StartupNorth

Year: 2007

  • Cake Mail LogoCakeMail launched their public beta last weekend at BarCamp Montreal. The company, founded by serial entrepreneur Francois Lane, is only offering email marketing services through resellers, a pretty contrarian bet in a ?direct from the source? era. It remains to be seen whether or not offering service direct and through resellers would yield superior results, but either way there are some great lessons here for Canadian entrepreneurs.

    Get other people to sell it
    CakeMail is a white label email marketing platform. They are positioning themselves as wholesalers and doing everything possible to empower their resellers (marketing and web design agencies). I?m not entirely sure what keeping a per email pricelist off their site does when larger competitors publish comparison charts, but resellers probably appreciate the gesture.

    Open and abstracted
    CakeMail was designed from the ground up to leverage a community of developers. The UI is completely abstracted from the logic. In addition to offering reseller the ability to completely tailor the visual experience, CakeMail has opened up their API to give resellers the ability to extend the platform to their hearts content. It is a cost effective way to add functionality, experiment, and harnesses knowledge that only exists at the end user level.

    Go global
    Abstracting the interface has another benefit, localization. This is one area where Canadian entrepreneurs can really out do their peers south of the border. The company, based in Montreal Quebec, is a team of six, two of which are based in Eastern Europe. Count the fluencies. Localizing software is a big challenge and an even bigger opportunity (check out our recent post on Languify). CakeMail is already running in several languages, supports email in all characters, and is going to be quickly localized by end users.

    CakeMail at BarCampGet traction? Then funding
    Investors are risk averse. There is no better way to increase your funding prospects AND valuation, than by getting product out to paying customers. I asked Francois about the company?s capitalization and this is what he had to say:

    ?We are currently building a list of interested parties who could provide strategic synergies in addition to capital for rapid expansion into international markets. While we already have paying customers, we’d like to gain a bit more traction before starting funding negotiations in earnest.?

    So take note, this guy has a recipe for success.

  • Savvica Languify – Don't Sleep, Release!

    We covered the return of Savvica earlier and expected we’d hear from them soon. I was thinking more like 5 or 6 months, but instead today we see that Languify, a crowd-sourced translation service, has gone live.

    Languify InfoIt is a service which not only let’s you manage your own translations for your product, but let’s you benefit from the translation work of others. Languify offers a full REST-style API, which allows other systems to programmatically interact with all of the projects, locales, keys, and translations you have on their service.

    I woke up this morning to a few messages from a well known entrepreneur that he left me on Skype at 3am, and I am sometimes amazed by the number of late night e-mail exchanges I have with other startups as we work through the night. I have a feeling that John and Malgosia pulled a few all-nighters to get Languify done and released (8 days from start to finish).

    While you don’t have to work long nights, and I avoid it most of the time these days, I have to admit that most entrepreneurs I know, who are successful, do it regularly.

  • StartupCampToronto 1 – Now taking submissions

    startupcamplogo_small.pngWe have 3 slots remaining for startups to present at StartupCampToronto and we have decided to let the audience vote on who those companies will be.

    StartupCamp is almost completely sold out, and in looking over the list of people who have tickets, I can see that it is a really high quality group. The mix of Startups, experienced entrepreneurs, experienced investors (both VC and Angel) as well as eager students, all has me feeling pretty excited and optimistic that there will be a lot of value in presenting at StartupCamp.

    The primary benefit of presenting is that you will get candid feedback on your pitch from a crowd that is made up of both other entrepreneurs, experienced investors and people who have successfully exited their previous startups.

    I know that when I was getting my first few startups off the ground, I would have loved the opportunity to have the core of my business plan assessed by such a great crowd.

  • StartupCamp Toronto – December 6th

    Update #5: All tickets are currently sold out. We plan to release any remaining tickets this coming Friday at 2pm ET.

    Update #4: 4 Service Provider tickets remain. Some people have been asking why we service providers are expected to purchase a sponsorship. The basic reason is that we have a very limited amount of tickets available, and in our experience (and we did ask for advice on this): tickets can be snatched up by service providers pretty quickly. Instead of shutting them out completely, we chose to offer a limited amount of spots to the most serious and dedicated of the group.

    We will not let this event grow to the size of a FaceBookCamp or a DemoCamp. Because of the format and intent of startupcamp, startups will not benefit from a large group. Please feel free to drop us a note if you have any questions.

    Update #3: Student tickets are now sold out.

    Update #2: Guru tickets are now sold out.

    Update: The Entrepreneur Round 1 tickets have sold out. We will be releasing a second round soon as well as doing a re-release of any tickets which were claimed by people not involved in startups. Stay tuned for updates about the second release of tickets.

    If you aren’t able to get a ticket for Startupcamp, please remember that there is Democamp just a few nights before which has less of a startup focus.

    startupcamplogo_small.pngI am extremely happy to announce that we will be holding StartupCampToronto on December 6th.

    After we had such a great time in Waterloo, we knew the time was right to do it right here in Toronto.

    We are simply announcing the event now and intend to fill in a lot of the blanks over the next few weeks. We have put together a small group to work out the details and that has been coming together nicely.

    There are loads of great startups in Toronto and even more future entrepreneurs with great ideas and a great work ethic. Building a startup in Toronto is no picnic, and we think the best thing to do is to create an opportunity for those who are committed to their startups to share with and help each-other.

    The format will be relatively simple. There will be 5 pitches by existing or soon-to-be startups. Each pitch is limited to 5 minutes and it is expected to cover the extent of your existing business plan. This may change, but it is the format right now. It worked extremely well in Waterloo a few weeks ago.

    Entrepreneur, Student and Guru tickets are now available here. And of course, we aren’t charging for admission, but we are limiting the amount of tickets available.

    We will email updates to ticket holders and post updates on the wiki.

    Note: We have created specific ticket types in order to make sure that there is enough space for Students and Entrepenurs. If you are a consultant, web developer, lawyer, accountant or other type of service provider, we have created a special type of sponsorship opportunity for you. Please purchase the type of ticket that describes you accurately. We will be checking tickets and re-releasing any which are invalid.

    We aren’t doing this to be jerks, we realize that a lot of people are excited about startups, but our focus is on helping existing startups who need advice now.

  • Investment Banking for Startups – Q1 Capital launches Private Investor Network

    Raising funds for a startup is a full time job. As Craig Hayashi of Maple Leaf Angels pointed out in his recent posts, it can easily take 6 months to raise an angel round. Fortunately, there are options for entrepreneurs who want to focus more of their attention on building the business and less of their precious time on the next financing.

    Golden KeyMeet Frances Fast of Q1 Capital. She specializes in getting startups funded… fast. There is such a thing as a startup investment banker. Frances recently joined Q1, to lead their Private Investor Network, but she is not new to the industry; Frances has been working with angel groups in Canada for nearly a decade, talk about a golden Rolodex.

    If your startup needs to raise over $750,000, you might want to consider the services of an investment bank. They’ll put together your pitch book and get you in front of an interested audience; of course you’ll still need to sell it.

    Investment banking for startups… sounds fancy, what’s the catch? Well, an investment bank’s services are not free. At the close of financing they get a 7% success fee and along the way charge a retainer to keep everyone’s eye on the ball and moving toward closing a deal.

    Sure you can do it yourself. Put together your own private placement memorandum, hunt down angels and vcs, try and get a meeting, etc. But if this is your first time down the startup financing road or you have more vital things to focus on, bringing on an experienced deal maker can keep everything on track and moving forward… fast.

    Contact: Frances Fast, Q1 Capital
    Tip: Be sure to sign up for the Q1 newsletter, it is chock full of need to know info!

  • JobLoft makes an exit

    JobLoft2JobLoft, the Toronto-based company at the center of the Dragon’s Den soap opera last year has finally been paid their due. In a move that both shows how much you do not want investment from the Dragon’s Den, and which shows how a little hard work pays off, JobLoft is being acquired by OnTargetJobs.

    OnTargetJobs runs a network of job boards including Hcareers, which caters to the hospitality industry. Our guess is that JobLoft’s map functionality will be brought to Hcareers. OnTargetJobs is backed by Warburg Pincus. No word yet on the acquisition details, but we’ll try and scoop TechCrunch.

    Congrats to the JobLoft crew on a successful exit.

  • Angel financing – What angels look for in a company: Product and pain point (part 1 of 6)

    In the next series of articles, I will walk through the main areas that angels evaluate when assessing a company for investment. As discussed in a previous article, there are distinct phases you will need to go through as you work through the funding process. However, the same evaluation areas will be used at each stage of the process – the only difference is in the level of detail. The areas I will cover are:

    • Product / pain point
    • Market potential / revenue model
    • Competition / barriers to entry
    • Management
    • Execution strategy
    • Investment potential

    So lets start with product / pain point. In order to engage investors in the funding process, you will need to clearly explain what your company does and what problem or pain point its product/service is addressing. This sounds simple to do but you would be surprised how many applications or pitches I have gone through and at the end have walked away without having a clear idea what the company does.

    In describing your company, it often helps to describe the problem you are trying to address. As an example, lets say you are starting a company to make cases for iPods. In this case, you would want to portray the pain point along the lines of:

    • Apple is renowned for making products that have great industrial design and part of the reason people buy them is how they look
    • iPods are made to be carried around so can take a lot of abuse
    • The casing on iPods is prone to scratching
    • Higher end iPods are expensive

      We therefore feel there is a market to provide people with an external case system for iPods that protects the iPod from scratching yet does not detract from the overall look

    Having described the pain point, you now must clearly explain how your company is addressing the pain point. With the example above, how many different ideas can you come up with to build a company to address the pain point? For example, maybe you try to develop a revolutionary ‘micro film’ that can cover the iPod and give it greater scratch resistance. Or maybe you look to hire well known artists and have them come up with very fashionable cases and sell them at high prices as limited numbered editions. Or maybe you will develop low cost cases made of 100% recycled materials that look plain but do the job of protecting the iPod in an environmentally friendly manner.

    Each business model has its own unique challenges so this is why its important to clearly define what your company is doing so investors know what they are investing in. Most investors will use this as a high level filter. If they do not think the idea is viable or marketable, they will probably not pursue things further. i.e. why would anybody want to invest in something they do not understand or do not believe is a good idea.

    One other tip is to keep things very focused. With any company there are probably opportunities for adjunct products, different revenue streams, etc. If your company is just starting out & looking for its first financing, resist the urge to try jam all of this into your company description thinking it will impress investors more to see how broad your company can be. With a start up with limited resources it is going to be hard enough to launch the initial product. Trying to do multiple things at the same time will probably not be feasible and will end up confusing investors as to what your company is.

    In my next article I will cover the next and closely related evaluation area which is how you show the market potential and revenue model for your company’s product/service. As always, if you have any questions, comments, or suggestions for future articles feel free to contact me: craig at mapleleafangels.com

  • Delusions of Facebook – Should you be a Facebook Startup?

    You can’t deny it: Facebook Applications have been a hot topic from the day the Facebook API was announced 5 months ago. Early success stories spread quickly, and the app-installation-fever that most users went through was overwhelming. Invitations to install this app and that one, we all had flooded inboxes.

    Here in Toronto, FaceBookCamp 1 and FacebookCamp 2 were wild successes with over 300 people in attendance at each. There are no surprises when Facebook takes over any conversation, and certainly not one about startups. StartupWeekend here in Toronto is now Facebook Weekend.

    I am a fan of Facebook, and have written my own predictions on how successful they will be.

    So, should you consider building your startup as a facebook app. Or is that, should you consider building a facebook app as a startup?

    I think there are a few fundamental problems with trying to do so, and I will try to explore those here. As a disclaimer: I have not tried to start a business on Facebook, I have just been an observer. I am also aware that there are some facebook apps which are doing quite well, and time will tell if they truly manage to cash-out.

    You cannot build a business on someone else’s platform when they don’t see you as a partner.
    This is the single biggest obstacle. Facebook does not see application developers as partners in any way. In fact, they forbid you from calling yourself a partner.

    The implications of this might not seem so bad up front. You are still getting access to a great API, lots of community-based support and most of all, you have access to Facebook’s 40-50 million users.

    The reality is more harsh however. You are putting yourself at the mercy of an organization that is growing at a phenomenal rate, you do not know what sort of value they prescribe to your, or any other, application and there are no guarantees about how long the platform will be as accessible as it is today.

    To make money, you need to have your own customers.
    To make real money, you need to have customers, even just users will do, but you have to have something.

    When you are building your business on Facebook, you won’t get either one. You get visits. Brief interactions with someone else’s users, and you have no control.

    Being able to move people from being visitors in to being customers is critical to building any sort of sustainable business. In order to generate any sort of sustained revenue, you need to be able to deliver ongoing value to your customer, so they can continue to either pay you, or click on your ads.

    If they don’t innovate, you die.
    You may or may not remember Compuserve, BBSs, AOL, and countless other internet beomouths. In their day, they were all the big thing, the had tens of millions of customers, doing billion dollar deals and they were bringing new customers in faster than you or I could count.

    The one common theme between all their stories? They have all gone away slowly and painfully.

    You may be able to build the most popular Facebook application there is, and you may be able to generate some cash through advertising or sponsorships, but one thing you won’t be able to do, when the time comes, is take your customers with you.

    When Facebook’s day does come, and it will come at some point, it will be your last day too. You won’t have a hope in hell in getting contact information or any other sort of data about your customers, because they were never your customers in the first place.

    This road has been travelled before.

    Your business is their feature
    The name Facebook Applications is misleading. You are building Facebook Features. Slideshows, Maps, Sticky Notes, all of it, they are all features.

    I don’t have to tell you that a feature is not a business, because you already know that. Don’t you?

    You have two options: Change or Die
    You are building your, *ahem* business *ahem* under the Facebook Terms of Service. While they may be relaxed and manageable now, Facebook can change them at any time.

    When that happens, you will have two options. You can do what they say and change your application, possibly removing things like advertisements, or you can go away and die. (And no, you can’t take your users with you).

    Treat your own customers well, and they reward you. Treat someone else’s customer well, and they are rewarded
    We have already established that you don’t have your own customers or users when building a Facebook Application. The kicker here is that you now have no incentive to enhance your ‘application’. The better job that you do, the more Facebook will benefit.

    You may being saying “aha, that means what you said above is invalid”. Well, almost. You see, at some point you begin to provide a diminishing return to Facebook. Their users are spending too much time in your application. At this point, Facebook has more to gain by making sure that you are no longer the flavor of the month, and they gain by having their customers go to other applications. The more people move around in Facebook, the more they benefit.

    Use Facebook as a conduit to your real business
    Facebook has almost 50 million users. You can’t argue with those sorts of numbers. This level of access to so many entrenched users is unusual.

    The opportunity is for you to extract a feature from your real business, and provide that feature as a Facebook Application. You can then try to link users through to your real website. If you are building something worthwhile, they will come there with you and you can focus on turning them in to real customers.

    The fact is, as a startup you should be focused on building something that is useful on its own. You need to create value that people are willing to pay you for, either with their attention or their own money. Until you can do that, you do not have a sustainable business. You have an experiment, a feature, an idea.

  • StartupCamp Waterloo – This is just getting started

    1732730724_69769af3d0_m.jpgJonas Brandon, David Crow and I made the trip from Toronto to Waterloo last night to attend StartupCamp Waterloo. Despite over 2 hours in traffic on the way there, we were happy that we went. What a great evening.

    The room wasn’t packed, but there were just the right number of people there. Things were kicked off with Ali Asara from Well.ca who took us through the ups and downs of his search for funding for his startup. Ali was incredibly compelling and more than made up for the fact that Albert Lai couldn’t make it in time. Ali, who Toronto recently lost to Guelph, is quickly becoming one of my favorite guys in the startup scene around here.

    I had intended to take notes on the evening, but I really just got too caught up in everything. After Ali’s presentation, it was time to have quick 2-minutes demos from a slew of startups, or potential startups. Despite some Facebook Delerium that was coursing around the room at times, which culminated in one startup being told to eschew any thought of making money and to just make a facebook app, there was a really genuine attempt to help each startup in thinking through their business plans and product development.

    The startups that presented, that I made note of, were

    • Village Toolbox ? Not yet launched. Wiki and social tools for actual, real-life, communities.
    • CastRoller
    • Zimride – A Facebook App
    • Purple ? Community managed band calendars
    • ContingencyWorks.com and his EpochBox idea.

    The startup that really got my attention was Village Toolbox. Simon Clark has built a social-software platform for his own community. While the product is in it’s infancy (it didn’t look very refined), and there are quite a few competitors in this space, I think Simon really kind of gets it. A lot of the competitive tools, which we use in my condo are ugly in their own way, and aren’t built with the community in mind. My guess is that there is a lot of room to innovate here, both with the product and with the localized revenue opportunities.

    1732730310_b8a7867ce5_m.jpgSimon’s question when he got up was: “should this stay as a hobby, or should I start taking it seriously”. My advice is: focus on the product, keep iterating it in your own community, and put it in a couple of others. Once you get it right, start spreading it out and then quit your day job when you can afford to, but no sooner.

    These startups were all very early stage, which will probably be the norm for events like this. There were a handful of more seasoned entrepreneurs in the audience however, and a lot of good advice flowed from them. It would be nice if startups would present some basic market research or target-audience information, because it can be hard to talk through problems without really understanding the end-user.

    This is just getting started
    By the time the evening was over, people were buzzing. The rapid-fire sessions, which nobody wanted to end, had us all excited. The entire event was very loosely planned, and it went off perfectly.

    Startups were invited, the number of attendees was kept low, and the organizers let the audience set the pace. We learned a lot of lessons. StartupCamp is unique from DemoCamp in that it isn’t about demoing cool technology just to show it off (a line that was very fine at times), but instead it is about demoing a startup or idea with the intention of taking feedback, and heckling, from the audience. The entire night reminded me a lot of the first DemoCamp here in Toronto.

    Keep the momentum going
    So, here is the deal. We are going to keep up our end of the bargain and we are going to be hosting StartupCampToronto1 (watch that page — too tired to fill it in now) using the same model.

    Now, the challenge we are sending out to all the other tech startup blogs: Run a StartupCamp in your city. Keep it simple and to the point. Let’s smoke out the entrepreneurs and see what, and who, is out there.

    StartupCongress planning continues to take place, but in the spirit of startups, let’s just do it.

  • Angel financing – Who are angels and what are their motivations (part 2)

    When you are making a pitch & ultimately getting angel investors on board with your company, its important to know who you are dealing with and what their motivations are. During a general pitch presentation to a room of angels, you will not be able to know much about who you are pitching to or what each person’s background is. So you will have to keep your pitch suitable for a broad audience. Don’t assume they will have knowledge of the industry your company operates in. As you work with angels interested in investing in your company, you will have the opportunity to get to know them better. This is important to do as you want to ensure their motivations & expectations are in line with what you have in mind.

    So at the risk of over-generalizing, here are some profiles of angels & their potential motivations.

    Cashed out entrepreneurs that have started & sold their own company. They know how to build and run a business. They may be looking for their next opportunity and want to get involved on the management team or board of directors.

    Professional service providers such as lawyers or consultants that provide services to companies. They may be looking for early stage companies to get involved with so they can grow with them and provide increased services once the company gets more mature.

    Doctors that may be interested in funding companies that are advancing technologies in their field.

    Business people interested in funding companies that help work towards a cause they are interested in such as environmental friendly sources of energy.

    Corporate executives looking for early stage companies that can provide a new product or service that can help the corporation they work for.

    At the end of the day, all angels are investing since they want a class of investment they can participate in that offers a chance at a high return (with the downside of high risk). However, there are wide ranges of preferences for what role angels see post investment. Some want to be actively involved in helping grow the company while some would rather be passive and be hands-off. It is also important to be on the same page in terms of expectations of exit and investment return. The main point is to ensure you understand your investors expectations and the role they want to play in your company post-investment so you can properly manage to it.

    In my next series of articles I will talk about the main areas angels look at when evaluating a company. As always, if you have any questions, comments, or suggestions for future articles feel free to contact me: craig at mapleleafangels.com