Jennifer Brooy on the EDC’s investment direction

We recently interviewed Jennifer Brooy, vice president, equity, at Export Development Canada about some of their recent deals, the EDC’s vast global network and how Canadian startups can benefit from a relationship with the EDC.

DigitalPuck: Can you tell us a bit about EDC and its investment direction?

Jennifer Brooy: Export Development Canada (EDC) is Canada’s official export credit agency. It is a Canadian Crown Corporation that provides financing and risk management services for the purposes of supporting and developing Canadian export trade and investment. Under one roof, EDC hosts three basic business components: insurance, lending and equity investments.

The latter, EDC Equity, is engaged in domestic and international investment activities to facilitate global business expansion and export growth of Canadian companies. The program involves three investment functions: venture capital for leading-edge Canadian technology companies that are born global, growth and buy-out capital for small and mid-sized Canadian entities embracing or seeking international growth strategies, and fund investing.

EDC Equity invests in domestic and foreign funds that cover a spectrum of stages, size of investments, industries and geographies within the alternative asset category. Internationally, we focus on funds that address fast-growing emerging markets, e.g. India, China, certain countries in Latin America and Africa, and others. This strategy affords us unique connections to potential business opportunities and alliances in these high-growth markets for the benefit of Canadian businesses.

DP: How will startup companies benefit from a relationship with EDC?

JB: Startup companies may find us to be an attractive partner given our sound balance sheet and a history of stable performance that spans over sixty years. This stability allows EDC to stay the course in assisting a company towards optimizing its potential. However, what makes EDC a unique and value-added partner is our established networks around the globe.

These networks encompass major multi-national corporations, companies of all sizes in developed and emerging markets, entrepreneurs, financial institutions, investors, etc. We have the advantage to open doors and identify opportunities for startup companies in places far and wide.

Canadian technology startups are born global – yet, they are not born with international networks that are necessary for their success, particularly in the world that we now face – globalization and integrative trade. As an investment partner, we aim to ensure that Canadian tech startups have ready access to their target markets and customers through our long-established networks.

DP: Do you do direct equity investments or just debt?

JB: EDC is able to structure transactions ranging from pure senior debt to common equity, and various combinations thereof. Having said this, our appetite for direct equity (or quasi-equity) investments is generally reserved for Canadian-based companies.

DP: Can you discuss some of EDC’s recent investments in Canada?

JB: Let me illustrate our approach with a cross-section of recent transactions:

* Early this past year we provided growth capital to an Alberta-based oil services company that is expanding its business into the booming shale gas developments in the US. The company is now on a high growth and performance trajectory; consequently, it recently launched a successful IPO.

* EDC Equity provided the lead commitment to a Canadian water fund, which translated into the fund manager achieving its target close of $150 million Q1, 2011.

* And, a couple of weeks ago, we completed a venture capital investment in a Montreal-based company with a unique software solution that enables the roll-out of wireless tablets based on a Microsoft operating system.

We are enthused about the variety of transactions that we are involved with and the prospects for Canada.

DP: What do you look for before investing in a Canadian company?

JB: Our due diligence process is fairly comprehensive. Ideally, though, we are looking for star management teams. In other words, teams with an Olympic capacity to “follow the puck.” A differentiated business/product offering is important, but without a team with the passion and talent to execute cohesively, a company will be nowhere fast.

Having said this, startups or companies in transition by definition are not fully baked, so we also look for co-investment partners with an aligned vision to build the right management team and direct a company to develop and enhance its value proposition, while remaining competitive. Is this easy? No. But, we are determined on this course.