Softimage started with $350,000 in venture capital funding. Here’s some comments from Loudon Owen, who with John Eckert helped finance and advise Softimage in its growth.
Proceedings of the Standing Senate Committee on Banking, Trade and Commerce
Issue 51 – Evidence
TORONTO, Thursday, April 29, 1999
The Standing Senate Committee on Banking, Trade and Commerce met this day at 9:00 a.m. to consider the present state of the financial system in Canada (equity financing).
From the opening comments by Mr. Loudon F. Owen, Managing Partner, McLean Watson Capital Inc.:
When we started, we were trying to raise money for a company in Montreal called Softimage. We were carrying around our little flip books but nobody wanted to give us money. We were quite astonished because we thought it was an exciting opportunity. We spoke to American venture capital firms, we spoke to Canadian venture capital firms and we decided there was an opportunity for a highly specialized venture group, so that is what we set up. We invest exclusively in software companies. We were highly focused, driven by what we perceived to be a market need. That was quite a few years ago and I think the market has changed dramatically in the last five years. However, that was what gave us the impetus to go forward.
I do not know if you have heard about Softimage. It is an animation software company. If you have seen Titanic, Jurassic Park, Death Becomes Her or most of the commercials on the television, you will have seen Softimage’s technology. The company was funded with $350,000. The shares which we receive from Microsoft are today worth $2.2 billion. It has 400 employees in Montreal and it was instrumental in building the animation industry in Montreal. There have been a variety of spinoff companies such as Discreet Logic and other companies in Montreal, so the company grew pretty dramatically. The only venture capital that went in was $350,000. After that it went public on the NASDAQ.
Our role was to invest. John Eckert and I share the duties of chief operating officer, and took it public on the NASDAQ. It was the first Quebec company to make its initial public offering on the NASDAQ. We considered the Canadian markets and elected not to go public here. We then sold it to Microsoft. We took the company from the initial point of investment, with its four employees, including the founder, Daniel Langois, to over 200 when we sold it to Microsoft.
On the question of whether Quebec was a hot of entrepreneurship [at that point in time, 1999] due to a more favourable regulatory and tax climate or just because people are more into the culture of entrepreneurship:
Do hotbeds of technology or clusters grow naturally because they are sponsored and supported? Again, it is a combination. I think Montreal’s animation, post-production and special effects community grew without any government support. For example, neither Softimage nor Discreet Logic had any significant government support or tax breaks. In fact, we tried to sell our first product to the CBC, and they would not buy it. They bought a French product, so we had to go to France and sell our first product there.
These companies grew up indigenously through their own creative efforts. What is happening now to sustain those industries and help them grow with their larger working capital requirements is assisted by government efforts.
Loudon Owen is co-founder of McLean Watson Capital. Prior to establishing McLean Watson Capital, Loudon and John Eckert financed and advised Softimage, a world leader in high-end 3D animation, in its growth from 4 to 250 employees, its IPO on Nasdaq in 1992 and the sale to Microsoft in 1994. Loudon and John served as the Joint COO for Softimage from 1993 to its sale.
Everything I’ve heard is that both Alias and Softimage were born with funds from the same Canadian government program. And it continually survived on tax credits. So I don’t know about that last part
I had the good fortune of working with Daniel Langlois in the early 90’s. I remember clearly that he was not keen on asking the governments for money. He did not like the constraints that came with it. He was calling this kind of money “social security for companies”. The IPO prospectus is a very interesting read to learn more about the early days of Softimage on the money side. I should scan it for a future flashback post.
Thanks for the info, and it would be great (and interesting) if you could scan that prospectus some day.