StartupNorth

Year: 2008

  • GigPark – share reviews with your friends

    logo170.pngGigPark, a Toronto, Ontario startup, has finally come out of private beta and is now live.

    GigPark is a site to review and recommend local service providers amongst your friends and contacts. That means that if you hire a plumber for example, you can review his/her work and it will be shared with other people who you have friended, just like Facebook or any other number of social applications.

    This is in contrast to most current review sites, which give you reviews about service providers that could be written by anyone. With GigPark you can get recommendations directly from your friends, either by viewing service providers that they have reviewed already, or by asking for a specific recommendation. Many review sites such as Amazon.com and Tripadvisor try to build the authority of the reviewer by showing you information about them (such as other reviews they have written, etc), but they remain ripe with fraudsters and hucksters and it is basically impossible to eliminate those people unless you take GigPark’s approach.

    gigpark2.pngGigPark has a very tight focus and it cuts through a lot of the mess of recommending new things to friends with a clean approach that reminds me of FaceBook before they launched FB apps. GigPark has also launched a Facebook app to compliment their service. The app is much more tightly integrated with FaceBook than most apps, which is nice.

    GigPark is taking a very fundamentalist approach to using the social network (or Social Graph as it now seems to be called) in their design of the service. Where it would be easy and lucrative for GigPark to find ways to publicly expose these recommendations, and it would also be profitable to resell the content, Noah and Pema assured me last week that they focus was on creating a safe and trusted space for users, and that might mean giving up some short term opportunities. That includes not selling off the reviews as “content”.
    If they get a significant amount of people signed up and engaged, then this approach is going to pay off by entrenching GigPark as the most effective review site. The use of a social network gets around the significant authority and spam problems that we mentioned in our review of HomeStars. The bet is however, can they build that audience?

    The hitch is that GigPark falls squarely in the YASNS category and getting people to sign up for a new site and then to have them re-create their social network is tough. The pitch is that GigPark has a very defined and obvious value, and the opportunity is huge.

    GigPark is self-funded and is run by Pema Hegan and Noah Godfrey.

    My profile is here, add me!

  • StartupCamp Waterloo 2 – Tuesday February 26th

    startupcamplogo.pngJust a reminder that next week on Tuesday February the 26th is StartupCamp Waterloo. We will announce the next StartupCamp Toronto there and hopefully a few other things as well.

    Austin Hill will be kicking things off and I expect that the pitches will be as much fun as last time. The thing I really liked about StartupCampWaterloo (and what we tried to achieve in Toronto) was how laid back things were and how “green” the pitches were.

    I can’t wait to hang out and meet some more aspiring Waterloo startups.

  • As The Web Turns – The tales of Capazoo

    250px-flag_of_montrealsvg.pngMontreal seems to be the hotbed for controversy in the Web 2.0 world in Canada. Where else could you find someone who will sell you the Brooklyn Bridge and someone else who will supposedly pay you for joining their social networking site? It is the latter, the multi level marketing site called Capazoo.com that is bringing us the latest dirty laundry.

    Capazoo is a social networking site, in this case it is a lot like MySpace, which charges anywhere from $25 to $35 a year for a membership. The big idea is that the more people I get to sign up, the more referral kickbacks I get. We’ve all seen this before in other disguises, in the case of Capazoo, they have attracted their share of B and C-list celebrities.

    I won’t even try to recount the whole story, but it seems to involve some brothers, at least one of which has been convicted of fraud before, a bunch of ex-NHL hockey players, some online porn kings and a bunch of investors who still don’t seem to know what is going on.

    capazoo.pngLa Presse, a French-Daily in Montreal has been digging in to the story (google translate) and it isn’t pretty. The two founders, who are also brothers, are now in court fighting over who has control of the company and they are also sorting out the small matter of who embezzled how much off the top from the investors money (one side is claiming it was a “10% commission on funds raised”).

    There was also the small matter that one of the two guys who were managing the company had decided that pornography should become a big part of the sites content (who knows — they may have made a fortune doing that), then add on the death threats that were going around and it seems you have something worth writing about.

    Heri has been covering this at Montreal Tech Watch and his last post on the subject stirred up quite a cat fight in the comments. You just can’t make this stuff up folks.

    I am not sure what to make of the whole thing. The worst part is that these guys have sucked a lot of investable money out of Montreal and have left a long trail of investors who probably now have a bad taste for web startups. I haven’t written much about Capazoo up until now because I always felt they were a very poor reflection of the entrepreneurs I know in Montreal. It remains one of the most exciting startup cities in Canada and judging by some of the great projects and startups I have been hearing about, it is going to stay that way for a long while.

  • IOU Central – Canada gets its first Peer to Peer Lending Company

    iou_logo.jpgIOU Central, a Montreal based startup, is launching today. They have staked their claim as Canada’s first Peer to Peer lending company. We covered the funding announcement of Toronto based CommunityLend back in December.

    Peer-To-Peer lending has been maturing quickly as a concept on the heels of successful sites like Zopa and Prosper, but Canada has so far had no such providers. Peer to Peer lending is a concept that takes a large group of lenders who are willing to lend out smaller amounts of cash and connects them with borrowers who need access to cash at a rate that is below the standard credit card rates, but they are generally willing to pay a higher rate than if they had to go to a bank. A lender can be anyone with a bit of extra cash that they would like to get decent returns on.

    iouscreen.pngFrom a borrower’s perspective, IOU Central operates much like any other lender, in that a borrower’s initial “rating” is based primarily on their credit score. You can however supplement that score by uploading a number of other documents to do things like prove your income, itemize your monthly expenditures and other things that can bump up your overall score.

    IOU Central groups borrowers into 5 tiers: A, B, C, R, and HR. Borrowers in each tier pay IOU Central a service fee on top of the loan of 1%, 1.5%, 2%, 2.5%, and 3% respectively. Service fees varies because IOU Central expects to have to spend more to recruit lenders interested in higher risk borrowers and expect to face higher operating costs servicing loans to higher risk borrowers.

    IOU Central charges Lenders a Lending Fee, which works out to about 0.5% annualized, calculated based on the amount of outstanding loans you have remaining each month.

    The company was conceived over a year ago and their site has been in development for just under a year. There are currently 7 full time employees and they have raised a round of funding which includes Angels and VCs, but they did not disclose the amount of funding.

    I asked Sam Bendavid, VP of Business Development for IOU Central, what sort of regulatory or legal issues they encountered running up to launch and he indicated that things were quite smooth. IOU Central is registered in Quebec as a lender and they worked closely with their law firm in developing their set of Legal Agreements.

    IOU Central will be focusing most of their initial marketing on potential lenders. This is a smart move as lenders will be far more scarce than borrowers. Perhaps the days of getting a loan from Uncle Vinnie are over, and Canada now has a safe, regulated, and legal place to secure peer to peer loans.

    Update: The Star provided some further coverage a few days later.

  • Where are all you brilliant startups?

    Just a reminder to all of you, any of you, brilliant (and not so brilliant) startups. You can get in touch with us and tell us about your startup.

    We can’t promise that we will profile every startup that comes in, but we can promise that we will try. The number of Canadian startups getting in touch to get profiled has tapered off in the last few weeks and we would love to see more. If you really want to get a head start, fill out this form and let the reviews begin!

    While we do cover a lot of events, post a lot of commentary, organize a few events, and have things like our great series on Angel Investors, we see profiles and big announcements as job #1, and the more help we get from you all the better we can be.

  • Want to go to SxSW? You can get $687 in support

    sxsw.jpgTomorrow morning at 9am (Friday, February 8th 2008) there will be a meeting at Foreign Affairs and International Trade Canada?s Toronto offices (151 Young St, 3rd floor boardroom) to discuss their subsidy for any companies who are going to be going to SxSW. From what I understand, there was a meeting about it in Montreal today. I am trying to get some more information and will post back what I can find. Read this PDF for most of the information you need.

    There are a lot of Canadians going to SxSW and while the document names a few, it only scratches the surface. They mention panelists: Kris Krug from Raincity Studios, Steve Bocska from Hothead Games, Jennifer Ouano from Elastic Entertainment, Ron Thiele from Xpan Interactive, and Keith Clarkson from Xenophile Media, and I will add Ben Vinegar from Freshbooks.

    Keep your eyes out for Jonas and I as well, we are working out the details as we speak.

    RSVP to [email protected] if you will be able to make it.

  • Lift08 Venture Night: 5 Panelists and one MC and 8 pitches

    I am here at Lift08 in Geneva, Switzerland. Tonight is “Venture Night”, a startup launch-pad that had 50 submissions, which were narrowed to 8 startups who all demoed and presented their business case tonight. The format is a good one, and it is similar to Under the Radar: 5 minute demo and business model, 5 minute questions from panelists and 5 from the audience. This is a posh event, wine and Swiss breadsticks no less and the turn out is substantial for this “pre-lift” event (I’d estimate 400+). And the inimitable Guido Van Nispen as MC.

    A venerable panel featuring techcrunch europe, VCs and Angels, a top euro blogger and long time LIFTer Robert Scoble.

      1) Viewdle.tv
      A video search company. Find people in video, images, using contextual and voice cues. More than just tags. Very slick and ajaxy. Searches for clinton, then narrows by Iran, shows in search results streamable clip of Hillary speaking of Iran. Options: sort by tag, by content channel, and by timeframe and, oh god, they have video tag clouds (what is this 2006?). But the seach works in the demo, and it’s cool.

      Have widgets for blogs. Business model is video search sold to content producers (reuters) or video aggregators. Processing is computationally intensive, not trying to crawl or index web on their own (smart).

      2) holistis
      Converting online store visitors to buyers – 98% of online shoppers don’t make purchases. Uses past behaviors, intention and behavioral targeting to convert viewers to buyers. Turn known visitors into loyal customers through targeted content. Theory is to grow the 2% end of the funnel as more profitable than the 98% end.

      3) wuala
      Free and simple online hard drive. This has been done before. The twist, using distributed storage and bandwidth. You have to share your own HD and bandwidth to us it. Their catch phrase is to be the “skype of online storage” (great catch phrase). Judges are throwing softballs until vc asks about copyright infringement: do they have the same issues as youtube or ftp servers. Revenue streams, ads, photo prints, or sell premium services. They make sure data is available even if large part of network is down, they also back up on their own servers and their system works on bittorrent principles: fast downloads through fragmented storage

      4) Mixin
      What are other people doing?, I want to plan my Friday evening. Like a dopplr for activities with your friends. Nice looking screens. looks like a jaiku/twitter calendar mashup. This begs the question: why not bundle, or at least mash this up with existing social networks instead of creating a new one. I asked this question. They want to, and will support integration.

      5) IO
      Digital is more present in the physical world like table top computing, surface computing and like bumptop but real. For public spaces, skinnable walls and tables gorgeous interactive surfaces, rippling water and blooming flowers, more art than tech. VC panelist says there are a few funded competitors – which also means this is a validated market with some action in it. I’d like one of these for my living room. But they have no interest in making it cheap, it is not a consumer technology.

      6) cocommentwas launched way back at Lift 2006 syndicates and collects and aggregates blog comments tries to solve the problem of bog comment viability trouble is blog comments are less interesting than blog posts. Cocommenters comment more and are stickier. Rev model is ads, and conversation tracking. A lot of “former” users on the panel asking ome questions about performance, usability.

      7) clipperz
      Do you trust online services, do you trust them with your data? You should have control of your data. Keep it to yourself. Data is stored on cards that aggregates all your secure data and logins. talk about a vulnerability, get hacked once and they get everything. Admit that I don’t really understand this play or how it’s differentiated. Authentication and security is important, but in reality, mostly people say they do, but, in practice, don’t care. Many many startups before them have leapt onto this sword of federated online security management.

      8 ) Pixelux entertainment
      Digital molecular models. animate materials like materials instead of scripted animations. Metals bend like metal, trees bend like trees, great for realtime video game animations. It reduces the costs of video game production through procedural physics rendering. DMM physics engine, realtime animation libraries, based on glass, metal, wood, etc. the algorithms know how it will break, bend or shatter. For movie market or for games and animation. Flat fees, and licencing business models on titles sold by the millions. nice.

    Whew, a solid deck of demos. Now this is a larger scale of event (and these are later stage companies) than our typical democamp or startupcamp, but I’m left feeling that we in the Canadian community need to step up our game. A lot of good Tech here (with a capital T). Good polish of apps, good polish of demos and some impressive technology that could actually work (mostly). Bravo.

  • BlitzWeekend – ad-hoc startup launchpad

    blitz1.pngWhen Heri first announced BlitzWeekend, I thought it was a slightly better take on the various StartupWeekends which had been painfully going on. That would have been the easy thing to do, but Heri and the guys have taken it a few steps further. Blitzweekend will take place on March 1st and 2nd 2008.

    The result is less of a throwaway StartupWeekend and more like a miniature version of Y-Combinator or TechStars. Instead of building one big project, and then leaving the day-to-day operations up to a few unwitting volunteers, BlitzWeekend is a chance to kickstart your own startup that you will be moving ahead with.

    Because of that, BlitzWeekend will have a much more well rounded crowd than the normal hack-fests that we are used to. The sponsors, who include BDO Dunwoody, Embrase, Globalex and iNovia Capital, will all be at BlitzWeekend to provide early support and guidance to the startups.

    To accompany the weekend, BlitzMaker has also been released. It is a tool to help teams form, share their ideas and to organize before BlitzWeekend.

    BlitzWeekend is also reaching out to teams from beyond just Montreal. I would love to see a team from Toronto or Waterloo make the trip over to Montreal. The crew in Montreal has offered to help with expenses by organizing some couches and possibly contributing to travel costs.

    Heri described the event like this

    – we have partners and sponsors like iNovia Capital (VC fund specializing in early stage funding), BDO, Globalex, Embrase. Actually, it will be an opportunity for any new entrepreneur because the most promising projects will have access to advice from business consultants and key networks. You can view it as a launchpad for startups, à la TechStars

    – we will have experts for the event, in the case a team get “stuck” in major problems. each team is going to have “joker cards”, allowing them to call an expert in one specifi domain (technology, design, business plan, marketing etc.)

    – we will have a “make” track for developers or designers who just want to create a cool technology and are not sure yet about how to do a business plan. However, we will have a “startup” track, and we will have a panel of “judges” who will be giving them valuable feeedback about their product and business plan.

  • Canadian DEMOgods

    demogods You are all DEMOgods to us! As promised here are the DEMO videos from our very own: Standout Jobs (Montreal, QC), Cozimo (Montreal, QC), HealthPricer Interactive (Vancouver, BC), Rove Mobile (Ottawa, ON), SceneCaster (Richmond Hill, ON), and Xtranormal (Montreal, QC). Congrats guys!

    (more…)

  • Angel financing – Valuation (part 2)

    In the first part of this article series, I discussed reasons why valuation is important. In this article I will talk about how to come up with a valuation. Unfortunately there is no clear cut formula you can use. As with trying to value anything that is unique, such as a work of art, valuation ultimately comes down to a meeting of the minds of what the holder agrees to sell at and what the purchaser agrees to buy at.

    Practices used to value mature companies generally do not work for start-up companies in their early stages. This is because there are too many unknowns if the company will be viable and how much revenue it will make. This makes using a discounted cash flow method of valuation very subjective as you can support a wide range in valuation by the assumption you make on the company’s terminal cash flow. Using a comparables method of valuation is also problematic as you will probably only have data on VC or IPO deals which deal with companies that are at a later stage of development. The value for these companies is going to be higher as they have proven they have a viable product/revenue stream.

    In terms of practical guidance based on experience, a rule of thumb is to expect that if your company is looking for its first round of angel financing, then it will have pre-money valuation in the $1m to $3m range. This is based on the assumption that your company is pre-revenue or in the early stages of revenue, has a product that is close to going to market, has a partial management team assembled, etc.

    The main advice I can give around valuation is to be reasonable and be flexible. As I discussed in the previous article, having a high valuation for the first round of financing makes it harder for investors to realize their ROI objectives. So unless there is something really special about your company, it is not a reasonable expectation to get an eight figure valuation. Since valuation is so subjective, your best strategy is to be flexible in the early stages of the pitch. You will not be able to convey the full value of your company during a 20 minute investment pitch. You should state your valuation expectations but say they are open to negotiation. During the more detailed due dilligence meetings, you will be able to spend more time with the interested investors and have the opportunity to have more serious discussions on valuation & the aspects of your company you feel support your valuation target (i.e. strengths in management, product, barriers to entry, IP, market potential). You will also get to know your potential investors better.

    Successful companies generally look for ‘smart money’, meaning investors that are willing to contribute money as well as their knowledge & expertise to help the business. You may find your investors can provide expertise to help fill out areas on the management team or can open doors for the company to potential clients. In this case, the value that the investors bring to the table is far more than just money so you may need to accommodate this via a lower valuation to entice them to get on board.

    A final point of advice is to separate the valuation discussion from control. A lot of founders approach valuation along the lines of: I need to raise $X, I want to maintain 51% control of my company, therefore I’ll set my valuation to ensure that after I get the money, I will still have over 51% of the shares in the company. This is flawed logic as its fairly easy to structure a financing deal where investors get control of a company without owning 51% of the shares outstanding. If control is an important consideration, then as a founder your best option is to get the company as far as possible before requiring outside financing. As soon as you take on other financial stake-holders you will have other people?s money involved in your company so you will need to ensure they viewpoints & opinions are managed.

    In my next article I will talk about the due dilligence process. To view an organized index of all angel financing articles as well as see a roadmap of future articles, click here. If you have any comments or suggestions for future articles feel free to contact me: craig at mapleleafangels.com