StartupNorth

Month: August 2009

  • Teaching Entrepreneurship

    The first book I remember reading about starting a new tech venture was High-Tech Ventures: The Guide for Entrepreneurial Success. It is a book that was written about entrepreneurial ventures in the mid to late 1980s. Surprisingly much of the advice and particularly the venture economics remains valid. However, much of the manufacturing and marketing advice doesn’t apply 18 years later. The good news is that there are a ton of online resources that are available to round out the education for entrepreneurs.

    It’s great to see that Velocity, SIFE and Impact are making it easier for students to learn about entrepreneurship as a career path. Maybe I need to put some effort into adding content to StartupSchool.ca to make a valuable resource for entrepreneurs and students.

  • GigPark.com acquired by CanPages

    Gigpark logoIt’s hard not to like Pema and Noah. The two founders of GigPark have been two of the hardest working and (more importantly) most focused founders to have come out of Toronto in the last few years.

    We first covered GigPark in February 2008. I loved the site, and the focus on maintaining the integrity of the social network, but I wondered whether they could build the mass needed to go from walled garden to healthy ecosystem. Then, earlier this year GigPark partnered with Metro, a free national newspaper.

    Today CanPages is announcing that they have acquired GigPark. The deal also received a nice mention in the Globe and Mail.

    Pema and Noah are examples of what a laser focus on product will get you. They released early and they continued to develop GigPark with regular releases and improvements. The key here though is that they got the product out early and didn’t try to come up with the perfect product from day one.

    When I first started using GigPark, I didn’t remember to go back to the site regularly, but over time GigPark became an integral part of how I found new places to eat and businesses to call. As my network slowly grew, it became not just useful, but critical.

    I am feeling especially proud to know these guys and to have had the chance to watch them grow from first release to acquisition. They have been behind-the-scene supporters of a lot of the community and have always encouraged the entire Toronto community.

    Noah and Pema will be staying in the CanPages family for a little while, but I am sure it won’t be long before they are back in action.

  • Weekend Reading

  • Pitching fastballs

    “Do you have some time for a coffee or beer to chat about my startup?” – Anonymous entrepreneur

    I’m happy to talk to entrepreneurs, learn about your startup and even help you out if I can. Since I have a bad habit of over committing and taking on too many activities. Let’s see there’s DemoCamp, Founders and Funders, StartupEmpire, my job (yes, I work at Microsoft), and a personal life (think 2 kids under the age of 2). Things are chaotic and busy, I’m starting to ask entrepreneurs to help me. So without more information, the answer to the above question is “maybe, help me understand why we should me”.

    This sounds familiar. It’s similar to the problem faced by investors (made more pronounced with time-constrained applications), and journalists, and customers.

    “If we get 1000 applications and have 10 days to read them, we have to read about 100 a day. That means a YC partner who reads your application will on average have already read 50 that day and have 50 more to go.” – YCombinator How To Apply

    We talk about an Elevator Pitch. Except this isn’t a world where you might have forced my focus of attention by being artificially trapped in an elevator. The goal is like a newspaper headline. It’s to make me read the rest of the story. You need to stand out. You have to be able to simply, clearly convey what your startup is going to do. The YCombinator team do a great job describing what they look for in How To Apply. The initial filtering criteria for a YC application are obviously different than the criteria that journalists use to find stories, and different that what I use when determining to take a meeting or how I can help a startup. But the process is the same.

    “What is your company going to make?" This isn’t the question I care most about, but I look at it first because I need something to hang the application on in my mind.

    The best answers are the most matter of fact. It’s a mistake to use marketing-speak to make your idea sound more exciting. We’re immune to marketing-speak; to us it’s just noise.” – YCombinator How To Apply

    This is about stand out from the pack. And helping the reader/journalist/audience member figure out who you matter to and why. Think of this as demand generation. You’re driving awareness and interest in your company, your team, your solution. The number one key is to be empathetic to the person whose attention and imagination you are trying to capture. Put yourself in the shoes of your intended audience, and help them understand what is special about your company, your product, you.

    “Boil down your elevator pitch to one sentence. Tell us what you sell or do in very concrete language. This sets the context for the rest of your presentation.” – David Rose

    Here’s an attempt to write that opening description for a few local startups.

    • FreshBooks is a QuickBooks killer. It is a web-based accounting system allows small businesses to have accurate, professional estimates, time tracking, and invoicing.  
    • Well.ca is Canada’s online drugstore. Strong sales growth over past 3 years, raised $1.1M from angel investors in July 2009, technology focused with strong customer service.
    • Rypple is a web application that gathers anonymous feedback from anyone. Peter Thiel is an investor. Founders have a strong track record at Workbrain.
    • Dayforce is an rich internet application and web service that allows managers to visualize and plan their employees schedules and the employees to enter their timesheets. Founders have strong track record including Workbrain.
    • Kiiro is a social project management application built on SharePoint. It uses the web and Microsoft Project to improve collaboration between the project managers and the team on larger projects.
    • CoverItLive is web application for live blogging events. Companies, conferences, individuals can connect photos, tweets, live video, and rich media during events.

    This is just the beginning. But that is the point. The goal is to entice the reader to want to know more. Ideally I’d love to see a short description of what you’re building. A clear identification about how you think you’re going to make money. What you think your secret sauce is. And a brief summary of key team members. Sound familiar. It’s very similar to the advice that David Rose provides as a Pitch Coach. The goal is to take basic pitch information and digest it into a smaller, customized components for your audience. It means that entrepreneurs are going to have stop being ego-centric and start thinking about others. You need to understand what is important to the individual that you are trying to reach and to shape your message appropriately.

    For me, I want to understand what your company does/builds; the management team; the market opportunity; the business model; the stage of corporate development (pre-funded, funded, pre-revenue, etc.); why you think I care about this; and what your ask is of me. Is that too much to ask?

    Open challenge to local startups to “pitch” for a meeting in a 140 characters or less in the comments (more realistically less than 420 characters – basically 3 tweets).

    Resources

  • StartupDrinks – August 26, 2009

    Updates

    • ExtremeU Social is happening on August 26 from 5-7pm. Start out on the patio at Extreme Ventures with the ExtremeU companies and then head over to StartupDrinks at C’est What?
    • Montreal RSVP at TechEntreprise. Happening at Brutopia.
    • Ottawa RSVP at Guestlistapp. Happening at Metropolitan Brasserie.

    It’s time again. StartupDrinks Logo

    Bryan Watson of NACO and Robin Ahn of CEOFusion have stepped up to help coordinate the next installment of StartupDrinks in Toronto. Heri of Montreal Tech Watch and Raymond Luk of Flow Ventures are hosting the Montreal event. And Scott Annan from Mercury Grove is stepping up to host an Ottawa event.

    The kickoff Toronto Startup Drinks followed hot on the heels of DemoCamp and was a great event.  We are keeping the startup community alive, one pint at a time on Wednesday, August 26, 2009 at local fave C’est What!

    It’s a simple concept: a grassroots effort to make sure startup folks get in touch and stay in touch.

    Toronto

    • Date: Wednesday, 26 August, 2009
    • Location: C’est What, 67 Front Street East, Toronto, ON (map)
    • Time: 6pm until late
    • Sign up using Guestlistapp, then join us on the night for a to meet other entrepreneurs!

    Montreal

    • Date: Wednesday, 26 August, 2009
    • Location: Brutopia, 1219 Rue Crescent, Montreal, QC (map)
    • Time: 6pm until late
    • Sign up at TechEntreprise, then join us on the night for a to meet other entrepreneurs!

    Ottawa

    • Date: Wednesday, 26 August, 2009
    • Location: Metropolitan Brasserie, 700 Sussex Dr., Ottawa, ON (map)
    • Time: 6pm until late
    • Sign up using GuestListApp, the join the gang at the Metropolitan.

    Everyone is welcome.

  • Startup funding sources – HTX

    My previous article on start-up funding sources covered Precarn. For the next article in this series, I will cover The Health Technology Exchange (HTX). I recently met with Norman Pyo, director of business development and investment to have a discussion on HTX.

    Craig: Thanks for taking the time today to speak with the StartupNorth readership. To start, can you give the ’30 second elevator pitch’ on The Health Technology Exchange?
    Norm: HTX is a not-for-profit organization that is funded by the Ontario Ministry of Research and Innovation. Our goal is to support innovation and commercialization in the Medical and Assistive Technology (MAT) sector in Ontario. Companies in this sector are working on things such as medical devices, medical imaging and laboratory devices. In this space we also have companies that are working on software oriented initiatives that the StartupNorth readership may relate to. Examples include healthcare IT systems to manage chronic disease conditions or remote monitoring by connecting personal medical devices to wireless devices such as the Blackberry. We support MAT companies through various programs that provide mentoring, grants, networking opportunities and events.

    Craig: So in terms of eligibility, companies need to be Ontario based?
    Norm: Yes, companies need to be based in Ontario for us to be able to fund them through our R&D programs; however, we work with organizations across Canada to provide linkages. We also focus exclusively on the MAT sector so we would refer other life sciences companies, such as those in the pharmaceutical or biotechnology industry, to organizations such as MaRS.

    Craig: What’s the best way for a company to engage HTX?
    Norm: We have three advisors at HTX, each with extensive and complementary backgrounds in the healthcare sector that provide mentoring on issues relevant to start-up medtech companies such as strategic planning, product/clinical development, regulatory strategy and early stage finance. Companies who are not referred to us should make initial contact with the HTX office. From there, they will be connected with an advisor that best fits their needs, in terms of expertise and geographic location. We mainly see early stage companies, so we actively work with the companies to understand what they are trying to achieve and see how we can use HTX resources to support them. This can include providing mentoring advice or making connections to industry partners and teaching hospitals/universities. We also run events on medical technology topics such as regulatory approval and discussion panels with CEO’s of companies in the space who talk about overcoming common hurdles and sector-specific challenges.

    Craig: Can you talk about the funding programs you have?
    Norm: We currently have three distinct funding programs: the Business Investment Program, the Health Technology Assessment & Implementation Program and the Clinical Validation Program. Each program has a specific focus for use of funds, all of which support advancement and commercialization of MAT initiatives.

    Craig: Ok, let’s start with the Business Investment Program; can you talk about how this works and what its purpose is?
    Norm: Yes, the Business Investment Program is meant to fund R&D within the MAT space. The program is funded by HTX, OCE and IRAP and provides up to $100K per project. Companies need to apply to the program with a specific project and have a publically funded research institution in Ontario lined up to perform the research. Companies much match the grant amount with 1/3 of their own money as well as 2/3 of in-kind contribution towards the project’s costs. In other words, HTX will fund up to 50% of the project’s cost and these funds will be directed to the research institution to help fund the R&D objectives of the project. Examples of past companies that have received this grant include Quantum Dental Technologies, GestureTek, and Quillsoft. An example of a company that has been awarded a grant under this program is Quantum Dental Technologies. Funding from this program helped to advance Quantum’s Canary System, which provides early detection for tooth decay, without the traditional use of X-rays.

    Craig: For 2009, the initial application phase of this program has just closed. What happens next?
    Norm: Correct, the call for Expressions of Interest (EOI) for the Business Investment Program closed this July. After the submissions are received, the funding partners (organizations that contribute funds to the program) meet internally to review the submissions to select the most promising projects. Those companies that make it to this next phase will then submit a full proposal. These proposals are reviewed by external reviewers who are familiar with the company’s space and that have a deep understanding of what the project is looking to achieve. Proposals are vetted against the capabilities of the company and research partner, past track record of management and its commercialization potential. Upon validation, the grant is awarded in a tranched fashion based on project milestones. The projects must be completed within a 6 to 18 month period.

    Craig: To be clear, the grant is not directly paid to the company?
    Norm: Right, typically, the company’s cash contribution is paid to the institution. The company’s costs over and above this are in-kind.

    Craig: What is the next program planned?
    Norm: We will be requesting Expressions of Interest (EOIs) for the Health Technology Assessment & Implementation Program this August. The purpose of this program is to support the acquisition and assessment of market-ready MAT products by Ontario hospitals. In other words, the program helps fund a hospital’s acquisition of a MAT product, and in return the hospital becomes a reference customer for the company’s product. Similar to the Business Investment Program, applicants can receive up to $100K per project, which must also be matched by the combined contributions of the company and the hospital/healthcare institution. The company provides a deep discount and the institution’s cost for evaluative services are recognized. The HTX contribution helps to defray the purchasing costs. Sentinelle Medical was a past recipient of this grant, and has successfully implemented their imaging technology into the Kingston General Hospital.

    Craig: And the third program?
    Norm: This would be the Clinical Validation Program. The purpose of this program is to fund clinical testing or validation studies of a MAT product within an Ontario Hospital. The maximum grant per project is $50K and must be matched by the company – with 80% being cash-contribution. Mespere LifeSciences was a past recipient of this grant. Mespere develops a non-invasive hand-held device to measure central venous pressure in real time; replacing the traditional expensive, invasive and infection-prone procedure of catheterization. We have launched this program through partnership with regional innovation organizations such as BioDiscovery Toronto, YORKbiotech, and The Golden Horseshoe Biosciences Network.

    Craig: If a company is ultimately selected for one of these programs, how long does it typically take to work through the process and get the cheque?
    Norm: This depends a lot on the project being proposed, but it typically takes between 2-4 months.

    Craig: How long have these programs been in place?
    Norm: We have been running funding programs since 2004 and to date have provided $8 million in funding disbursements and helped fund over 70 projects. Approximately 1/5 of this has been for healthcare IT related projects. Example of healthcare IT initiatives funded include: MedManager Interactive, HInext, and Quillsoft, who all offer innovative solutions to distinct healthcare issues.

    Craig: Great, thanks for taking the time to speak today. In closing, do you have any words of advice for entrepreneurs that want to get into the MAT space?
    Norm: The MAT space has some unique angles given the public nature of healthcare funding, privacy issues and requirement for clinical research validation. That being said, there are a lot of interesting problems to solve and a lot of opportunities to provide innovation in the space through software or wireless technologies. HTX is here to help support entrepreneurs commercialize their ideas.

    craig at mapleleafangels.com

  • Weekend Reading

    • Tickets still available for HoHoTO's party on Aug. 18 in Toronto, which will raise money for the Daily Bread Food Bank – http://hohoto.ca/ #
    • RT @ChiefApricot: Just got a notice from Bubbleshare.com photo sharing site – they are shutting it down. Had one of the best interfaces. #
    • RT @aiderss: PostRank™ releases Real-Time Engagement Data APIs and adds Sentiment Analysis to Real-Time Content API! http://bit.ly/QWs0Y #
    • The $1 Clause – http://bit.ly/lCGNg #
    • RT @leilaboujnane: The 20 Worst Venture Capital Investments of All Time my fav was WebVan http://bit.ly/6Vslk #
    • #Nortel – http://bit.ly/1rjHDN
      where do you stand? #

  • Toronto Startup PagerDuty Launches Beta of their Web-based Alert Service

    When a critical server crashes in most businesses, an alert email is sent out, often to a group of people, in the hopes that someone will look into it. But who should handle the problem? What if they are unavailable? Or what if no one was checking their emails? A crashed site can result in lost revenue for a company but the problem of alerting the right people in the right way was traditionally only available to large enterprises.

    PagerDuty is a new Toronto startup that aims to solve this problem through their newly launched web application at PagerDuty.com. Started by former Amazon employees, the newly launched (and currently free) beta service is a well-executed, easy to use to solution to a common and costly problem.

    landing_page

    channels_smallI love how it works. To use it, you sign up using a one-page form, and you’re then set up with your own account (accounts are free during their beta, but it’s not clear how long they’ll be in beta). You then set up your own alert software to send emails to PagerDuty whenever you want a notification (this is the most time-consuming part because you’ll need to set up each monitoring software individually). PagerDuty doesn’t do the actual monitoring; rather, it receives alert messages via email and routes them to the right person on your team based on rules you build. Alerts can be in the form of SMS, phone calls, or email.

    Picture 1One of my favourite parts of the software is the great UI on the built-in calendar that allows you to set up which person on your team is on-call at any time.

    Here’s how PagerDuty’s Alex Solomon describes the service:

    PagerDuty prevents a sysadmin’s worst nightmare: coming in to work on a Monday morning and finding out that their site has been down for the entire weekend. […]  When something goes wrong, PagerDuty springs into action by calling, SMSing, or emailing the engineer on duty.  If for some reason, PagerDuty can’t get ahold of the person on-call, it automatically escalates the alert to someone else.”

    Everyone on the PagerDuty team spent some time working at Amazon which uses sophisticated internal tools for handling problem alerts. According to Solomon, they created PagerDuty because, after leaving Amazon, they “spent some time looking for something similar to what Amazon has, but the solutions we found were either lacking key features, or were priced well beyond what we were willing to pay.”

    The team had the option to possibly start up PagerDuty somewhere in Silicon Valley, but in the end, they chose to start in Toronto because of reduced costs and the fact that they had a better network here. “the Valley wasn’t really an option for us. We chose Toronto because all of us grew up here — most of our network is based here, so it really made sense to try not to stray too far from home,” says Solomon.

    PagerDuty has done many things right. The website looks slick and the UI is smooth. (Some have commented that the front page may look a lot like some other Web 2.0 startup websites but that’s probably a good way to start, in my opinion). The problem they deal with is a real one that their team has experienced in the past, and they’ve solved it elegantly. Some of the challenges I expect they’ll have is that the market will be limited to a specific segment of companies that already use server management utilities that send emails – marketing to the right people in these companies and gathering enough adoption will be a challenge at least in the beginning.

    PagerDuty founding team is Alex Solomon, Andrew Milkas, and Baskar Puvanathasan.

    You can learn more about PagerDuty’s service and sign up for a free account on their website at PagerDuty.com.

    I’m going to try using the service at my company.

  • The sky is falling

    “we have a structural problem and this means Canada’s ability to drive innovation will weaken and we will see the overall economy suffer.” – Gregory Smith, President of the CVCA

    The CVCA has released their Q2 2009 Venture Investment data.

    • Venture investment down 42% from 2008. $179M in 2009 compared to $309 at the same point in 2008. This includes a $50M placement from OMERS for PublicMobile, which when removed makes the numbers even worse.
    • Average deal size decreased to $1.9M from $2.9M, this means that Canadian companies have less available resources than US competitors. 

    So it’s bad. Really bad. This is not the first time. It probably won’t be the last time we hear about the troubles of Canadian VCs. Anybody really surprised?

    The VC industry in Canada has been in turmoil for a long period of time. There are regulatory and structural hurdles, which the CVCA is actively lobbying politicians for the support. This includes lobbying for support to SR&ED tax credit programs, offset agreements, incentives for investment, etc. I’m not sure that “establishing a blue chip, limited-life panel comprised of company executives, university presidents and venture capitalists with the express mandate to devise a road map for Canada’s technology industries” will provide the solutions necessary to Canadian entrepreneurs. And while I think that VCs are an important part of the ecosystem to support and nurture entrepreneurs, they are only part of solution. It is the entrepreneurs and startups that will save venture capital in Canada. 

    What does all of this mean?

    • Number of investors will continue to decrease
    • Valuations will continue to decrease
    • Customer uptake will be slower
    • Need to become cash flow positive
    • Acquiring entities will favour profitable companies

    Does this sound familiar? It’s pretty much verbatim out of Sequoia Capital’s R.I.P. Good Times presentation or Ron Conway’s email to his portfolio. This is not new or news to Canadian companies. Raising money has been difficult for a while in Canada. Our investors have preferred later stage investments, in the H1 2009 just over 60% of all of the capital when to later stage deals (Series B and later). We’ve seen a need for companies to be able to demonstrate a product, customers and market potential just to raise early funding.  

    There are Canadian ventures that are growing and successfully operating on revenues. Along with a set of emerging technology ventures that have closed non-traditional funding rounds. Well.ca raised $1.1M from angels. J2Play was acquired by Electronic Arts. It’s possible to raise money, to get acquired, to operate successfully during tough times. You just have to execute better than your competitors.

    So what is an entrepreneur supposed to do?

    1. Read How Startups will save Venture Capital in Canada.
    2. Read R.I.P. Good Times. and Ron Conway’s email to his portfolio.
    3. Stop worrying about the state of Venture Capital in Canada.
    4. Start building real businesses with real customers driving real revenues (if you need to raise money there are other sources of capital).
    5. Look for growth in markets outside of Canada (while this includes the US, it should not be limited to US only growth).
    6. Execute, execute, execute. You’re only as good as your last deal. So find customers, keep them happy, and keep innovating.

  • Weekend Reading