Venture capitalist returns to Canada ‘to create jobs’

Venture capitalist Ann Hanham hopes to bring a little bit of Silicon Valley to Canada. At 59, she is returning home to create a $300 million venture capital fund for the biotechnology sector.

Venture capitalist Ann Hanham

She will be looking to back just 15 to 20 companies, on the expectation that those companies will produce a return of five times their value within five years. Hanham is a managing director at Burrill & Company, a venture capital firm in Silicon Valley where she has worked for the past 12 years.

Born and raised in Port Colborne, Ont., she earned a PhD in biology from the University of British Columbia, and is the co-founder of the biotechnology firm InterMune Inc. The Burrill Canada fund will invest broadly in biotechnology related to life sciences, bio-fuels, bio-industrial chemicals and agricultural bio-technology.

Why Canada?

Burrill and Company puts out a report each year on the bio-technology sector. They gather data all over the world. When I looked at the chapter on Canada, I became concerned because Canada’s venture capital community is having so much trouble raising capital. There wasn’t enough capital to sustain the existing bio-tech companies, let alone having capital available for additional start-ups. I went to Steve Burrill, the CEO, and said I would like to go back to Canada and provide the insights and the networks that I had

What will your fund look for in start-ups?

I have a metric where, if I don’t see a five times return in under five years, we don’t even take it into due diligence.

That’s pretty fast, isn’t it?

Yes, and that’s the nature of venture. Let’s say a company comes in and argues they have a value of $10-million. With an additional $10-million in capital [from the fund], I would need to see that company worth $100-million in under five years. Those are the sort of numbers we work with within the industry.

What is Canada’s potential to provide those kinds of companies?

It’s huge. Canada is in the top 10% of countries on a per capita basis for research; the Canadian and provincial governments have put an enormous amount of capital into research in academic institutions. But Canada is rated in the bottom 20% in the world for commercialization of their research. That means I can come in and leverage all the federal and provincial money that’s gone into academic institutions. I can get it cheaply in Canada today, and I can sell it in the world for a lot more. To me, that’s a really good argument to invest in Canadian start-ups.

Why haven’t we been doing a better job of commercializing all the wonderful research?

I don’t think there’s any simple answer to that question. There is a culture in Canada which is risk-averse. There is a culture of willingness to take risk here [in Silicon Valley] and there’s no shame in failure here. There’s more of an acceptance that “well, what did you learn from your failure and how are you going to make sure that doesn’t happen next time?” Historically, Canadians have addressed a smaller market and have not really tried to see what the value of their products is on a global scale.

Here I have access to world markets that I never felt when I was in Canada. I am on the board of a company that is building a pharmaceutical plant in Wuhan, China. Burrill invested in this company because of the enormous opportunity. I think historically Canadian venture capitalists syndicated with Canadian venture capitalists. Every company we invest in from the Burrill Canada Fund will go global from day one.

To what extent do we have entrepreneurs who are ready to play in this game?

When we did an analysis of the Burrill portfolio of companies, globally, and looked at predictors of success, the No. 1 predictor was the entrepreneurs, the CEO and senior management of the company. We found that there were serial entrepreneurs who had the skill set to pick the winners and even when technology failed, the serial entrepreneurs knew how to go out, get additional capital and bring in other technology and in the end they were extremely successful.

I’m betting that I can find 15 to 20 very talented serial entrepreneurs and to hedge that bet, we will bring serial entrepreneurs on staff and create companies around them. We’re not just going to sit waiting for companies to send me a business plan; we’ll also be proactively finding truly talented entrepreneurs and putting technology around them.

So how will you find these people?

I already have a database. I know five individuals that I could call who would absolutely jump to do this.

How will you persuade investors to contribute to the fund?

There are three sectors I’m pitching to. One is the corporate sector. The idea is that we’re bringing in an experienced team with a big network of potential deals. We’re also going to the institutional investors. With the corporates in alongside, you have that expertise and the validation that this is something that is worth doing. The institutional investors will come alongside and then there are funds of funds we’re also applying to. In Quebec, there’s Teralys. There’s the Alberta Enterprise Corporation Fund and the Ontario Venture Capital Fund.

Why was it personally important for you to come back to Canada?

I had a terrific upbringing in Canada and I have a loyalty to Canada. I had a fantastic childhood and I got an absolutely first-class education there. When I reached a point in my career, there weren’t the jobs that could keep me there. I’ve always wanted to go back and create those jobs. I would love to come back and teach and mentor what I have learned, and create enough of an infrastructure that this could be perpetuated, so there could be future funds that would do this on this model.

This interview has been edited and condensed.