Do or Die

At the same time Welaptega was being forced to be technologically innovative, Hall admits the company needed to be innovative on the fundraising front too.  In 2006 the company secured a $1.5-million loan from BDC Venture Capital and InNovacorp (the Nova Scotia crown corporation created to help start-up technology companies), but the government overseers were anxious almost immediately.

“True venture capitalists wear risk for high return. When the market was good, BDC and InNovacorp acted like venture capitalists, but when the market got tough – when the spin-off from Hurricane Katrina continued to delay or cancel contracts – they acted like bankers.”

David Dobbin, a long time investor in Welaptega who eventually bought out the BDC/InNovacorp stake in the business, said taking the government funding out of the business was the only way to move forward with the company’s business plan. Dobbin is chairman of Elephant & Castle Group Inc. (an English style pub and restaurant chain) and a former senior executive with CHC Helicopter.

The company is now financially strong, but Tony Hall is still mad. Even when the company found the money to buy out the government investment, he said the bureaucrats were intransigent in their repayment terms. Not only did the $1.5-million loan need to be repaid in full, they demanded $700,000 cash in exchange for their equity position.

“Rather than helping position our company for growth, they were hitting our bottom line. Is this the way government-funded agencies designed to stimulate the economy are supposed to act? I don’t think most Nova Scotians would agree it is in the best interest of the province.”

Dan Macdonald, CEO of InNovacorp, said his people worked very hard on securing Welaptega’s initial financing, helped the company establish a product development road map and provided advice to Hall surrounding the Dobbin transaction.

“We realize there were different views on the final transaction, but we do not share Mr. Hall’s characterization of the situation,” says Macdonald. “Still, we have high regard for Welaptega. It is a great example of an innovative Nova Scotia company competing and winning business globally.”

Hall said the one-two punch of payout and the contraction of the market did force the temporary slashing of staff, but with new financial partners and the expanded range of services, the company has hired back most workers. Today, the future looks promising once again for Waleptega as it moves aggressively to begin work on new projects in Rio de Janeiro, Brazil and Lagos, Nigeria.