Category Archives: Venture Capital

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:TwitterTumblrFoursquareEtsyKickstarterWattpad,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 EdmodoShapewaysHeyzapTwillioFoursquareAMEECovestor10genWattpad,
FirebaseSift 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

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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

Build launches in Atlantic Canada

Wall art on the Build Ventures/Volta wall

Patrick Keefe is announcing his new fund today called Build Ventures, a $50m early and mid stage fund based in Halifax.

The guy is a Harvard MBA, an Oxford grad, former Atlas Ventures principal, Boston Consulting Group executive and he built over a dozen Starbucks coffee franchises which he then sold back to Starbucks corporate. When you meet Patrick and dig in to his background you start wonder where the hell this guy came from.

What’s even better is that Build is the in-house fund at Volta, a new startup crash pad in Halifax that currently houses 10 startups. The fund has taken up residence at Volta and has been a key part of getting it started.

The fund has just launched so it hasn’t announced any investments yet, but we are excited to see which deals they do first.

Volta and Build are two big leaps for the startup community in Atlantic Canada and when you consider it alongside what has been happening in New Brunswick with Launch36 and Startup Week, as well as a recent string of big exits, it seems like things are accelerating incredibly quickly.

The next major event is the Atlantic Venture Forum in June which is being keynoted by Paul Singh.

The first rule of real estate

Before you read this, go read Mark MacLeod’s post on Who not to take money from…. It’s not related to this post, but a great post for entrepreneurs to read when talking about investors.

RT @Cmdr_Hadfield Chris Hadfield 19 Jan With a long tradition of hockey on the shore of Lake Ontario, introducing Toronto - Go Leafs Go! @MapleLeafs pic.twitter.com/iZdN2yZb

If geography doesn’t matter, than why do plane tickets cost so much?

“When it comes to raising funds, I just don’t think the geography matters that much. Good solid product that solves an actual pain can find it’s way to investors any where in the world thanks to the internet.” – Adeel vanthaliwala

I read a lot of comments like Adeel’s. And I agree that geography might not be the most meaningful filter, it still impacts startups in raising capital. It is far easier to raise money from a broader range of sources today, than it was 10 years ago. Changes to Canadian Tax Act (Section 116) have helped open the border to outside capital. There has also been a rise of new Canadian funds that have all closed in the past 2-3 years including: OMERS Ventures, Relay Ventures, Rho Canada, BDC Venture Capital, Real Ventures, Version One Ventures, Golden Venture Partners, Tandem Expansion Fund , Georgian Partners, etc. I worry that comments don’t take into consideration the complexity and challenges of raising capital. The impact of geography on raising capital has been reduced, but geography does still affect startups raising money.

Fugetaboutit!

The best advice on geography is from Brad Feld in 2007:

  1. Don’t worry about it
  2. Be realistic about the available resources
  3. Find the local entrepreneurial ecosystem – now!
  4. Don’t try to get investors to do unnatural acts
  5. Don’t play the “we can be virtual” game

From the point of the investor, geography probably doesn’t matter that much. Unless of course there is a limitation in the partnership agreement that limits the geography where the capital can be invested. There are other more practical concerns about having remote startups including legal and or taxation concerns (see Section 116). Or the ability for a startup to leverage personal/professional networks for hiring, business development, etc. And none of this describes the challenges of having to spend 6 hours flying each direction to attend a board meeting. But beyond that, proximity is not a requirement from the investor side. Good startups can be located anywhere.

“Local brewers = geography matters. As macrobrew VCs are increasingly spending time in multiple geographies (separate from their HQs) there is real potential to differentiate along knowing that you can actually sit down and see your VC face to face. For some that’s important, but for some that’s a negative. Just as some people here in Boston prefer drinking Cambridge Brewing Company ale; others could care less it was brewed locally.” – David Beisel

I like David Beisel’s   model of the VC industry starting to become more similar to the beer industry. There are larger funds, local funds, specialized funds, and individual partners. They all matter differently to entrepreneurs depending on the company, stage of development, location, etc. Understanding the available resources and your ability to access them are key.

Traction trumps geography

Non Linear Growth

There is going to be the inevitable argument about companies raising money from foreign VCs. The great news is since the changes to the Tax Act and the fall of Section 116, we have a lot of examples:

Not to belabour the point, it is possible to raise capital from foreign investors in Canada. But the level of traction demonstrated by most of these companies was very high. For example:

“Since HootSuite’s Series A financing, we’ve grown from 200,000 users to almost 2.5 million! We’re proud of our progress and are looking forward to the future with more success on the roadmap.” – Andy Au, Hootsuite

According to my calculation that’s a 431,690% CAGR of the registered users between when they announced their Series A and Series B financing. Go big or stay home. Traction and growth trump geography. Paying customers, a scaleable business. Being able to demonstrate that for every dollar that goes into the business you understand how many (more) dollars come out. You need to be able to demonstrate appropriate milestones to mitigate risk.

Avoiding Unnatural Acts

“Don’t try to get investors to do unnatural acts: Assuming you are looking for capital, focus your energy on two categories: (1) local investors – either angel or VCs and (2) VCs that are interested in the specific business you are creating. In category #2, “software” is not a specific business – you need to be a lot more granular than that. Your chance of #2 is enhanced by a relationship / investment with someone in category #1, so make sure you focus enough energy on that early on.” – Brad Feld

The secret here is that social proof that VCs are doing deals north of the border is not enough on its own. You need to focus your efforts, and assuming that you’re doing everything you can to hit accretive milestones you still need or want to try to avoid doing unnatural things. A local investor is not required, but it can be a signalling risk about the team, market, product, or other, i.e., what am I missing if local investors are cold? (There are situations where you can imagine an entrepreneur choosing to avoid local investors, particularly if they have had a deal go sour in the past, but usually the entrepreneur discloses this very early).

What to do about location?

  1. Fugetaboutit!
  2. Start nailing concrete milestones that demonstrate traction and mitigate the risk associated with your business.
  3. Get connected to your local community. Look for events like Founders & Funders, Elevator Tour or GrowTalks to have initiate low risk conversations with both local investors and entrepreneurs that have raised capital.
  4. Do your research! Use AngelList, Google, Bing, LinkedIn, portfolio pages, etc.  to find partners following and investing in companies in your very specific vertical.
  5. Figure out who locally is investing locally and figure out how to get a warm introduction and find 30 minutes to meet.
  6. Listen, ask questions, try to figure out what is missing, what is the biggest risk factor and how you might mitigate the risk.
  7. Rinse and repeat with non-local investors aka get your ass on a plane and keep hustlin’ (go re-read Mark Suster’s Never ask a Busy Person to Lunch).