. The angels bought in at $2 a share. The stock closed yesterday at $123.
Mr. Holland said the Canadian scene is catching up to the U.S. model, with high-tech companies creating wealthy entrepreneurs who are looking to back new ventures. Venture funds are also moving faster and more aggressively, he added.
Ideas on Tap, an informal networking event IdeaPark held for the high-tech community recently, drew about 200 people to a downtown pub.
Wendy Stueck