Michael Wekerle is stepping down as chief executive officer of Difference Capital Financial, the tech investment firm he founded in 2012. He will remain as chairman, and is still the largest shareholder in the company.
The move has been in the works since last year, says Henry Kneis, the company’s new CEO. “This is really a natural evolution in the development of Difference Capital,” says Kneis, who previously served as chief financial officer and chief operating officer. “Michael is good at being a source of ideas, and good at being a rainmaker. Everybody has acknowledged for some time now that the day-to-day management of the company was best left to others.”
Wekerle, probably best known to Canadians for his role on Dragons’ Den, raised $185 million to launch Difference Capital to capitalize on a shift of investment dollars from the resource industry to the country’s burgeoning tech sector. But the stock has fallen roughly 65% since it debuted, largely owing to a couple of investments that have gone sour. Lignol Energy ended up in receivership, and Difference has significantly written down the value of its stake in World Gaming. As of March, Difference valued its investment at $3.7 million compared to $22 million at the end of 2013. Two founding partners and three board members departed last year.
Kneis told Canadian Business last summer that Difference initially made too many investments too quickly, and had since brought “more rigour to the investment analysis process.”
Wekerle has numerous projects underway aside from Difference Capital. “He does have a lot of bold ideas and initiatives, and he pursues them all with zeal,” Kneis says. Wekerle is trying to build out an innovation hub in Waterloo, purchased the El Mocambo club in Toronto earlier this year, and is an investor in Wahlburgers, the burger chain founded by the Wahlberg brothers. (He’s contending with a few lawsuits, too.)
In addition to the personnel changes, the company is acquiring Difference Capital Management, a separate firm that managed its assets. Institutional investors had raised concerns about the arrangement, and wanted more transparency.
Although Difference has struggled, Kneis says the company has made progress pruning its portfolio and says about 45% of its investments are in companies that are in a position to go public. Difference owns a small stake in Vancouver-based Mogo Finance Technology, which recently announced plans to raise $50 million through an IPO.