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Q Labs sale validates innovation in the province

Big things, I mean really big things, are happening in New Brunswick. Take a look at the latest tech success story in Fredericton. While some people looked at recent the Radian6 deal as a brush with lady luck, the latest international acquisition of Q1 Labs (which may very well dwarf the Radian6 deal) has firmly established Fredericton, and with it New Brunswick, as a new international hotbed of innovation.

So what is really happening here? Are we seeing the baby steps of a new Silicone Valley? I know one thing – there is an attitude and hunger to make big things happen here. You can’t help but wonder what’s next, and you certainly need to keep an eye on it.

This week’s sale of Q1 Labs is bigger than a New Brunswick story, it’s one of the few lucrative tech exits in all of the country this year and serves to validate the team of professionals – beyond those in labs – who are at work in the province churning out successful tech firms.

“Our industry has been starved of exits,” said Richard Remillard, executive director with the Canadian Venture Capital Association.

There have been three initial public offering exits since 2008, and Remillard said until recently there hasn’t been a increase in merger and acquisition activity, nor a increase in the valuation of those exits.

All of this certainly makes for exciting times in New Brunswick, as the outpouring of enthusiasm and confidence spills over into every other area. This is what I really like about this city. Remember a while ago when Fredericton won the award for best small city for a population of 100,000 people? Now can you see why?

Q Labs sale validates innovation in the province
Fredericton: Hotbed for hi-tech firms sees another homegrown company gobbled up by industry leader

This week’s sale of Q1 Labs is bigger than a New Brunswick story, it’s one of the few lucrative tech exits in all of the country this year and serves to validate the team of professionals – beyond those in labs – who are at work in the province churning out successful tech firms.

“Our industry has been starved of exits,” said Richard Remillard, executive director with the Canadian Venture Capital Association.

There have been three initial public offering exits since 2008, and Remillard said until recently there hasn’t been a increase in merger and acquisition activity, nor a increase in the valuation of those exits.

Q1′s acquisition by IBM on Tuesday come on the heels of Salesforce.com’s buy out of Radian6 for $350 million in March. Both firms were born out of Fredericton and owe their success to a similar pool of personnel. While the figures from the Q1 Labs deal were kept confidential, the money earned from Radian6 has caught people’s attention.

“What this does for the industry as a whole is shows that you can make significant amounts of money,” Remillard said. “I suspect what it does for New Brunswick is that it reinforces the message that there’s something interesting going on in the region.”

“What these two deals suggest is that there’s a foundation in the province,” Remillard said.

Peter Lindfield, Atlantic regional director of the Canadian Advanced Technology Alliance, said the Q1 Labs deal further underscores the depth, experience and expertise in New Brunswick’s ICT industry.

“They’re hallmarks of success in the Canadian industry,” he said. “We’re over represented with success and I think that the potential for success is much greater than we’ve seen.”

Lindfield said the two acquisition exits also clear a trail for future New Brunswick tech firms, a proven route as opposed to the initial public offering option.

“Q1 really speaks to the fact that exit strategies are really tailored to the environment,” Lindfield said. IPOs are in the doldrums, he said, with firms having difficulty raising financing capital through the public markets during these turbulent times.

“ICT industries I think are recognizing that they constantly have to position themselves for potential acquisition,” Linfield said, adding it’s a lesson for the province’s entrepreneurs to take home.

Q1 Labs’ management team was successful in building itself into the firm that was attractive to IBM, he said.

“It’s built on the foundation of management expertise, the ability to manage innovation.”

Part of that foundation is built within the province’s schools. Lynda Leonard, senior vice-president of the Information Technology Association of Canada, said the two sales this year validate the innovation unfolding at the University of New Brunswick.

“The infrastructure is working,” Leonard said. “Your academic infrastructure is feeding the entrepreneurial pool quite nicely, producing technology that world-leading companies find captivating enough that they want to buy.”

She said the sales also create infrastructure in finance, sales and acquisition in the management side of technology ventures.

“We routinely survey the industry,” Leonard said. “And one of the key laments of the industry is just how hard it is to find that C-suite talent.”

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