StartupNorth

Month: December 2007

  • Homestars.com – Reviews of Home Improvement Companies

    homestars.pngHomestars.com is a publicly accessible reviews site that does not require any registration in order to read reviews. Posting reviews requires an account. Homestars is focused solely on the “home improvement companies and resources for homeowners” niche.

    Homestars’ focus on a single vertical is smart and they are executing on it well. The most specific advantage of this approach is that selling targeted advertising at a premium will be much easier for HomeStars, who have very specifically motivated users in the home improvement space. These people are ready and willing to spend money, and if HomeStars can get them to the site, there is no doubt that advertisers will be ready to pay.

    Perhaps it is a result of the narrow focus of the site, but the user interface is very easy to navigate and it is a lot of fun to just dive in and start (as I did) looking for pissed off people skewering their plumber or driveway repairman. As you dive in you will notice “Sponsored Ads” on some pages. If you look up a review for Plumber Bob, who seems like an honest and hardworking guy, you will see that Canada Wide Plumbing & Mechanical Services Inc. have a “sponsored” ad on Plumber Bobs page. To get one of the premium spots, and to add pictures and a few other things to your own page, you pay a monthly fee of $80. These premium spots make up the bulk of HomStars’ revenue.

    Because people often want a review of something as specific as a Plumber or a Roofer only intermittently, I think HomeStars have done the right thing in making the site as public as possible. Home Rennovations is a niche that has been overlooked so far and unlike books, music, travel, or cars, it has been hard to get decent local reviews of these services.

    hsreviews.pngHomestars have also recently done a deal to provide their review data to another Toronto based startup: ZipLocal.com, who, as we have mentioned before, appear to be treading water and perhaps are hoping that bringing in more high-quality review content will generate some additional traffic. I think HomeStars has to be careful about licensing their reviews outside of Homestars.com; I am not sure that when a user enters a review on HomeStars the user expects it to be syndicated.

    The most glaring problem for HomeStars is accountability. As far as I can tell there is no way to see what other reviews a particular user has posted, so it is hard to know if a review is just a one-off from someone, or if they are an established and helpful reviewer. I think HomeStars will need some sort of scoring system that gets applied to the individual reviewers, based on their participation. Otherwise, HomeStars risks filling up with spam reviews.

  • homestars, gigpark – Reviews of stuff

    Toronto is currently in the throws of labour, giving birth to two distinct but potentially competitive review services.

    Homestars.com and Gigpark are both, at their core, places to post reviews. In the case of Homestars, their current focus is on home renovators and service providers (an industry that needs to have some accountability injected in to it!). Gigpark, is more generalist in its approach, but layers a social network on as the main hook. The idea being that you will trust reviews from people you know more than you will trust reviews from just anyone.

    I think both approaches have a few strengths and a few glaring weaknesses. First up for review is HomeStars.com, and we will take a look at GigPark later on.

  • Extreme Ventures – Early Stage Venture Capital

    amarsun.jpgWe promised you a surprise at StartupCamp Toronto, and we did our best to deliver. At the end of the night, we asked Sundeep and Amar from Extreme Venture Partners to come up, tell us about themselves, and take some questions from the room. Extreme VP is a new venture fund based in Toronto, and this was their coming out so to speak.

    Jumping in to the startup scene here and telling everyone you are a couple of freshly minted VCs can’t be easy to do. I was excited to introduce the guys because I am one of many who believe that venture capital has to change in Canada. I don’t pretend to have all the answers about where venture capital is going or where it should be going, but if a new venture fund is going to try and do things differently, I am on their side.

    When I first got an email from Sundeep and Amar I was intrigued, excited and a little pessimistic. My guess is that those are the exact same feelings that most people in the room had at StartupCamp. The fact is that a large number of startups in Canada are going to need some sort of capital, whether it is early stage, acceleration capital or expansion capital later on. As Albert Lai said when he kicked off with his keynote: finding early stage and acceleration capital in Canada can be painful, if not impossible.

    Amar (on the left in the above photo) is an engineering grad from Waterloo who has spent the last 5 years working as a VC here in Toronto. He has worked on something in the area of 40 transactions in that time, and has learned a lot about “traditional” VC it seems. Sundeep has some notches on his belt, having founded and sold a few successful startups over the last few years while living in San Francisco.

    Sundeep and Amar have not raised a huge fund by any stretch. At $10 million, they aren’t taking a management fee out of the fund, nor can they afford to throw money at unrealistic startups. What they plan to do is invest early in good ideas and provide up to $1 million in funding over the life of a company.

    There are a few things that I think sets Extreme VP apart from other Canadian VCs: They can do deals as small as $25,000, they try to complete a deal within 1 month if it is a ‘yes’, they are probably more tuned in to what is going on right now with web startups than most other VCs, and they have a good set of connections that they can use to help the companies that they fund.

    One thing that has impressed me so far is that they are also accessible. Even before they officially ‘launched’ their fund, I saw them out at democamps, pub nights, and breakfasts where I could not find another VC if I tried. To me, that says something. The other thing is that these guys are actually doing some deals. In a short period of time they have funded something in the range of 3 startups and I believe they have more that are looking good.

    What do I hope Sundeep and Amar accomplish? Disruption. I hope they are a wake up call to many of the VCs in Canada who have taken their deal flow for granted. By being accessible at the grassroots level, Extreme VP will see valuable deals before they land on the desks of the more established VCs. Some of them may have to hit the ground and start looking for good deals before they get picked up by the new guys in town.

    Contact: Sundeep & Amar, Extreme Venture Partners

  • Angel financing – What angels look for in a company: Financials and exit strategy (part 5 of 6)

    After providing details on management, you have hopefully given investors confidence in your team’s ability to deliver on the company’s vision. Now it is time to turn to the financial aspects of the company and investment opportunity. In presenting your company’s financials, you want to give investors an idea of the company’s revenue/profit potential. The usual way to do this is to show a summarized income statement. You would want to show a projection of the company’s revenue and income for 3-5 years into the future. If your company has been in operation for prior years, you would also want to show the actual results for revenue/income for these years. As any future predictions of revenue/income are going to be very speculative for an early stage company, the methodology you have used in building up the projections will be more important than the actual numbers themselves.

    In a previous article we spoke about market size and revenue potential. You would pull in your revenue numbers you came up with to show how the company’s revenue will grow as you build your company. Just as you did a bottom up exercise to determine your revenue numbers, you would want to do a similar exercise to determine expense items. Against revenue you would want to identify your variable and fixed costs. Variable costs are any costs that are directly proportional to a unit of your product that is sold (i.e. cost to manufacture the product, credit card processing costs, etc). Fixed costs are more tied to the overall growth and size of your company (i.e. management salaries, rent, legal fees, insurance, etc). In your investment presentation you will want to show your income statement on an annual basis with separate lines for each major revenue or expense items. Typically you would show your revenue minus operating expenses to come up with EBITDA. EBITDA provides a picture of the earning potential of a company based on operations.

    Investors will look your financials to try understand things such as:

    (more…)

  • iBegin – From Local Search To Business Data

    ibegin logoiBegin has been doing all the right things, right from the beginning. It wasn’t that iBegin had the perfect business model from the start, they didn’t. Very few startups do, but instead of getting stuck on one idea, they have transformed within their niche and have shot in to profitability.

    iBegin started out as an experiment: a user generated local search site for Yorkville, a ritzy 4 block neighborhood in downtown Toronto. The number of visits to the hyper local site surprised Ahmed Farooq, the site’s founder, so he started exploring purchasing business listings to expand. Dealing with the data providers proved to be a big hassle. Worse still, the data providers used opaque variable pricing schemes and demanded princely sums. And so iBegin discovered a business opportunity, hassle-free fairly-priced business listings: iBegin Source.

    iBegin charges $1000 per state or province, $40,000 for the entire US, and $8,000 for all of Canada. Customers love the transparent pricing. iBegin has already made over 50 sales, 80% of which required no interaction or hand holding. And it is not just customers that have noticed iBegin… this year Ahmed received (and turned down) a buyout offer in the low seven digits.

    ibegin logoAs a local search engine, iBegin used to compete with Toronto based and venture backed startup Ziplocal, which has undergone several redesigns and appear to be struggling with the local search business model.

    It is worth reading iBegin’s philosophy. Notice what they didn’t have from the start: “iBegin was not created by a dozen people brought together to work on it. It didn’t have a CEO and CFO and other related positions. It didn’t have bankers and venture capitalists backing it with millions, helping finance user research groups, and hiring expensive and unneeded consultants and advisers.”

    Ahmed is no one trick pony. He has a number of other ventures including: vB Skins, Is My Home, and the Bloggy Network. Building a stable of successful businesses and reinvesting those cash flows, instead of raising outside financing, has allowed allowed iBegin to experiment, iterate, and evolve. Getting to product/market fit is a significant achievement.

    There are many opportunities for iBegin going forward. Next year we’ll see iBegin expanding into other English speaking countries and offering categories (e.g. health, legal) in addition to regions. How does Ahmed do do it? By listening to customers and bootstrapping his way to a big success.

    Contact: Ahmed Farooq
    Blog: www.techsoapbox.com

  • StartupCamp Toronto – Thank You

    StartupCamp Toronto took place last night and the room was packed. For the main event we had somewhere in the area of 90 people, and we think about 40 showed up for the after party. It was more than we expected, but it all worked out well.

    Thanks to everyone who came out, especially those who traveled from Montreal and Ottawa. Most of all, thank you to the startups who pitched as well as those who demoed afterwards downstairs. The feedback from the demo pods was surprisingly good.

    A Big Thank You

    Once again, a thank you to our sponsors. Without them, this would have been impossible.


    q1media.jpeg hyndman.png
    cogniiton.jpg achilles.png
    pwc.gif msimages.jpeg

    For a full recap of the evening, Anthony Carbone has the most thorough post yet and Leila has some pictures.

    This is now all in the past however, and we are moving on! We have some great announcements to make.

    StartupCamp Montreal is set for January 23rd and will be at the SAT, which looks like an incredible venue. Heri scooped me on the story, which I plan to make him pay dearly for. A wiki should be up and running for the event soon and we are planning on forming a contingent from Toronto to make the trip. We had two Montreal startups at StartupCamp Toronto, so we’d love to see a few Toronto startups make the roll call in Montreal.

    StartupCamp Waterloo 2 is planned for February 26th, 6-9pm at the Accelerator Centre. We will post more details on these events when we have them.

    More StartupCamps are coming. We are working on instigating more and have 2 others in the early planning stages. We are feeling pretty excited about StartupCamp and the startup energy in general across Canada. Each city is developing a unique flavor and niche. Instead of having one dominant city in Canada, we are seeing a handful of cities all buzzing with startup energy and working together while building up their own strengths individually.

    Who knows what’s in store, all I know is that I have a good feeling about it.

  • StartupCampToronto is tomorrow – open to all (8:30pm)

    So, StartupCampToronto is tomorrow. Jonas and I are pretty sure we have taken care of everything we possibly can. Don’t forget for those who have tickets: Things start at 6pm

    As you probably know, we have tried to keep the numbers for this event at a reasonable level. Our hope is that the presenting startups will get valuable feedback that can help their business. We have felt bad about turning down a lot of people who have requested tickets after the fact.

    If you don’t have a ticket, we still want you to come hang out. We have made arrangements to take over No Regrets at about 8:30pm to hang out and get to know all the cool startups who will be there. If you get there on time, you will be there just in time to hear a slew of really great announcements.

    What? StartupCamp After Party

    Where? No Regrets, 42 Mowat Ave, Toronto

    When? 8:30pm

    What else? Demos tables manned by a handful of fantastic startups

    You will also have a chance to hang out with the presenting companies.

    And finally, the people who put up the money to make this happen:

  • One from the Den: HomeBox

    homebox_small.gifRyan Coleman blogged about the Dragon’s Den the other day and made a good observation that the actual makeup of the Dragons makes them almost useless.

    Ryan also mentioned one of the “deals” that got me to do the most screaming at the TV. Jodi Sinden had launched her stationary business (HomeBox) only just over a week earlier, and had one the #1 prize at a trade show in New York, she came on the show offering 20% of the business for $50,000.

    The cast, I mean: Dragon’s, came back with the usual demand for control and offered $50,000 for 50.1% of the company. Jodi took the deal.

    The story however, is not a nightmare, it has a happy ending. Jodi commented on Ryan’s post and said:

    There was a missing piece that wasn’t put to air, but only hinted at: I would’ve needed large future investments of capital to finance inventory, and $50,000 wasn’t even close. The extra little push that made it an attractive deal was that they said future cash investment on their part would never reduce my equity in the company. That is very different than most venture capital groups, where every further investment is in return for another percentage. At the time of the filming, I had a good idea but it launched only a week before, so I only had $5000 worth of sales. Over the two months of negotiation time afterwards, my FIRM orders grew to twice the value of the dragon deal. So I did. Run away that is! Speaking of which, now looking for investment to finance that inventory… Look for the Homebox this friday on The Shopping Channel and in the spring at Indigo and Staples!

    She went from $5000 worth of sales to $100,000 in just a few weeks and told the Dragon’s to take a hike. It sounds like Jodi still has some need for cash to holdover her inventory to handle big orders, but that is a typical bump in the road for a startup that is producing real goods.

    Jodi is not only on to something, but she is executing as well. She went out and got order before she could fulfill them and then worked out the details — smart move.

    You can buy the HomeBox’s online during the holidays. I have bought one already as a gift and think I will go back and buy some more.

  • Conceptshare Announces Major Partnership and New Version

    Conceptshare, who we have previously profiled, has two major new announcements today. We have a lot to cover, so lets dive right in:

    Partnership with Corel, Inc.
    corelcs.jpgCorel, Inc. has partnered with Conceptshare to provide a Corel branded version of ConceptShare that will be promoted directly to Corel’s 10million+ customers. The site, coreldrawconceptshare.com maintains significant ConceptShare branding and maintains the same pricing as the main ConceptShare.com website.

    screen-1.jpgThis launch is for the branded website only, but it is the beginning of a 5 year partnership between the two companies. If this venture goes well, I am sure that we will see more tightly integrated offerings coming from these two companies. This move also positions ConceptShare well ahead of its competitors, none of whom can boast such a significant long-term deal.

    ConceptShare Version 2.0

    screen3.jpgOn the heels of this new partnership comes the announcement of ConceptShare Version 2.0. We managed to get a sneak peek at version 2.0 some time ago and were really impressed. Instead of lumping in dozens of new features, ConceptShare Version 2 feels like a maturation of the previous version. It now has a significantly more professional look and also provides more refined workflows for major tasks.

    Version 2.0 also sees video support coming out of beta status and is also built on a upgraded framwork which will allow much more rapid software releases in the future.

    ConceptShare already counts Avenue A | Razorfish, QUALCOMM, AOL, Monster.com, the National Football League, the New York Knicks and Harvard University as their major clients on top of hundreds of independent designers who all rely on ConceptShare on a daily basis.

    These two announcements take ConceptShare from the rank of fledgling startup to the status of being one of the most polished and reliable players in the online collaboration space.

    Read more about the partnership and the new version on the ConceptShare Website.

  • Digg.com, a client of Canadian web development firm silverorange, is now partnering with another Canadian company: Idée. Idée, who we previously profiled here, will be providing software to detect multiple submissions of the same image to Digg.com’s new dedicated images section.

    Fans of Digg know that a dedicated images section has been in demand for some time now and by avoiding the noise of having multiples of the same image uploaded, Digg can provide a much better service than their competitors.

    From the Digg.com Blog:

    Sorting and Duplicate Image Detection
    digglogo.png We?ve added a new sort to the images section called ?mosaic? view ? it?s great for browsing image thumbnails. To help prevent people from submitting duplicate images, we?ve added image recognition technology from Idée Inc.

    Congratulations to everyone at Idée on this deal and on the new website, it looks great.

    Idée has a follow-up post with a lot of information here.