Royal Bank seed fund boosts capital with addition of four new partners

Primaxis Technology Ventures Inc has finally reached and surpassed its goal of establishing a $50-million seed capital fund to exploit emerging discoveries in the telecommunications, semiconductor and electronics, advanced materials and manufacturing and information technology infrastructure sectors. With the addition of four new partners to the original two investors, Primaxis now has a $55-million fund at its disposal, minus an undisclosed amount it has already invested in six firms and three university research projects (see chart). Another partner will be announced in January.

Primaxis was founded in late 1998 by Royal Bank Ventures Inc (RBVI) along with UK-based BTG International Inc and is one of four seed funds established by the bank to exploit early stage technologies. The others are Milestone Medica Corp, eLab Technology Ventures Inc and Foragen Technology Management Inc, which has also secured new funding (R$, November 3/00).

Primaxis' new partners - Dupont Canada Inc, MDC Corporation Inc, Battelle and Crown Investments Corp - are investing a total of $35 million into Primaxis, contributing a wide spectrum of expertise. Primaxis president and CEO Ilse Treurnicht says it was always the intention of RBVI to expand the investor base in the firm.

"I came on board in February, 1999, to develop a business model and bring in additional investors. Our model is that of an early-stage technology investor with a strong management team," says Treurnicht, a technology commercialization specialist formerly with the Univ of Toronto. "We proactively build out intellectual property and complement the business elements that are there in the investee firms, and bring in additional partners for investment and technology sourcing. The plan is to invest most of this fund over the next four years, except for a small amount we want to keep available for follow-on."

Treurnicht says the new partners offer Primaxis obvious sources of capital for investment, but they also have substantial links into follow-on capital pools, allowing Primaxis to "go a little deeper" into its investee firms.

Dupont Canada is the Canadian arm of one of the world's largest chemical firms. With six Canadian manufacturing facilities, it employs 3,300 people.

MDC Corp is an international business services company providing security sensitive transaction products.

Battelle is a pioneering US-based R&D firm focused on the commercial and government sectors. It specializes in technology development, product development and commercialization.

Crown Investments Corp is the financial holding firm for the Saskatchewan government's crown investments. It is also an investor in sister seed fund Foragen Technology Management, which is focused on the agriculture and agbiotech sectors.

To date eight of the nine investments made by Primaxis are in Canadian firms and universities. The ninth - Silicon Video Inc - is headquartered in California's Silicon Valley but conducts all its R&D in Toronto. The fabless semiconductor firm was founded to spin-off patented image,video and graphics processing technologies, and apply them to a range of existing and emerging markets.

US firms will be considered as investment candidates, but Treurnicht says the firm's primary focus will be on Canada.

"Primaxis is hands-on and it's easier with companies that are close by," she says. "US offers opportunities for technology bundling and bringing that technology into Canadian companies. We'll do this by licensing technologies and by other means."

Primaxis will consider a variety of strategies in company development, including spinning out technologies from university research that has reached the proof-of-concept stage.

R$