With the Launch of LX Ventures, Mike Edwards Plans to Build a Tech Startup Empire

Mike Edwards was pushing 40 when he became an Internet millionaire overnight and decided to retire in Whistler, where he has lived since 1990.     

A former pro bike racer who thrives on high-octane activities like heli-skiing, high-alpine mountain biking and ironman competitions, he couldn’t ask for a better place to retire. He was just too young.

“I failed at retirement,” said the 46-year-old venture capitalist. “In retirement, I opened four cafés in Whistler – the Lift Coffee Company – I opened up a restaurant in Kitsilano, called Kits Daily, I built a couple of houses, I day-traded a little bit, I did six ironmen [competitions], and the long and short of it was I drove my wife crazy.”

He also made some “inappropriate use of funds” angel investments, which he defines as cut ting “too big a cheque in a non-diversified and non-disciplined manner.”

In February 2010, he took his family to Europe for six months and started plotting what he calls “Mike 2.0.”

Since then, he founded a high-tech incubator called Launch Academy, took on the executive director’s role at GrowLab, created an early stage venture capital firm called Initio Group and last year turned a failing company called LX Ventures Inc. into an early-stage venture capital firm. In the span of less than two years, he has invested in 40 startups, 12 of them through LX Ventures.

From his West Hastings office, he runs a startup studio, where 100 people – from students in Launch Academy to revenue-producing startups like Strutta – share office space with Garibaldi Capital Advisors, which recently brokered a $36 million investment in Vancouver’s BroadbandTV.

Even Microsoft Corp. has set up an office here in order to be close to some of Vancouver’s hottest new properties.

The Business Development Bank of Canada and Industrial Research Assistance Program (IRAP) will also be opening offices in Edward’s startup studio.

“Ultimately my goal is to build a platform, and that platform is a vertically integrated studio to identify and develop early stage, high-growth companies,” Edwards said.

“It really has become the centre of startup activity in Vancouver,” said fellow angel investor Boris Wertz. “If you come to town as a newbie, this is where you would first meet people and get to know people.

“What I really love about Mike is he has some really big ambitions. If there’s one thing I sometimes regret in Vancouver is we don’t have enough people with big ambitions as investors or entrepreneurs.”

Born and raised in Ontario, Edwards studied political science at Queen’s University but never finished his degree.

“I had an opportunity to do a business and just couldn’t balance both running the business and completing my studies.”

Edwards had worked for a house-painting outfit and in 1990, he came out west to open a western division and ended up in Whistler, where he got into cycling and turned pro.

He spent four years trying to make a living at pro bike racing, but when he and his wife had a baby in 1997 – they were married in 1995 – he quit and started a bike importing business in California.

With the financial backing of Vancouver businessman Jack Evrensel, he began importing high-end bikes from France.

That was his first lesson in business: know your market. He had consulted pros who got their bikes through endorsements, not ordinary consumers who had to pay for the bikes. The result was that he was stuck with a lot of high-end French bikes he couldn’t sell and investors he couldn’t pay back.

This was 1997, when the Internet was taking off, so he taught himself how to build an e-commerce website, sold the bikes online and managed to pay off his investors.

“I learned that, faced with adversity, I could overcome it, and I ended up having a wicked skill set in a burgeoning industry,” he said.

Edwards moved back to Whistler at a time when Vancouver was becoming known as Hollywood North, and realized there was business opportunity in online film distribution.

In 1998, he founded Internetstudios.com, an online market for buying and selling film distribution rights.

He raised $8 million to build the company, then went public, raising another $25 million. At one point, the company’s stock was trading at $20 per share and had offices in London and Santa Monica.

He replaced himself with a “professional” management team, stepped back and then watched the company sink like a stone in the dot-com crash.

“My learning on that is two things: Don’t give Internet money to Hollywood executives – they can spend money like no one can. My second, more important learning was I didn’t have to replace myself – I was just as smart as those people.”

He started three other companies, including bandfinders.com, an online talent agency that he built with some help from Vancouver talent agent Sam Feldman.

In 2002, he began looking for technologies that took advantage of what the Internet is good at – efficient distribution – and bought into a local search engine called AreaConnect, becoming one of two partners. After building the company up, he and his partner sold it in 2006 to Marchex Inc. for $17.5 million.

Having become an Internet millionaire, he decided to retire. Four years later, he was an angel investor with aspirations of building new businesses from the ground up.

In October last year, Edwards bought out the failing LX Ventures and relaunched it as an early-stage venture capital firm, with a portfolio of 12 companies. But Edwards doesn’t see himself as a venture capitalist.

“I didn’t want to be a venture capitalist – I wanted to be a business builder,” he said. “So I created a vehicle that is very similar to Betaworks in New York. I invest in, I acquire and I build early-stage technology companies.”

The 40 investments he has made so far have been through his own money and that of the Initio Group, an early stage venture capital fund.

One of the startups funded by Initio, Punch’d, was acquired by Google; another, Summify, was acquired by Twitter.

Being a publicly traded company gives Edwards two currencies for his investments: cash or stock.

“Venture capitalists are always raising on five- to seven-year cycles, whereas as a public market company, I can create an evergreen fund and I can sell an asset or not sell an asset as the market fits,” he said. “A venture capitalist has to sell an asset to get a return. I may never sell my cash-flow generating properties.”

Asked what he considers his greatest accomplishment, Edwards cites his marriage to his wife, Julie Hamilton, and his two children, aged 15 and 12.

“I’m married to the same woman that I’ve been with for 25 years,” he said. “An entrepreneurial cycle is crazy, and to be able to stay together during all those ups and downs, I’m incredibly proud of that. I’ve got kids who still dig me and still want to do stuff with me.”

This article was written by Nelson Bennett and was originally published in Business in Vancouver.

Photo: Dominic Schaefer