StartupNorth

Year: 2013

  • Get them out of the building: Travel support from Volta

    Graffiti at VoltaWhen Ben Yoskovitz moved to Halifax to join us at GoInstant he left the growing Montreal community and brought a lot of fresh perspective to what needs to happen in Nova Scotia to grow the startup ecosystem.

    The #1 thing he noticed was the successful startups were the ones getting out of the building and on to a plane. Spending significant amounts of time in San Francisco, New York or wherever you need to be is an important part of growing your network of people you can rely on to build your business.

    Today Volta is announcing a travel support program for startups. You have to be small (<10 employees) and young (<3 years old).

    This hits home for me. When I was living in Charlottetown and 19 years old I had my first attempt at a product startup, it was called Blogtrack. It had what seemed like an insane number of daily active users at the time, just under 10,000, and I had no idea what I was doing (still working on that). I also had no money really, certainly not enough to blow on a trip to Boston for Bloggercon. A guy named Lee Brammer at what is now called “Innovation PEI” offered to help cover some of the costs for the trip, which meant it was (just barely) affordable. It was, for me, an eye opening trip, eating dinner at a table for 4 with Dave Wiener, Betsy Devine and Dan Bricklin just about blew my mind.

    Anyway, the point is that sometimes you really need to get out there and just do something you might not have otherwise. Good things almost always come from it and the truth is that it can be hard to make up for sitting across the table from someone and really getting to know them.

  • The Unicorn Awards 2013

    Our friends over at TechVibes have posted a call for nominations for 2013 Canadian Startup Awards. This just screams that we also need an Ig Nobels/Darwin Awards equivalent.

    • Zombie Startup of the Year Award – Recognizing a Canadian startup that continues to live on the brains of its’ founders, but not customers.
    • The Snapchat Award – Recognizing a Canadian startup that won’t sell to Facebook, even if the offer was for more than $4B.
    • Stop the Gravy Train Award – Recognizing sketchiest use of tax payer money in our burgeoning startup ecosystem.
    • The Twerk It Award – Recognizing the media accomplishments of an exemplanary Canadian entrepreneur, who is getting as much coverage  as Miley Cyrus in 2013.
    • Keeping up with the Kanadians Award – Recognizing the startup that has watched previous episodes of startup reality TV but failed to comprehend the complex plot lines.

    We’ll be announcing the awards before Christmas…And we need your help. Send us a tweet, leave a comment, or just drop us an email with a suggestion for the awards. Or just leave an anonymous nomination.

  • Where’s Waldo?

    I’ve written about CIX Top 20 Follow @CIXCommunity in 2008, 2009, 2010, 2011 and 2012. To follow my pattern here is my post for 2013. Full disclosure: I sit on the Advisory Board for CIX. 

    There are 3 core events in the Canadian startup calendar:

    There are other happenings and gatherings ranging from NxNE to HPX Digital to Mesh to the C100 events. If you need a reminder about the state of the Toronto startup ecosystem, make sure you check out my now 14 month old but still relevant post, Don’t Panic.

    Each of the above events is optimized for different audience needs. CIX brings the  viewpoint of Canadian investors (if you care). The advisory board is primarily venture capitalists (a few lawyers, a couple of CEOs and  one evangelist):

    • Roger Chabra, Rho Ventures
    • Boris Wertz, Version One Ventures
    • Mark MacLeod, Freshbooks (recovering VC)
    • Barry Gekiere, IAF
    • Joe Catalfamo, Summerhill VP
    • Justin LaFayette, Georgian Partners

    The advisory board is 44 people big. And approximately 30 are doing some form of investment. It’s almost 70% are actively making investments in technology companies. There is very strong Canadian VC and investor representation in the group that advise and plan the conference content.

    And it shows in the content, of the 67 scheduled speakers (as of Nov 14), 19 of the speakers are from the advisory board – that’s 28% of the content. (It’s even higher if you include partners and others from firms of advisory board members). If you want to know what Canadian VCs and investors are thinking, this is the best way to see what is important. They define this conference. They provide the content and the voices at the conference.

    So why go?

    CIX gives you insight in to the types of companies, IP and traction that Canadian investors are currently looking for. It is the barometer of the “high potential growth technology companies” in Canada. It will be interesting to see what everyone thinks are the hot companies and trends. The panels and policy discussions are the things that Canadian investors are grasping and struggling with. It will be interesting to hear the conversations.

    You might argue that as an entrepreneur you don’t care about these conversations. They don’t help you grow your business, build your product, or acquire customers. But they do provide you insight into the mind set of the people you are trying to raise money from. That might be the thing that gives you an unfair advantage in understanding their decision making process this year.

    I love that 2 of my personal investments Upverter and OpenCare made the Top 20. Full disclosure: My employer, OMERS Ventures, is an investor in 360 incentives. I’m also excited to check in on Breather, Bionym, Axonify, Hubba and others. The CIX Top 20 has turned out some of the best companies in the past 5 years.

    It is possible to make your luck at CIX (just remember the preferred method of connecting).

    Photo Credits

    AttributionNoncommercialShare Alike Some rights reserved by Jameson42

  • What is the problem accelerators are solving?

    There is currently a preoccupation with accelerators in the entrepreneur world resulting in a large increase in programs.  Arguably, the result of this frenzied growth is that ‘entrepreneurship’ is as commoditized as college. Unlike college, it is extremely hard to know which programs are adding value and which ones are wasting everyone’s time. This doesn’t mean investors aren’t in the know and they are favouring the programs they like – example, YC or TechStars.

    It could become (or has already become) virtually meaningless to be an accelerator born internet entrepreneur so why would you give up 6-12% of your company to do it? For investors it is really hard to cut through the noise. I think this is because few people actually know why accelerators exist at all. In some cases I fear that the people that are creating new ones aren’t likely clear on why they are creating these programs either.

    How does anyone know which ones work? What problem are they solving? What metrics should they be tracking in order to get better at what they are doing?

    Defining the problem(s) accelerators solve.

    There are three problems I think accelerators are trying to solve:

    1. Investors need to identify talent.
    2. Talent needs to find the right investors and coaches.
    3. Education system failure.

    The first is a relatively easy problem to solve. It is hard for investors to identify talent at an early stage, accelerator programs offer a filtering tool for investors as they can take the top talent that applies and narrow it down to those that have the highest potential based the criteria of the particular program. If an investor trusts the filtering job done by the accelerator than that accelerator is providing value.

    A suggested metric for this: measure how many alumni of a program receive funding, from what type of investor, and in what time span?

    The second problem that talented people and teams have is finding the *right* investors and coaches. By the right investor I mean someone that will give you enough money and coaching that you can slowly de-risk your startup a little more and build momentum as you grow towards being a sustainable business. Founders need coaches to apprentice under while they build their company. The right investor is someone who will put in enough of their own money and time and they can help you get your business through the major milestones it faces. This likely means that party rounds are bad. What I think should be the goal are 4-6 investors and/or an individual (not a VC) has a 1/2 to 1/3 of the total round.

    This should result in the person(s) who put in significant capital also have a board seat and have their sleeves rolled up ready/able to help.

    A suggested metric: track who put in the most personal money in the round and are they on the board of directors or some other significant role in the company? How much time a week/month do they spend with the founders?

    The failure in education is a much harder problem to solve. Is it the traditional silos that are limiting education or is it the expectation that you go to school to be trained for a job or a bit of both or something else? Is the failure the education system (K-12) or is it the students or both? In higher education you have environments that are designed to encourage independent thought that is backed by facts and thinking. You should be exploring and developing your networks.

    At no other point in your life will you be surrounding with that much leading edge research and thinking. Just because a school doesn’t hand you your first startup with funding and office space does not mean the education system is failing entrepreneurs!

    There is also already a process for very smart people to apprentice under others that have already developed their ability to take massive amounts of information and focus it on an outcome. It also happens to come with a filtering mechanism built right in that improves the likelihood that the person that finishes is relatively in the top few percent. It’s graduate school. The process is not perfect but it is a process that works.

    Educating people is hard. Coaching people is harder still. If an accelerator is going to solve the failure of the education system in educating entrepreneurs it should take that part very seriously and not dismiss the education system as having nothing to offer.

    A suggested metric: Does the accelerator have qualified educators and coaches that put in a significant amount of time (more than 1 hr a week) with each entrepreneur? Are there measurable outcomes expected on the entrepreneur? Are there consequences for not meeting expectations?

    Accelerators should be more than marketing to the entrepreneur and placing them in a zoo for the public to see them in action. Education is serious business and it is about people’s future. Entrepreneurs need to have realistic expectations and enter with a clear idea of what they want out of the opportunity.

    Everyone around accelerators is still learning about how to make them work and figure out for whom do they exist. It is an exciting time in education — just be sure to track stuff that matters while you run the experiments!

  • The Odds are You’re Going to Fail

    Now now chief, I'm in the zone
    Stay focused! We have this on the wall at GoInstant. Source Mike Mitchell

    I mean that in the most constructive way possible!

    You’re unlikely to recruit founders, raise money, gain traction, earn revenue, get acquired or go public. You’re very likely to fail.

    Here’s How Bad Your Odds Of Success Are

    To beat these odds, you need to be doing everything you can to find an edge, especially pre-funding or pre-revenue.

    Here are 3 of the most common questions I disappointingly ask early stage startups:

    1. You’re not full-time?

    It’s insulting to ask an investor for money if you’re not full-time on your startup.

    You need to be way beyond the one-foot-in stage before raising a round. If you don’t believe in the idea enough to go all-in, why should investors, customers or your team believe it?

    Full-time is the bare minimum. Large companies are working 40 hours a week, with way more resources. How can you accomplish more each day than them? You need to work longer. You can’t expect balance in your life, especially when the team is small. You need complete obsession over work.

    Assume there is competition working on the exact same idea. Even if you don’t know about them, imagine them. They are small startups, medium sized companies, and large enterprises. They are working relentlessly. They could launch faster. They could launch bigger. Let the threat drive you forward.

    Work weekends, work evenings, pull all nighters. Obsess over it.

    2. Where’s your demo?

    You need a demo, and it needs to be amazing.

    If you get feedback on that demo, consider it then implement it right away. Stay up all night and work on it. There should be at least two of you; the CEO demoing during the day and the CTO working all night to implement. Iterate, iterate, iterate, as fast as possible.

    The important thing here is momentum. You need serious momentum. You need an unstoppable train. Your momentum will attract your team, investors, and customers.

    3. You have side projects?

    Side projects will distract and kill your startup.

    You should be working with obsessive focus on one idea and one idea only. Facebook was almost killed by Zuckerberg’s side project.

    Side-projects are great for creativity. Many developers have side projects that they use to keep their skills sharp. Many companies have R&D labs or a percentage of hack time. Early stage startups are not the place for side projects.

    Write all your ideas down, then get back to focus. Constantly consider priority. What is the most important thing you could be doing right now to move customer or investor relationships forward? Your entire company should be thinking this way.

    You need every edge you can get

    Your only edge is to find an edge everywhere. Long hours, momentum, focus.

    It’s not sustainable, and that’s a good thing. If you can’t make it work then you fail fast. Pivot or fold and try again! If you CAN make it work you can hire enough people to bring back a healthy work-life balance.

    Set goals for your team in short intervals. We will achieve X by Y date or we will [pivot, fold, etc].

    Remember, beating the odds isn’t easy, but there are many ways to find an edge.

  • Fireside Chat with Albert Wenger – Oct. 23rd

    Screen Shot 2013-08-08 at 5.00.12 PMWe’re very excited to host Albert Wenger of Union Square Ventures on Wednesday October 23rd 2013 in Toronto, at the spanking new OneEleven Accelerator, from 5:30pm to 8:00pm.

    William Mougayar, founder of Startup Management will interview Albert on stage, and there will be a Q&A period with the audience. We will talk Network Effects, the changing landscape in venture capital, advice to entrepreneurs, government and technology, privacy and security, raising money from U.S. VCs, and anything you’ll be asking him. This is a unique event, not to be missed by any one involved in a Tech Startup or ecosystem.

    Albert Wenger is a partner at Union Square Ventures (USV), a New York-based early stage VC firm focused on investing in disruptive networks. USV portfolio companies include:Twitter, Tumblr, Foursquare, Etsy, Kickstarter, Wattpad,Kik and Shapeways
    Before joining USV, Albert was the president of del.icio.us through the company’s sale to Yahoo. He previously founded or co-founded five companies, including a management consulting firm (in Germany), a hosted data analytics company, a technology subsidiary for Telebanc (now E*Tradebank), an early stage investment firm, and most recently (with his wife), DailyLit, a service for reading books by email or RSS. His wife is also the co-founder of Ziggeo.

    Albert is on the Board of Edmodo, Shapeways, Heyzap, Twillio, Foursquare, AMEE, Covestor, 10gen, Wattpad,
    Firebase, Sift Science and Tumblr (prior to its sale to Yahoo). Albert graduated summa cum laude from Harvard College in economics and computer science, and holds a Ph.D. in Information Technology from MIT.

    Location

    OneEleven, 111 Richmond Street West, 5th Floor, Toronto. OneEleven is Toronto’s newest accelerator. It’s your chance to visit this brand new 15,000 square feet facility, dedicated to accelerate the commercialization of cutting edge research and development for the economic prosperity of the region.

    Buy your ticket

    This event is organized by Startup Management and hosted by OneEleven. It was made possible due to the generous Patronage of Wattpad, Sponsorship of OMERS Ventures, and Support of Ryerson Futures.

    SUM Logo Horizontal                       Wattpad logo_200

    OMERS_Ventures200RyersonFutures_200111Logo_200

    Startup Management is a knowledge resource for growing, scaling-up and managing startups.

    Wattpad is the world’s largest community for reading and sharing stories.

    OMERS Ventures invests in companies with significant growth potential and market opportunities, seeking partners with a shared vision of building a vibrant knowledge economy.

    Ryerson Futures is an accelerator for early stage companies connected to the Digital Media Zone at Ryerson University, and manages a seed fund.

    OneEleven is a unique centre for commercialization that will create the talent and technologies that shape our future in ‘Big Data’.

    Eventbrite - A Conversation with Albert Wenger, Union Square Ventures

  • Make stuff

    Maker Faire

    I’m really looking forward to Maker Faire Toronto. It is happening Saturday and Sunday, September 21-22, 2013 at the Wychwood Barns. This is an amazing opportunity to celebrate the Maker Movement. I’m excited to see the inventions, the creativity, the resourcefulness of people to solve problems, to inspire. To be proud of the things they’ve built.

    “That is, no matter what the thing is you’re building, it’s deeply gratifying and incredibly educational to perform the act of creating something, anything.” — Christopher O’Brien

    I am really excited about the opportunity to bring my kids. I’m excited to teach them about entrepreneurship. But even more importantly, I’m excited to provide them access to learn and to explore technology. My friends Tara Brown and Sean Bonner opened LA Makerspace focused on providing a kid-friendly space. My kids have asked me about building robots, making candy and taking apart their toys.  The eldest is now 6 years old, and her problem solving skills and attention are developing where this will be a transformational experience.

    “We are making the tools for passion. When I look around, I don’t see any apathy here.” — Nolan Bushnell

    Much of the DIY culture emerged out of the Homebrew Computer Club in Silicon Valley. And while not directly responsible for the success of many of the companies that emerged, it seeded a culture and the connections between folks that started Apple Computer, Osbourne Computer and others. This is the ground floor, the Mechatronics department at UWaterloo accepted their first class in 2003.  Bufferbox was started in 2011 and sold to Google in 2012. This is a very interesting space if you look at the emergence of other area startups like InteraXon, Thalmic Labs , Upverter, Matterform, Bionym and others. 

    Bring your kids. These are very interesting times indeed.

  • Risk Tolerance

    If there is one thing in Canadian startup land I have heard repeatedly since moving back from California it is in regards to the lack of ‘risk tolerance’ of VCs here. When I was on the operational side of things I didn’t know many Canadian VCs so I couldn’t really comment, but I heard the stories. In fact, I will be completely honest that the idea of joining a Canadian VC fund was the furthest thing from my mind.

    risk and rewardBefore I share my thoughts on risk tolerance let me start with a few points. First, I think that we can all agree the landscape is improving. There is a new generation of  entrepreneurs, investors and community leaders emerging. I am blown away at how different things are now compared to five years ago.

    Second, we need to once again state that Canada is NOT the Silicon Valley. It is a silly comparison even from a geographical perspective as comparing a small region with critical mass to one of the largest countries in the world is insane. Vancouver, Toronto and Montréal are not the Silicon Valley in the same way that Boston, Austin, New York and Des Moines are not either. Anyone who sees Canada as its own insulated eco-system is completely out-of-tune with reality. Capital and technology knows no borders. Mark nailed this earlier this week.

    Lastly, there is a level of talent, experience and excellence in the Silicon Valley that can’t be found anywhere else. There is a reason Facebook moved to Palo Alto in its early days. There were entrepreneurs and investors who had been exploring the potential of a social web for almost a decade beforehand. No where else in North America could you find this. Pinterest moved from Kansas City to San Francisco for the same reason. One of iNovia’s portfolio companies, AppDirect, started in the Silicon Valley as the founders (Canadian btw!) knew that the talent they needed to build a large-scale enterprise platform was there.

    So what can Canada, or anywhere outside of the Silicon Valley for that matter, do well. I can both observe and predict to answer this question. In recent years it has become apparent that B2B SaaS companies can be built anywhere. Look at the thriving companies across Canada – HootSuite, Shopify, Freshbooks, Lightspeed, etc. All SaaS companies. This is not unique to Canada either. ExactTarget was built in Indianapolis. MailChimp in Atlanta. eCommerce companies have similar characteristics. Amazon is in Seattle. Wayfair is in Boston. Groupon is in Chicago. Beyond the Rack is in Montréal. However, it is hard to name large consumer Internet, enterprise platform, networking or hardware companies outside of the Silicon Valley. Of course, there are a few outliers – Tumblr in NYC for example.

    The other thing that Canada, or any region, can do well is build critical mass in a brand new and emerging market. RIM (BlackBerry) did this in the Waterloo region by leading the emergence of smartphones. Calgary has been the hub of most stock photography and graphics companies over the last 20 years. Route 128 in Boston dominated the minicomputer industry back in the 70s and 80s.

    All of this results in the eco-system we find ourselves in and behaviour of investors. It is less likely that a consumer application with no traction will get funded in Canada because there are not funds big enough to make a long bet on it and there isn’t the talent that improves the chance of success.  We also lack senior management talent, especially in sales and marketing, as it generally resides were the majority of customers – in the US. This is why many Canadian startups build its sales and marketing teams in the States. We often proactively syndicate larger Canadian investments with US funds as they bring complimentary resources to the table and can significantly mitigate future financing risk as they have deeper pockets. All of these factors results in the eco-system we find ourselves in. Blame the system, not the players as David Crow would say.

    One last factor in determining risk tolerance is rarely discussed and it is simple numbers. Investing very early in a company with no traction does require incredible intelligence, it requires incredible conviction. Savvy entrepreneurs know that to find the investor that has that conviction is going to be tough so the best approach is as a pure numbers game. This means they talk to a ton of funds. Tim Westergren, founder of Pandora, said that he had over 300 VC pitch meetings before getting funding. 300! In Canada there are not a lot of VCs, lets say 10. There are very high odds that you can talk to every fund in Canada and not find the conviction you are looking for in any of them. It is simple math – if you are looking for a needle in a haystack do you have better odds looking in 10 places or 300? Unfortunately, this is then chalked up to an issue with ‘risk tolerance.’ I can’t speak for every VC across the country, but I can report that approximately half of our initial investments are made before there is a dollar of revenue in the company.

    My advice to entrepreneurs would be to start local as you may find the investor that has the same convictions you hold. They may be able to connect you to US investors to put a strong syndicate together as well. What you shouldn’t do is talk to the local VCs and then complain about risk tolerance – even if there is truth to it. The successful entrepreneurs get on their horse and find ways to get in front of investors from the Valley, New York and even overseas. Ryan found his first investors in the US. Yona found his first angel investor in Europe! Jack and Rian found their first investor in Germany!

    We have seen a ton of US-led investments in Canada recently and this is great news. Often this is perceived as a problem in Canada. I disagree – it is great. In many of those cases local VCs passed or perhaps they lost out as the deal became competitive. That is completely fine as well. In the past Canadian investors were forced to be generalists, but I hope this recent trend drives more domain focus within Canadian VCs. As much as we need world-class entrepreneurs and startups we also need, to a lesser extent, world-class funds and investors. This is why I went against my initial instincts and joined a VC fund in Canada – the team was focused on becoming a leading North American fund and was actively investing in the US. I believed that this was the right approach and the only way we are going to be able to compete in the long run as capital becomes even more fluent across borders. Canada is a small player on the global tech stage and as a friend of mine used to always say “What’s so great about being the best hockey player in Kuwait?”

    Lets all aim higher.

    [Ed. note: This originally appeared on Kevin Swan’s Once A Beekeeper on August 12, 2013, it is republished with permission.]

  • A Perspective on Investor/Mentor Whiplash

    CC-BY-NC-ND AttributionNoncommercialNo Derivative Works Some rights reserved by nocklebeast
    AttributionNoncommercialNo Derivative Works Some rights reserved by nocklebeast

    The other day Fred Wilson posted an opinion and some tips on Investor/Mentor Whiplash. He took the position that that is a big problem for accelerators as well as early stage and seed environments. Brad Feld took this as a bit of a misunderstanding on accelerators, he insists that TechStars creates an environment where early stage companies can learn to manage the whiplash. Brad Feld states:

    I disagree with Fred. It’s not a big problem. It’s the essence of one of things an accelerator program is trying to teach the entrepreneurs going through it. Specifically, building muscle around processing data and feedback, and making your own decisions.

    On the surface this seems correct. A problem (one of many) new founders face is the overwhelming barrage of mentorship (good and bad) and information mixed with the inability to filter. An accelerator should be able to provide the environment where a strong group of peers with some guidance can help to build the “muscle around processing data and feedback.” In the last 6 years I have noticed that is a common problem founders face and their ability to manage it is important to their success. It wasn’t until I experienced the whiplash myself a 2nd and 3rd time that I fully appreciated the damage it can do even if you are prepared for it.

    Generally what I tell early stage founders:

    • Only talk to customers once you have something to show them — but that shouldn’t take you a long time, don’t go heads down for months. Asking people what they want and not focusing on something specific they can touch/feel is a path to busy work and infinite sadness.
    • Avoid the mentor parties/socialization. Find two (or three) good people with opposing views and bounce specific data off them but only when you have done something that requires fresh eyes to advise you how to interpret the results.
    • Focus on what isn’t working when getting feedback from mentors. Founders need to be positive but you need to focus on the bad things when talking to your close mentors that have been through it already. If they can’t help you with the tough stuff why are you spending a lot of time with them?
    • Don’t expect a direct answer. Experienced mentors know you are the best person to run your company, not them, and they have developed a way of not telling you what or how to do things but instead challenge you to figure it out in a positive way.

    Whiplash from mentors doesn’t just happen in startups, it happens everywhere people are giving you advice or have something to gain by influencing the decisions you are about to make or the opinion you develop on something.

    Being prepared and learning to manage the whiplash isn’t just the essence of accelerator programs, it is the essence of education that culminates in the top level you can achieve to filter information – a phd program. At the phd level the filter muscle is almost too strong but that is a topic of a whole other blog post.

    The scary thing for entrepreneurs is that accelerator programs are too often run by people that don’t know how to effectively educate people and/or they have something to gain financially by the decisions founders make.

    I think this *is* a big problem in accelerators. I wonder if the ability to teach that skill to founders (or select founders that already have that skill) is the difference between a successful accelerator (which is really only TechStars and YC) and one that isn’t (pretty much everyone else)?

    [Editor’s note: This post was originally posted on Jesse Rodgers’ Who You Calling a Jesse blog on July 31, 2013.]

  • Atlantic House @ Grow next week in Vancouver

    voltadiamond

    The buzz has been awesome about the GROW conference next week. Just a few weeks after Startup Fest in Montreal. The summer season is moving quickly…

    A Startupnorth we’ve helped organize the Ontario House along with Communitech and the Waterloo community, and now we are announcing that along with Volta we are organizing the Atlantic Canada House.

    In this case Reza Kazemipour the San Francisco based CEO of Oris4, a Halifax company, has stepped up and personally funded the house. Amazing to see such commitment from the local community.

    The Diamond on Powell street and if you are around, stop by between 6 PM and 10 PM for a drink and see what Atlantic Canadian Entrepreneurs are working on.

    We still have a few tables available and if you are Atlantic Canadian company looking to showcase your product to West Coast Entrepreneurs and Investors, apply to Milan @ Volta ([email protected]) and he will hook you up with a table.

    Currently, from our neck of the woods we will have Compilr, topLog, DraftCam, EmailOpened, ModestTree and Oris4 with few others to be added to the list shortly.