Randy Thompson: Alberta’s Angel
Thompson talks about the changing face of the province’s venture capital scene
by Alix Kemp
Some might call Randy Thompson a job tourist. After three years as chief of staff for Alberta’s minister of technology, Thompson founded the province’s first Internet service provider, Alberta SuperNet, in 1992. Three years later he sold it.
After a few businesses (some more successful than others), the serial entrepreneur decided to change tracks again, founding an angel investing group called the Venture Alberta Forum. Since starting the group in 2003 (it was recently renamed VA Angels), the organization has grown to be one of Canada’s largest and most active angel-investing concerns, with more than 50 investors, 57 deals worth more than $28 million, and new branches in Kelowna and Winnipeg. Thompson is an energetic, easily excitable 48-year-old who’s constantly moving between residences in Edmonton and Calgary. We held him still just long enough to find out what makes angel investors tick, and how the startup tech sector has changed over the past decade.
photo Bryce Meyer
AK: What makes someone become an angel investor?
RT: I don’t particularly want to go back in and CEO a company where I’m the founder and I’m doing 20-hour workdays again. You’re looking for that adrenaline rush – that’s the key to an entrepreneur who’s been turned into an angel investor. It’s that, at your core, you’re still somebody who loves to build things and change the world, and being an angel investor allows you to help with that.
AK: You’ve done both, so which is harder: launching a new startup or building it into a company that lasts?
RT: I don’t know that there’s any stage of company that’s easier than the other. It’s almost like raising kids. You think when you have kids that it’ll get easier with time, but they turn into terrible twos. Then the terrible twos become horrible kindergarteners, and the kindergarteners become 13-year-old junior high girls and boys. Then the company becomes a high school kid that just steals your money and takes your car keys.
AK: Only one third of startups make it to four years. Why?
RT: The VA Angels survival rate is double, with 67 per cent of our companies still active. Now, that goes to mentorship and coaching. A lot of the entrepreneurs that end up not making it don’t have access to support systems that help them build good companies from the very beginning.
AK: I have to ask – what’s the worst pitch you’ve ever heard?
RT: [Laughter] You know, I actually felt bad for the guy. He got up in front of us and he started perspiring almost immediately. He had a silk shirt on, and he has 10 minutes to speak, but within four minutes his silk shirt started to perspire …
AK: Oh no …
RT: … It was horrible. At the fifth minute, he stopped and said, “OK, everybody, we all know this is going horribly. I just need the money.” Needless to say, the group didn’t give him any money. We’ve seen some bad ones, and we’ve invested in some bad ones.
AK: When you do make a bad investment, what can you do?
RT: Quite honestly, the way angels end up getting out of their companies is they just decide not to put any more money in. That’s the hardest thing. At what point do you start the tough love, and say you’re not giving them any money, even if it means the company goes under?
AK: You take a structured approach to angel investing. Why?
RT: The biggest problem I saw was the lack of structure in Alberta around technology investing. None of the entrepreneurs knew where to find people who would invest. I saw all these formal groups in Silicon Valley, and I thought that would be a really good thing to have here in Alberta. That was back in 2003 – we’re coming up on our 10th anniversary in June. Yuck. I never do anything for 10 years.
AK: Wait – your organization is turning 10 and that’s yuck?
RT: [Laughter] I always used to sort of do things for three years and get out. Ten years, that’s huge.