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private equity

Balloons suspend Kent Couch in a lawn chair as he floats in the skies near Bend, Ore., Saturday, July 7, 2007.Pete Erickson/The Associated Press

A Toronto-based consulting firm is planning to spend $5-million over the next five years to fund start-up technology companies that are developing software related to human resources and corporate governance issues, saying it wants to spark more innovation within the industry.

Global Governance Advisors (GGA), an executive compensation consulting firm, said it is creating a private-equity fund with a $1-million commitment for each year, and it will choose four companies that will compete to receive funding.

GGA managing partner Paul Gryglewicz said the private-equity financing could increase beyond the start-up commitment for those companies that are most successful. "It's all in the spirit of advancing the industry," he explained. "We want to create. We are looking for entrepreneurs that have a passion for governance like us, and want to express it by means of technology."

The Human Capital Innovators Fund will initially provide $200,000 – $50,000 to each of four firms – to help the entrepreneurs develop a business plan and to conduct an evaluation of the commercial viability of the technology. The fund will then award a further $800,000 to winning firms with the most success at developing a commercial product. The $800,000 could be divided among the four firms or it could be given entirely to one company, depending on their initial success.

The fund plans to take an ownership stake in the new businesses, or in new software that gets commercialized.

Mr. Gryglewicz said GGA has committed a minimum of $5-million to run the program five times over five years, but it is also willing to use its connections and support to help secure larger amounts of funding after the initial start-up. GGA will also provide input and support to help entrepreneurs understand the needs of the business community, he said.

"It's part of our growth plan, but it's also part of our evaluation of how we might accelerate the technology sector in Canada by supporting young bright minds," he said.

He said the fund will focus on areas where GGA has the most expertise, including compensation, human resources and corporate governance oversight of boards of directors. Companies with the best chance of being selected will have a combination of market knowledge, technical expertise and founders "who can hit the ground running and take on the challenges of launching a successful startup."