Old money joined forces with the new economy yesterday as a trio of veteran investment bankers rolled their $40-million venture capital fund into an Internet business incubator.
2FundEcom, a Toronto-based private fund run by retired Nesbitt Burns deputy chairman Aubrey Baillie, former Canada Trust and Midland Walwyn president Peter Wallace and former Merill Lynch vice-chairman Robert McLeish, merged with NRG Group, a three-year-old firm, also based in Toronto, that has given birth to a number of successful Internet companies.
The new venture will keep the NRG Group name, and qualifies as the latest in string of Canadian venture capital funds created to develop Internet businesses, with an eye toward turning big profits by taking these firms public.
"Both sides of this venture saw an opportunity to work at the grassroots level on the development and funding of Canada's high-tech sector," Mr. Baillie said.
Among the central players at NRG Group is John Rae-Grant, who headed up software developent teams at Microsoft from 1986 to 1996, then worked as a software consultant before joining NRG last March. Mr. Rae-Grant now bills himself as "dot-com midwife" and chief technology officer at NRG Group. "What we're doing is streamlining the process that allows entrepreneurs to develop their ideas," he said yesterday.
NRG Group offers budding Internet entrepreneurs, most of whom are in their 20s, a place where they can get the financial and technical support needed to turn interesting ideas into business plans. It has already notched wins by taking investments of up to $250,000 in return for up to a 49-per-cent stake in promising plays.
The so-called "incubator," which occupies half a floor in an old factory in Toronto's garment district, was home to a trio that developed http://www.BuyBuddy.com , which lets consumers search the Internet for the best prices on computer equipment. The software developers, none of whom were over 21, became millionaires on the success of BuyBubby.com and a related site.
Yesterday's union with the Bay Street veterans means NRG Group will be able to make larger initial investments, although the company intends to maintain a grassroots philosophy by incubating companies that require less than $500,000 in seed funding.
Andrew Willis