P6's VC investment in Jefferson Partners paying off
Venture capitalists swing for the fences
Jefferson Partners hits homer as AOL buys Quack.com
Barry Critchley
Financial Post
If you want to get a head start in the venture capital business, memorize these three
numbers: 2-6-2. Why? Because the rule of thumb is that for every 10 investments a VC
makes, two will be strikeouts, six will be singles and the other two will be home runs.
That's not a hot average. So, when you hit a homer in this business, you've got to hit a
monster grand slam. Well, the gang at Jefferson Partners, a five-year old Toronto-based
venture capital firm, did just that.
Jefferson recently sold Quack.com, a company that lets you make long-distance telephone
calls over your Internet connection, to America Online Inc. for a price tag of around
$300-million. In less than nine months, Jefferson, which was involved in a number of
rounds of financing, turned a US$1.8-million investment into a US$18.2-million payout.
In exchange for its stake in Quack.com, Jefferson received about 311,000 AOL shares.
Jefferson investors -- a group that includes PSINet, Torstar, Yorkton Securities and
Montreal's Chagnon family -- received those AOL shares on a tax-efficient basis. (Bid.Com
also invested in Quack.com and made a $23-million profit on its $1-million investment. ELab
Technology Ventures Inc., a unit of the Royal Bank, was also an investor.)
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