Markus Frind can't find anything to buy.
The Vancouver tech entrepreneur, who sold his online dating site Plentyoffish.com last year to Match Group for $575-million (U.S.), has set aside about $100-million (Canadian) of his net worth to invest in startups (he was Plentyoffish.com's sole owner).
Last year he plowed more than $20-million into online Vancouver furniture retailer Cymax Stores Inc. and led a $9-million financing of another hometown firm, financial technology firm Grow (formerly Grouplend).
After that roaring start, however, Mr. Frind is finding it hard to hook the next big catch in venture investing. Mr. Frind is looking specifically for firms with more than $5-million in annual revenue – a startup that has had initial success and is starting to build its team – where he can sit on the board "and where I can make a measurable impact on the day-to-day" aspects of the company's development, he said at this week's Cantech Investment conference in Toronto.
He's looking for Canadian companies, particularly in the startup hotbed of Vancouver, with a bent toward online commerce, "heavily marketing-driven, stuff I understand and can add value to." He'd look at Internet-of-things opportunities but not consumer hardware, like smartwatches, or virtual reality plays.
These days it seems hardly a week goes by without a new Canadian venture fund – or two – being announced. But Mr. Frind sees "a giant lull" for investors in the startup space here, in terms of opportunities he'd consider.
"There's not much to invest in these days. No one knows what the new cycle, the new trend is." Having backed a fintech company – a hot sector featuring tech companies aiming to disrupt the financial services industry – he's concluded "there will only be a handful of winners and they have been funded."
Mr. Frind sees a lot of deal flow and says "you can see a ton to invest in," but many of the opportunities seem geared toward a 100- to 200-per-cent return, with ventures geared around narrow features and built to be acquired in a couple of years. He's looking for 10-times returns, not one or two. "I'm looking for someone who can be in a company for 10 years and is going to build something massive."
The tech venture sector has seen its star fall somewhat recently. The smartphone market, which has driven a lot of innovation and venture investing, has hit maturity, the economy and stock markets are on shaky ground, there are growing concerns that many top-name private tech ventures are overvalued and U.S. tech initial public offeringS were at their weakest level in a decade last quarter.
"We're in between cycles," Mr. Frind said. But there are still venture-backed startups that need funding, which he calls "zombie companies."
Many have come calling on him. "They're limping along and growth is kind of flat, they're not going anywhere, and they're looking to raise money. And there's a tremendous number of those," he says.