StartupNorth

Month: March 2010

  • More seed funding for Canada – Founder Fuel gets their first commitment

    I first met John Stokes a few years ago when he landed on to the Canadian startup scene and started talking about his new fund Montreal Start-up. In March 2008 they raised a small initial fund which they quickly deployed in to some nice deals in Montreal including Status.net and Whatsnexx.

    John and the team, which includes Austin Hill, announced today that they will be taking commitments from the Quebec Government (through Investissement Quebec) at $50 milion, Solidarity Fund QFL, which is investing $33 million, and by FIER Partners, which plans to invest $17 million.

    The fund still needs to raise over $8million directly from LPs, which Investissement Quebec seems to think will be a snap and done in 4 months, but I am not so sure. I hope I am proven wrong.

    In case any potential LPs are reading this right now, here is my advice: Do this one. Do it because this team is going to do more than just pass the time humming over deals — you will get hustle, an aggressive attitude and a group that understands that Canada needs more hustle and less of the same old.

    John and the team are connected and tuned in to the community. Early stage entrepreneurs trust this team and they are the kind of guys who can get your money in to some great opportunities.

    Congrats and good luck.

  • Mantella Venture Partners Launches

    Mantella VP & Basecamp Labs

    Mantella Venture Partners launched today. It’s a $20MM early stage technology fund based in Toronto.

    “Unlike most venture funds that are supported by institutional investors, this one is backed by Mantella Corporation, a family owned commercial and residential real estate developer who has been entrenched in the GTA market since 1946. The fund is also focused on the concept of ‘hands-on capital’, ensuring that early-stage entrepreneurs get the hands-on support they need at every stage of a company’s creation and growth to help facilitate”

    The main investment partners are Robin Axon and Duncan Hill. Robin is ex-Ventures West and Ducan was an EiR at Ventures West and previously had founded Think Dynamics (acquired by IBM back in 2003). They also run Basecamp Partners/Labs where they have been incubating PushLife, Chango and a couple of other startups.

    It’s interesting to see an emerging breed of Canadian incubators and small funds like Mantella VP, Extreme VP/Xtreme Labs, Bootup Labs, Flow Ventures, Montreal Startup, Wesley Clover, LeadtoWin, and others. All of these have very different models and motivations. But they exhibit the need many startups have in both getting to Product/Market Fit and then the business development and go-to-market efforts. Both of these efforts require capital, and it’s great to see VCs that traditionally don’t get their hands dirty with operational details down in the weeds.

    Full press release below.

    TORONTO—March 2, 2010—Mantella Venture Partners announced today the formation and launch of a $20M investment fund to support early stage technology ventures in Ontario. Mantella Venture Partners is a collaboration between Basecamp Labs, a private early stage technology accelerator, and Mantella Corporation, an established family-owned commercial and residential real estate developer in the Greater Toronto Area.

    Mantella Venture Partners will invest in entrepreneurs who are building early stage mobile and Internet software companies, helping them to get their ideas from conception to market. Through the Basecamp Labs accelerator, Mantella Venture Partners will provide hands-on support at every stage of a company’s creation and growth – from business development and marketing to financing and team development – to help facilitate early market traction.

    Mantella Venture Partners is managed by Robin Axon and Duncan Hill, the founding partners of Basecamp Labs, experienced venture investors and company creators who have been involved in multiple successful venture exits to companies like IBM, Intel, Microsoft and Siemens.

    “For the past few years, we’ve seen a steady decline in Canadian venture capital deal flow, the number of VC-backed firms, and the average investment size,” says Axon.  “In fact, according to a recent CVCA report on the industry, investment levels in 2009 were the lowest they’ve been in 13 years.”

    “But innovation is still thriving,” says Hill. “With the venture market in such a state of flux, the timing could not be better for the launch of a new fund that is focused on both early-stage investing and providing the hands-on support entrepreneurs need to ensure market success.”

    The existing Basecamp Labs portfolio includes two companies: Chango, an ad buying platform for direct response advertisers; and Pushlife, a mobile entertainment platform for mobile operators.

    “The value of combining capital with guidance and support from a team with extensive experience building companies, can be seen in the progress of our first portfolio companies,” says Robert Mantella, president and CEO of Mantella Corporation. “Robin and Duncan are experienced investors and entrepreneurs who are passionate about technology and know what it takes for a start-up to succeed. Together we can breathe new life into a changing venture industry.”

    Duncan Hill was the Founder and Chief Technology Officer of Think Dynamics, a developer of data centre automation software that was acquired by IBM in May 2003. He spent two years at IBM driving strategy for early enterprise cloud computing. Most recently, Hill served as Entrepreneur in Residence at Ventures West; was an independent director for RapidMind (acq. by Intel August ’09); and was executive advisor to Opalis (acq. by Microsoft December ’09). He currently serves on the Chango board of directors and on executive advisory boards at Pushlife, ServiceMesh, Cirba, Embotics, and the Velocity program at the University of Waterloo.

    Prior to founding Basecamp Labs with Duncan Hill, Robin Axon was a partner at Ventures West on the IT and communications team. Before that, Axon was at MD Robotics (formerly Spar Aerospace) and the Canadian Space Agency, where he helped to prepare the Canadarm2 for installation onto the International Space Station. Axon has served on the boards of a number of technology companies including: QuickPlay Media, RapidMind (acq. by Intel August ’09), AudienceView, Fortiva (acq. by Proofpoint ‘08), Chantry Networks (acq. by Seimens ‘03), Belair Networks and Instrumar.

    About Mantella Venture Partners
    Mantella Venture Partners is a $20M early stage investment fund with a hands-on approach to building technology companies in high growth markets.  The fund invests in founders focused on creating market-altering mobile and Internet software businesses, and surrounds them with an ecosystem of passionate, experienced operators that drive early market engagement into sustainable business success. Mantella Venture Partners will invest up to $500k at inception with the ability to support subsequent rounds as required. It is managed by Robin Axon and Duncan Hill, experienced venture investors and company creators who’ve been involved in multiple successful venture exits to companies like IBM, Intel, Microsoft and Siemens. Additional information is available at http://mantellavp.com/.

  • Q&A with RedFlagDeals

    I had the opportunity to ask Derek and Ryan of Clear Sky Media a few questions about the YPG acquisition.

    When did YPG approach you to buy RedFlagDeals.com/Clear Sky Media?

    Derek: We had spoken with YPG over the years about syndicating/sharing data, but things really started to gain momentum in the fall.  Clear Sky Media had traditionally been very focused on national and online offers, but we all recognized the opportunity with local deals and coupons and helping consumers make better buying decisions more broadly. Things moved very swiftly from there and we completed the deal in early February.  YPG is serious about expanding their online presence and they have a scale that will allow us to broaden our reach nationally and at the same time tackle the local space that would have been impossible for us otherwise.

    What is the plan for RedFlagDeals.com and other properties in the YPG portfolio?

    Ryan: As Derek mentioned, the deal makes a lot of sense for both parties.  Local is an area we had always been interested in, but as successful as we had been, we were nowhere near the scale to properly address it.  YPG has over 1000 sales people and direct relationships with about 385,000 businesses in Canada.  Now that we have the scale and the resources, we’re staying on to see how big we can make this.

    It was only four and a half years ago that it was just Derek and I working in a 200sqft office above an Internet café.  It’s very exciting.

    Derek: Beyond local, we’re also looking at what we can do in the shopping search space with PriceCanada.com and we’ll continue to invest heavily and accelerate the growth of RedFlagDeals.com and Scarlett Lounge – more to come!

    What are you going to do next?

    Derek: In the short term there’s a lot of work to do.  We’re keeping our downtown Toronto office and our entire team, but we’ll be expanding rapidly.  Longer term, I think we have an opportunity here to create something that is much greater than the sum of its parts.  No one has really figured out local search and shopping yet.  It’s a challenge, but it’s one that we’re now in a place to take on directly.

    What is one thing would you tell other startups about the acquisition process?

    Derek: Even though this was, in many ways, a very streamlined acquisition, it was very time consuming and sometimes very frustrating.  There is a lot of back and forth on seemingly minor items, but it’s a necessary part of the process. Having lawyers and accountants that you trust who have worked through it before is huge.

    What is one thing you would do differently?

    Derek: Because of the timeline we were working on, it might not have been possible in our specific case, but before the Letter Of Intent was signed, I would have had a more detailed discussion about what exactly the due diligence required and what we would need to do to close.  In our case, we had a short period for all of this and in hindsight, I would have given ourselves more time.

    Ryan: The timeline also meant that the initial transition has been a bit bumpy.  If we had had more time, I would have liked to have had our accounting, HR, and PR processes in line.  All things considered, it’s gone well, but we could have saved ourselves time and headaches with a better fleshed out transition plan.

    Final thoughts?

    Ryan: We’re really proud to have been involved in the Canadian startup scene over the past 5 years.  It’s not always easy being a Canadian startup; really, it’s a pain in the ass a lot of the time, but you can be successful in Canada.  In the areas where Canada is behind the US, there are opportunities.  Plus, you have one of the most supportive communities I’ve seen anywhere rooting for you.  It’s been awesome.  Thanks everyone!