Making Canada SAFE

It has been 9 months since PG announced the YC SAFE (Simple Agreement for Future Equity). The Winter 14 batch included Canadians: Taplytics, Send With Us, Piinpoint, Minuum, Gbatteries and others. (There have been an increasing number of Canadian companies since Chris Golda and Michael Montano headed down in 2008. Maybe there should be a new drinking game: how many Canadian YC companies can you name?). This usually means a trickle down effect of culture, term sheets and deal structure. But I haven’t seen a SAFE used in the wild.

Until now.

Thanks to Aaron and Cobi at  Taplytics, Dan Debow, Jesse Rodgers at Creative Destruction Lab and Tom Houston at Dentons for providing a working draft for Canadian companies of Cap, No Discount SAFE.

I have also seen angel deals using Laberge Weinstein and Cognition LLP that are using the SAFE as the starting points Canadian companies (h/t @ddebow). It seems like we might have a functional alternative to convertible debt.

 

You are supposed to break the rules

diving_lessons

Great entrepreneurs truly do not care about the rules.

If you haven’t noticed, there are a lot of rules.

Some come and go with the times, others never seem to go away:

  • You are supposed to dress a certain way
  • Finance your company this way
  • You pitch deck should look like THIS
  • You, in your industry, with your product, it’s not the way it’s done

And there are the big rules, the regulations:

Great companies are built by breaking rules. We call them ‘norms’ but they are rigid and they feel real until someone destroys our idea about ‘how it’s done’.

  • Marc Benioff decided to sell software as a service when everyone believed they had to install software on premise
  • Steve Jobs built expensive but beautiful machines when every other hardware company believed they had to be cheap.

and so many more.

And it’s happening, there are more great stories of breaking the rules and the amazing companies that result:

  • Figure1 is breaking the rules in Healthcare
  • Wattpad has done away with not only publishers, but with most of the old creative process

Who else comes to mind?

Sometimes a pure rethinking of technology can completely rewrite the rulebook. Bitcoin is readily looked at as an alternative to fiat currency, something that was unthinkable before a purely electronic currency was conceived.

Breaking the rules goes by many different names like ‘disruption’ and ‘innovation’ but they all start with someone rethinking an old way of doing business. When we look back on what they’ve accomplished we often like to call these rule breakers ‘clever’, ‘brilliant’ or ‘strategic’. The truth is that they didn’t get ahead by adding complexity, or navigating what existed. Most of the time they were able to get ahead by pushing aside the rules and focusing on the opportunity.

The rules almost always come to mind later.

As the world becomes more and more ‘wired’ I believe that startups will run in to regulatory hurdles more and more often. Like uber, AirBnB, Lyft and others, the rules sometimes represent a massive opportunity to create efficiencies in a place everyone else thought was off limits.

There are little rules, and there a big rules. No matter which stage a company is at, it’s the rule breakers who get noticed, they are the ones who crack a market open and feed off the the plump center.

One Post to Rule Them All

One Ring to Rule Them All

Hard to believe that it has been 21 months since I wrote Don’t Panic: A Hitchhiker’s Guide to the Toronto Startup Ecosystem. There are parts of this post that are a little dated but it generally holds up as a meaningful introduction to the Toronto/Waterloo startup scene. The goal is to provide a curated list, it will not be comprehensive. 

If I’ve missed anything, add a comment or ping me directly @davidcrow and I’ll make updates on the fly.

People & Companies

There are so many people and companies, it is hard to know what is important to whom. I will do a separate posting with the companies and founders that I’ve been following. The challenge is that this is a long, long list and there are a lot of amazing companies in Toronto.

Angel Investors

Institutional Investors

There are a lot institutional investors that are active in Toronto. Entrepreneurs need to do a little diligence on their investors. You should be trying to figure out what type of companies do they typically invest in? How big is their fund? How much is unallocated? Who else have they invested in?

Foreign Institutional Investors

Banking/Financial Services

Accounting/Tax/SR&ED/Bookkeeping/Reporting

Legal Firms & Lawyers

Journalists

I think the biggest piece of advice is that generally the “we’re a startup and we launched” it just a shitty pitch to any journalist. You need to spend some time building a better message understanding who these journalists are, why their audience might possibly care about your story. This is a list of journalists that write about emerging technology companies. But you should also seek out journalists in your vertical or segment, this might might include moms, marketers or anything.

Recruiters

Office Space

We all need office space. I have spent hours looking at listings on Craigslist, Kijiji and other sources. I

Maker Space

Maker spaces are very different than flexible lease office space.

Educational Programs

Application Development Shops

Design Shops

PR & Marcomm Agencies

These are the Toronto-based PR Agencies that I’ve worked with or seen their work first hand. I probably need to add a section for other international PR firms particularly NYC , SF and the UK. This can be a very expensive and very difficult for founders that have not found product/market fit.

Coworking/Flexible Lease Office Space/Accelubators

We can call it what you want. Incubators, accelerators, cyclotrons. It doesn’t matter. The activities range from education to local economic development to flexible leasing to coworking. They are a necessary part of the ecosystem. But it feels like at times rather than starting a “real company”, that many have decided that the path of rent some real estate and attract others with a few programatic offerings is a better business model (at least there is a defined market with a key pain that can be monetized). Let’s call it what is is, it is office space with benefits or office space ++ (office space # for you Microsoft peeps). The benefits range from flexible leases to access to advisors to educational programs to investment capital. Do your research. Focus on the outputs, i.e., the companies that have graduated from each.

Events

There are a limited number of Canadian events that matter. There are the big events. They are big, they are busy, and not a lot of business happens at the event. But you can be guaranteed that most of the major players above will attend and you can reduce the number of trips to connect with people. You should be going to events that your potential customers attend. I am pretty sure unless you are an investor, service provider looking to service the startup industry that you shouldn’t be focused on these events. They are interesting social opportunities to connect with these groups in a concentrated fashion. You should also be actively looking for those same opportunities in SF, NYC, Boston, UK and around the globe.

If you’re going to travel and you want to stay in Canada there are 3 events where you can bump into most startups, founders and investors including some from outside Canada. These events are worth traveling for, but you need to have significant motivation/reason, like you are speaking or you have arranged a meeting with a specific individual.

The rest of the conferences are regional in nature but they should be considered mandatory if you are looking to connect in one shot. These events include most of the local ecosystems, i.e., Montreal, Ottawa, Alberta, Waterloo, etc.

There are smaller local events that happen more regularly. But I am not an expert at these events anymore. I recommend just subscribing to StartupDigest for a great weekly calendar email (you can also check out our Events page). Where are people finding really great opportunities to connect?