StartupNorth

Year: 2008

  • Yaletown Ventures closes $65M

    It might be the end of the world as we know it for venture capitalists. But Vancouver VC, Yaletown Venture Partners, announced their $100M Second Fund with $65M closing today. The fund is focused on early-stage investing in clean tech and IT in Western Canada.

    "The support that Yaletown has earned for its first two funds in extremely challenging market conditions, from institutional and technology industry insiders alike, is a strong endorsement of this team and its investment strategy," said Haig Farris, retired co-founder of Ventures West and one of Canada’s most respected angel investors.

    This quote by the retired cofounder of Ventures West says it all. A strong investment team with a strong thesis can raise money in down times. This is true of entrepreneurs and startups. Good ideas, good businesses and great execution make it easier for startups to raise money even in tough times.

    Yaletown has done a number of IT investments including:

  • Just Launched: Bizzia – b5media's business news portal

    Earlier today b5media launched Bizzia, making their second foray into the world of blog aggregation. Bizzia is centered on business news, initially pulling together posts from 30 established b5 blogs and videos from content partner Your Business Channel.

    The Wall Street Journal it is not, and many of the questions I posed when Starked (their entertainment portal) launched remain. Namely, will consumers of niche content be interested in aggregation around a generic vertical? Time and traffic will tell… For your consideration two data points: First, in under a month Starked has managed to attract an audience size similar to that of StartupNorth (at least according to Compete). Second, Starked does not yet nearly rival other niche b5 blogs like JuniorCelebs.

    Finally a survey for the peanut gallery: any thoughts on the palindromesque brand / logo?

  • Your Business 2.0

    One type of pitch companies sometimes make goes something like this:

    • Founders have a reasonably successful consulting services company where they do development or other project based consulting in a particular industry niche.
    • Based on their knowledge of the space and seeing a need, they come up with an idea for a product.
    • They divert some of their companies time/money to develop the product and maybe get a beta version installed at a couple of their customers.
    • Now they are looking for money to take things to the next level.

    In comparison to a ground-up startup, this type of investment opportunity does have its share of advantages due to the consulting services part of the company:

    • There is some level of cash flow to help fund the new company
    • There are existing relationships with customers in the industry
    • Management has proven their ability to run a services company in the industry

    However, in terms in of pitching to investors, there are a few aspects that need to be positioned compared to a ground-up startup.

    Company – investors will probably not be that interested in investing in a low ROI services based business. The up-side will be with the product business. As such, since you are looking to bring in outside investors, now is the time to formally split the two parts of your company. This means separating into 2 different legal entities, setting the share capitalization of the new company, transferring any assets into the new entity, etc.

    Intellectual property – since you probably did a large part of the development of your product as a side project to your consulting services business, you need to be clear where the intellectual property lies and who has ownership of it. Often the exit value of a company will be heavily dependent on its IP. Investors will not want to get into a situation where the services entity of the company retains the IP ownership and the product entity does not own the IP.

    Revenue – past revenue generated by the services part of your business is not meaningful in terms of the new product part of your company. It is good to show for historical purposes to show stability, growth, etc of your consulting services business. But in terms of how well your product is selling, investors will want see this separately as most likely its only a small part if any of your current revenue.

    Management – until the new product company takes off, most likely management will be splitting their time on the new company as well as keeping things running on the services side of the business. Investors will want assurances that management will be able to devote enough time to grow the product company without getting bogged down in fighting fires to keep current customers happy on the services company.

    In today’s challenging investment climate, start-ups are going to have to rely on bootstrapping even more than ever. Providing cash flow by doing consulting services is a perfectly viable way to do this. When looking for outside funding, you just need to ensure you correctly communicate some of the unique structural aspects of the deal.

    craig at mapleleafangels.com

  • Pipeline – US Venture Funding for Canadian Startups

    Looking for venture funding? Consider participating in the following initiative run by PWC and Burns & Levinson LLP.

    The US/Canada Venture Capital Pipeline links venture capital firms and investment banking firms based in the US with Canadian companies seeking financing. The event is designed to build relationships and create business opportunities between US investors and Canadian companies. This December 4, 10 Canadian IT companies will head to Boston to meet one-on-one with U.S. investors.

    The deadline to submit applications is November 14.

    Here are all the details. If you are interested in applying, please contact:

    Leonard Gold
    Managing Director
    Burns & Levinson Canada Co.
    Partner, Burns & Levinson LLP
    lgold(at)burnslev.com
    617.345.3831

    Charles Godbout
    Vice President, Corporate Finance Inc.
    PricewaterhouseCoopers LLP
    charlesgodbout(at)ca.pwc.com
    514.205.5020

  • Weekend Reading

    Ze Frank gives Idee Multicolr Search some well deserved love.

    Should venture funds that invest government money be restricted from doing deals with usurious terms?

    Kontangent was selected as a fbFund recipient.

    SoftImage was acquired by Autodesk for $35 million.

    Learn how FreshBooks is handling feature requests.

    In defense of fremium. By Tungle CFO Mark MacLeod.

    Who says deals shouldn’t be done on the back of a napkin… found this alt energy plan left on a table.

  • StartupEmpire: Somebody will get funded!

    One thing we wanted to be sure of at StatupEmpire is that there would be a chance for investment-ready startups to meet the right people.

    Are you coming to StartupEmpire? Do you have a mobile startup or an idea for a mobile startup? Do you have Blackberry development somewhere on your roadmap?

    We have a huge opportunity that I am really proud to be able to talk about.

    We have been working with the Blackberry Partners Fund to see as much as $500,000 get invested in to up to 5 mobile startups during the conference.

    Are you thinking about developing a mobile product or application? Are you coming to StartupEmpire? Fill out this form and you might just walk away with a term sheet! These are simple convertible debt deals that will help you get up and running.

    Submit your idea or startup here!

    I would like to thank our Leadership sponsors, Microsoft and HighRoad Communications.

    We are also pleased to announce our champion sponsors,

    PriceWaterhouseCoopers
    Ontario Centers of Excellence, Gowlings
    and JLA Ventures.

    Visit www.startupempire.ca for more information on the conference and to register.

  • StartupEmpire – Student & Startup Tickets

    startupempireIt’s time for startups to buckle down and really understand their expenses. We thought we’d make it a little easier for startups and students to participate in StartupEmpire.

    One thing about a downturn is that it’s not about eliminating spending, it’s about managing cash flows and making every dollar go as far as possible. We are working on putting together the best hands on workshops that will help entrepreneurs go from idea through to customer acquisition and sales – from legal issues to merger and acquisition issues. The goal is to provide valuable and pragmatic advice from real entrepreneurs, funders and service providers. Advice and examples that can help inspire you and hopefully save you the time and effort later.

    Students and startups are the reason we are hosting StartupEmpire. We want to encourage your participation. To help we’ve created a Student Volunteer program. Twenty students will get a complimentary ticket to StartupEmpire in exchange for volunteering and helping with the tasks that make  a conference run smoothly.

    We understand that students and startups are cash strapped. Our goal is been to provide an event that facilitates an opportunity to learn about the mechanics of starting up in Canada; and to facilitate connections between a community of entrepreneurs and funders.

    To this end and with the help of our sponsors, we’ve also created a limited number of Student & Startup Tickets. These tickets are priced at $199/person. They are full tickets, i.e., there are no limitations. From Day 1, this has been about helping entrepreneurs and startups in Canada.

    Student Tickets

    Are you registered full-time in an academic program? High-school, college or university? Then come on down. You might want to consider the student volunteer program. However, if you want to guarrantee your spot at StartupEmpire, purchase a Student Ticket. If you’re selected as a Student Volunteer we’ll obviously refund your fee.

    Startup Tickets

    Who is a startup? We tried to describe a bunch of parameters: privately held; incorporated less than 5 years; less than $5M/year in revenue; less than 5 employees. We just couldn’t figure out a good set of objective criteria to describe startups.

    So, the definition of a startup is kind of like pornography, I’m not sure I could describe it, but I know it when I see it.

    We will let you self-select, although, we hold the ultimate decision on whether you qualify for the startup ticket discount. We are looking for entrepreneurs and startups. You’ve got an idea. You’re building a product.  We’ll let you determine if you think you are a startup.

    If you’ve already purchased a ticket, and you think you qualify as a student or a startup, don’t worry. I’ll be going through the list of participants this weekend and contacting you individually.

    I would like to thank our Leadership sponsors, Microsoft and HighRoad Communications.

    We are also pleased to announce our champion sponsors,

    PriceWaterhouseCoopers
    Ontario Centers of Excellence, Gowlings
    and JLA Ventures.

    Visit www.startupempire.ca for more information on the conference and to register.

  • You better be on the upside of the downturn

    You could argue that we are always in a downturn. Even when things are on the way up, a smart entrepreneur realizes that it will be followed by the downward sloping of the curve. It goes up, it goes down.

    So here we are. I posted just a few weeks ago that I thought things were rough, and were going to be rough. I have to say, even though it was only two weeks ago, things have changed a lot since, at least in terms of people’s outlook.

    So here is the trick. It is time to use this period to your advantage.

    A handful of VCs in Canada have put together “seed” options in their funds when they raised them a few years ago. These range anywhere from $250k to $500k and are usually simple convertible debt notes. Until now it hasn’t been very cost effective for them to spend much time issuing these. Either an opportunity was good enough that they wanted to invest in it full-tilt from their regular fund, or they just didn’t like it. Most didn’t want to spend much time with the “it might work” group of startups (which is where all good ideas start!).

    Watching the gameMy sense is that this is changing. Some of these VCs are starting to think that these might be just the right instrument to get some startups off the ground in the next little while. Those are the smart VCs, the ones who adapt quickly and who understand that the upside will be coming back in to focus.

    This is your chance to start to hustle while others are taking a breath on the sidelines. The challenge for we startups is to structure our companies in a way that makes sense for the current environment, and for VCs the challenge is to realize that this is a critical point for the industry in Canada, and those who are left have to jump in the game and send a signal.

    And this isn’t all about getting funded. This is the time to hustle even more if you are going to bootstrap. Build your product now and test it, when the upside comes again, you will be ready with a product and some customers, then you can focus on going deeper in to the market.

    The truth is, we will never know when the bottom of this situation will show up. Like it or not, the upside of this downturn is coming and the best way to lose is to stop working hard right now.

  • More on how I was right – Facebook is dead as a platform

    I am sitting here watching my cat chase his tail (what does that say about me?), and it reminded me that I was going to make this post.

    This time last year, just as everyone was getting the Facebook logo tattooed on their butt and while my buddies were trying to figure out the science of breaking up with someone they had listed as a relationship on their profile, I went against the grain.

    Almost exactly 1 year ago, I took the time to tell you that you were all deluded, that the Facebook Platform made no business sense and that this was all going to come crashing down.

    Then, just 4 months later, I got on my high horse (on which I am still firmly mounted) and I wrote that I was right. The house of cards came down even faster than the credit markets.

    So, I am back again, thinking I will gloat a little more, and tell you that if you haven’t moved on yet, then you need to get over it. Your relationship with Facebook is unhealthy. It is a fine place to find old boyfriends and girlfriends from High School, but it is no place to make a business.

    As your mother would say: I told you so.

    Now we are at the point that even the people who were making money off of Facebook applications are willing to admit that the whole thing has gone down the tubes.

    Scott Rafer, the founder of Facebook App shop Lookery, recently declared the Facebook Platform “dead” at the Facebook Developer Conference in Berlin.

    “Lookery’s own statistics from Quantcast suggest that their publisher traffic has been almost halved since the new site design was released. Ultimately, I think we may see an increase in traffic as users become educated on the new design but there is no doubt that developers were impacted significantly.”

    The redesign of Facebook was just the final nail in the coffin of the world of Facebook applications, but it is representatitve of a point I made in my first post on this subject: “You cannot build a business on someone else’s platform when they don’t see you as a partner.”

    As an app developer, you were a customer of Facebook. A guest and a test market. You were disposible.

    Build for a real platform

    What is a real platform? Here are some examples:

    The Web.
    Yes, all those things you loved about Facebook, The Web has them too, and more, and better,. more better.

    The Web has an API, it has users (a lot more than Facebook), and it is pliable and you can apply all sorts of revenue models on top of it. Yes, the web is a wonderful place to put things that have value.

    Sure, the web isn’t for lazy folks. It isn’t like Facebook in November 2007 when you could get 50,000 people running your app which displayed various types of mullets, but you know what, if you put a little elbow grease in to it, you just might get 50,000 users, and you might get 5million, and they will be all YOURS.

    Microsoft Outlook
    I’m not telling you this is a MUST-BUILD platform, but it is worth taking a look at. Outlook has proven itself as a great platform on which to build. From a development perspective I am sure it is a total pain, but once you are in there, you have as much access to someone’s “social graph” as Facebook could ever give you, and your ability to integrate with Outlook is limited only by your imagination and the willingness of your users.

    The Blackberry
    I might get a rough ride for this one, but the Blackberry is the ultimate platform. Blackberry users are addicted. They are fiends and they ALL HAVE MONEY. Here is the other thing: Blackberry has been getting a lot of grief for not having an app store like Apple does for the iPhone. I have to agree that it seems silly, but there is a reason: RIM does not want to be a gatekeeper. You can install whatever you want on a Blackberry, and through that, RIM ensures that they are not the broker of success on thier hardware. The web is where Blackberry apps compete.

    Now, sure RIM recently announced carrier-specific app stores, but those will probably die off, and they are about RIM pleasing the carrier. The ability for anyone to be able to install your app will still live on.

    So go on, get out there and build on top of things that care about you, your users and your business.

  • Byte Club launches – Behind the scenes at b5media

    A new web video show has launched. It is called Byte Club and the first episode is a profile of Toronto based b5media.

    Here is the first episode: