Winnipeg Free Press

Winnipeg Free Press (Newspaper) - February 11, 2014, Winnipeg, Manitoba C M Y K PAGE B7 winnipegfreepress. com WINNIPEG FREE PRESS, TUESDAY, FEBRUARY 11, 2014 B 7 FINANCIAL POST E N T R E P R E N E U R B Y A R M I N A L I G AY A G reg Yuel considers his first angel investment to be a move to help out a family friend and fellow community member. It was 2002 and John Cross, a well- known innovator and contributor in Saskatoon, approached Mr. Yuel and his father for some help. At the time, Mr. Cross' biotech company, Philom Bios, was the target of a hostile takeover by a U. S. competitor. Mr. Yuel and his father helped cultivate a consortium of friendly investors to buy shares in Philom Bios from shareholders who would have sold out to the competitor, he said. In October 2002, the Yuels' group, PIC Investments Ltd. and investment group Golden Opportunities Fund bought the shares from the then- Saskatchewan Wheat Pool, to fend off the takeover by the U. S. parent company of competitor Becker Underwood, an article in the Saskatoon Star- Phoenix reported. Mr. Yuel refers to the deal as business philanthropy to help a decent man. " It certainly wasn't a Dragons' Den deal. We just hoped for the best, and hoped that it would turn out," he said. His altruistic efforts paid off. Philom Bios was a pioneer in the field of crop inoculants, a technology that helps increase crop yield by using live microbes. By 2007, it was sold to Denmark's Novozymes Biologicals for $ 6.50 a share - compared with the roughly $ 3.90 the two groups paid five years earlier, an article in the Star- Phoenix reported at the time. " Our group, we did save the business, save that company from being eaten up by a competitor," Mr. Yuel said. " We carried it along ... We got a good return, and we were happy with it." Saskatoon- based PIC has made investments in more than two dozen companies, including 12 currently in the queue. With some angel investments, including Philom Bios, the group has made successful exits, while others have failed to flourish, or were outright squashed. " The general rule of angel investing has been borne out by our experience ... Two in 10 we hit out of the park and it pays for the rest," Mr. Yuel said. " Two in 10 are absolute abysmal failures, and the other six just limp along," he added. One investment that ran dry was a dehydrated alfalfa producer, a company he referred to as a " dismal failure." This stemmed from inadequate due diligence on PIC's part, he said. Although he knew the agricultural company was working through industry problems, Mr. Yuel said he and the angel fund underestimated the scale of those problems. Despite all the time and energy he invested in making it work, Mr. Yuel said, the alfalfa producer's managing partner wasn't interested in or willing to listen suggestions. " Our advice became a battle with that managing partner, as opposed to our successes which have been where the entrepreneur listens," Mr. Yuel said. Since last January, Mr. Yuel has made five angel investments - three with PIC and two on his own, for a total of $ 4.2- million. The investments he made with PIC were Warman Home Centre, a real estate developer that also makes housing materials and supplies, Prairie Plant Systems, a biotechnology firm developing plant- based pharmaceuticals, and Advantage Tower, which specializes in construction, installation and engineering for the wireless industry. On his own, he invested in Triton Triathlon Training, Webcoaching software for triathletes and other multi- sport athletes, and a startup oilfield exploration company he will only refer to as S- Gen. Many of PIC's investments are in agriculture or biotech, which Mr. Yuel said is the natural result of its locale rather than a preference. He says his main criteria for investment is whether he can be of assistance. " If I can give myself a clue as to how much we can help them, it helps identify what our lift in that investment might be. It helps identify that we might get more than our investment back." Once that element is confirmed, Mr. Yuel assesses whether he believes in the company's service or product, and whether there is a market for it. He then looks for cultural fit: whether the organization's key players are open to advice and, frankly, " is this someone you want to go to dinner with for the next four years?" " Once we get those three silos filled, then we're good to go," he said. " Then it becomes a question of negotiation: how much money and how much control." Financial Post aligaya@ nationalpost. com ALTRUISM PAYS BACK FOR ANGEL INVESTOR Two in 10 we hit out of the park and it pays for the rest T he most discussed topics on the network in 2013, according to Twitter, included low- budget movie # Sharknado ( about a tornado of sharks), the birth of the # RoyalBaby and 50th anniversary of campy British scifi TV series # DoctorWho. But beneath its pop culture memes and cat GIFs, social media has proved an increasingly potent business tool. A recent report from BMO Financial Group shows 57% of small businesses in Canada now use social media, a 42% rise from last year. Business owners are using social networks to track sentiment about their company and rivals, to recruit top employees and sell products and services. McKinsey Global Institute estimates that social media stand to unlock a collective US$ 1.3- trillion in value for businesses. This year, companies will turn to social media to boost business in even more creative ways: Cutting phone wait times The ability of customers to air their complaints via Twitter and Facebook - instead of waiting patiently on clogged phone lines - has shifted the balance of power in customer service. A recent Nielsen survey shows more than half of all customers now turn to social media for redress; meanwhile, some 81% of Twitter users expect a same- day response to questions and complaints. With such potent tools in customers' arsenals, expect to see companies shift resources to social media support in 2014. The upside is significant cost savings and an easier way to manage the huge volumes of messaging generated on Twitter and Facebook. At HootSuite, for instance, a 17- person customer service team uses the company's own tool to handle eight million users. Internal social networking edging out email The basic idea of email has remained essentially unchanged since the first networked message was sent in 1971. And while it is great for one- on- one, formal correspondence, there are far better tools for collaboration. For example, several business apps are borrowing features from popular networks including Facebook and bringing them into the office. This year, expect to see internal business networks such as Yammer make serious inroads into enterprise settings, enabling employees to form virtual work groups and exchange ideas on centralized, Facebook- like message boards. These tools put an end to tiresome email threads and can make relevant content accessible and searchable for the entire company. Using Twitter to boost foot traffic Native social media ads - the ones that appear in users' Twitter and Facebook streams - exploded last year and now represent a $ 3.1- billion market. This year, savvy business owners will be able to avail themselves of some pretty sophisticated geo- location features built into these ads. Twitter, for instance, just unveiled an option that lets businesses target users by zip or postal codes. Promoted Tweets for the local pub or dry cleaner may pop up in your Twitter stream as you walk through a particular neighbourhood. Facebook has been using this kind of " geo- fencing," since 2011, to help businesses better court high- value foot traffic. Twitter classes Among 2,100 firms surveyed by Harvard Business Review , only 12% of those using social media feel they do so effectively. To fill the gap, employers are turning to formal social media classes, often in the form of online courseware, similar to the Microsoft Office or Adobe training modules, with topics ranging from online etiquette to how to cultivate sales prospects on Twitter. The goal is to get both social newbies and social natives up to speed on how social media can serve as a productivity tool. Big Data get friendlier for small business For years, all the digital information that businesses capture about their customers and their habits has been hyped as the secret to everything from boosting sales to improving customer loyalty. But collecting and making sense of this data has been out of reach of smaller businesses. A new wave of user- friendly analytics software is set to hit the market, enabling non- experts to sort through terabytes of social media information. Cloud- based programs, such as Brandwatch and uberVU, let companies monitor message volume and sentiment around their brand and identify influential users on social media, just by plugging in a few keywords. They also spit out the kind of detailed, eye- pleasing reports that, until recently, took stats experts days to prepare. Software also is maturing, to do a better job at consolidating different social media functions - marketing, customer service, internal communication, analytics and advertising - into one social relationship platform. ( I'm obviously biased toward Hoot- Suite, but giants such as Adobe and Oracle also have offerings.) Financial Post Ryan Holmes, CEO of HootSuite, has redefined the face of social media - bringing Twitter, Facebook, Google+ and other social networks out of the dorm room and into the boardroom. An angel investor and advisor, he also mentors startups and entrepreneurs. His column appears monthly in the Financial Post. Follow him on Twitter. com/ invokerv Social media poised for bigger things to come C O M M E N T DAVID STOBBE FOR NATIONAL POST Greg Yuel, president and CEO of PIC Investment group, at his temporary office in Saskatoon. Yuel got into angel investing when he and his father joined a consortium to help out a friend. 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