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Canadian entrepreneurs have to be more creative than relying exclusively on the US market.

Written by

Jonas Brandon

in

Jevon, I don’t have access to special finance data.

I don’t think the biggest issue Canadian entrepreneurs has to face is not credit facilities. I think Canadian entrepreneurs have to be more creative than relying exclusively on the US market.

Moreover, on a personal note, I refuse to admit that the tech and startup sector in Canada should suffer because of a dysfunctioning US finance sector & mortgages and home credit problems

Originally posted as a comment by Heri on StartupNorth using Disqus.

Comments

22 responses to “Canadian entrepreneurs have to be more creative than relying exclusively on the US market.”

  1. Mark MacLeod Avatar
    Mark MacLeod

    Heri,

    Being more creative is a good suggestion, but let’s face the facts:

    1.) A Canadian tech company’s primary market is the U.S.
    2.) Tech buying is heavily cyclical (when times are good we feel it, when they’re not, we feel it)
    3.) Canadian VCs do not typically lead financings after the 2nd round. Good companies that need more than 2 rounds of financing have typically had to go to the US for money.
    4.) The Canadian VC industry isn’t particularly strong at this point either.

    We cannot avoid the US market. When it coughs, we catch a cold.

    Mark

    Reply
    1. Heri Avatar
      Heri

      I know the current state of the Canadian tech sector and I know the primary market is the US

      My point was that it should be diversified. So that when the US catches a cold, we have at least a minimal room for manoeuvring

      Reply
  2. Mark MacLeod Avatar
    Mark MacLeod

    Heri,

    Being more creative is a good suggestion, but let's face the facts:

    1.) A Canadian tech company's primary market is the U.S.
    2.) Tech buying is heavily cyclical (when times are good we feel it, when they're not, we feel it)
    3.) Canadian VCs do not typically lead financings after the 2nd round. Good companies that need more than 2 rounds of financing have typically had to go to the US for money.
    4.) The Canadian VC industry isn't particularly strong at this point either.

    We cannot avoid the US market. When it coughs, we catch a cold.

    Mark

    Reply
  3. John Philip Green Avatar
    John Philip Green

    Why is relying on the US market un-creative?

    Especially when it comes to e-commerce, its pretty hard to focus anywhere else. PayPal–even credit cards–aren’t used elsewhere. And advertisers pay way more for US audiences.

    Do you suggest our friend Stuart should orient TripHarbor.com to another market? How could that possibly make sense?

    I say all this as someone who’s education company is focusing on India, by the way.

    Reply
    1. Heri Avatar
      Heri

      see my previous reply to Mark

      Reply
  4. John Philip Green Avatar
    John Philip Green

    Why is relying on the US market un-creative?

    Especially when it comes to e-commerce, its pretty hard to focus anywhere else. PayPal–even credit cards–aren't used elsewhere. And advertisers pay way more for US audiences.

    Do you suggest our friend Stuart should orient TripHarbor.com to another market? How could that possibly make sense?

    I say all this as someone who's education company is focusing on India, by the way.

    Reply
  5. Husein Avatar
    Husein

    Unfortunately Web 2.0 Ad supported and consumer search/acquisition models will have to deal with the reality of falling CPM rates. For those leveraging affiliate/CPA models, getting that customer to pull out that credit card may just be a little more difficult.

    With Angels’ stock holdings hemorrhaging, they just don’t feel as rich as they did and as one Angel put it, ‘why invest in a private entity when you have TSX-Venture listed companies trading at similar valuations with liquidity’.

    So what to do…merge! A lot of great ideas out there, with a lot of companies building the same core applications/platforms to turn their dream into reality. Turn you business into a service to your fellow start-up…have an ad platform you have built, share it.

    The big winner may be those few companies that merge with a clear vision and plan to make 1+1=3. This means a Founder(s) needs to step down and let another integrate and grow his/her baby in a fashion he may have never envisioned. I have all the faith that this economic environment will showcase Canada’s start-up “creativity”. Let the deals commence.

    Reply
    1. Heri Avatar
      Heri

      this seems to be unrelated, but also I think there should be more ways than just building on ads.

      Reply
      1. Husein Avatar
        Husein

        Unrelated?

        The credit crisis means less money, it means less “risk taking” cash in the system. Compound this a US and European economy compressing and consumer spending drying up and you have Startups that need to address burn rates. What is the quickest way to reduce burn, spend less, therefore merge complementing technologies than building them out yourself…this is creative given this is not the norm in the start-up world.

        Being creative means thinking out of the box. It means looking at both the Revenue and Cost lines. Merger addresses the cost equation. Revenue is addressed simply by either charging for your service or giving it away and making money through affiliate/advertising relationship e.g Ryan Air. If European and North American consumers are slowing down spending, and you have a web based business targeting these consumers (who have PC/Internet at home) what do you do? Go to China and India where your service is not relevant or your medium (the PC) is second to mobile? More likely you will be better off becoming commercial sooner by using less cash.

        Cheers,

        Reply
        1. Heri Avatar
          Heri

          Husein, I totally agree on what you just wrote.

          The part I was not so sure was your first comment where you wrote in great lenght about advertising rates. I was thinking that startups should look beyond Ads for their business models

          Reply
          1. Jevon Avatar
            Jevon

            I am not a big fan of ad-based models either. The main reason I get queasy about them is that the market for ad inventory seems so volatile and competitive. More competitive than convincing a customer to pay for something valuable.

            That said, there are much better models than ads display. Bankaholic ( http://www.bankaholic.com/ ) recently sold for $15million based on their Lead-sales model. Fascinating and important for startups to understand.

  6. Husein Avatar
    Husein

    Unfortunately Web 2.0 Ad supported and consumer search/acquisition models will have to deal with the reality of falling CPM rates. For those leveraging affiliate/CPA models, getting that customer to pull out that credit card may just be a little more difficult.

    With Angels' stock holdings hemorrhaging, they just don't feel as rich as they did and as one Angel put it, 'why invest in a private entity when you have TSX-Venture listed companies trading at similar valuations with liquidity'.

    So what to do…merge! A lot of great ideas out there, with a lot of companies building the same core applications/platforms to turn their dream into reality. Turn you business into a service to your fellow start-up…have an ad platform you have built, share it.

    The big winner may be those few companies that merge with a clear vision and plan to make 1+1=3. This means a Founder(s) needs to step down and let another integrate and grow his/her baby in a fashion he may have never envisioned. I have all the faith that this economic environment will showcase Canada's start-up “creativity”. Let the deals commence.

    Reply
  7. Jason Avatar
    Jason

    why not rely on US market? Many people think Canada and the US is one market 🙂

    Reply
    1. Heri Avatar
      Heri

      because everyone (well bloggers) in the US says the american startups are busted? why put yourself in the same sinking ship?

      (yeah ok, that was a bit harsh, but I’d really like people to pause a little and think before jumping on the bandwagon)

      Reply
  8. Jason Avatar
    Jason

    why not rely on US market? Many people think Canada and the US is one market 🙂

    Reply
  9. heri Avatar
    heri

    I know the current state of the Canadian tech sector and I know the primary market is the US

    My point was that it should be diversified. So that when the US catches a cold, we have at least a minimal room for manoeuvring

    Reply
  10. heri Avatar
    heri

    see my previous reply to Mark

    Reply
  11. heri Avatar
    heri

    this seems to be unrelated, but also I think there should be more ways than just building on ads.

    Reply
  12. heri Avatar
    heri

    because everyone (well bloggers) in the US says the american startups are busted? why put yourself in the same sinking ship?

    (yeah ok, that was a bit harsh, but I'd really like people to pause a little and think before jumping on the bandwagon)

    Reply
  13. Husein Avatar
    Husein

    Unrelated?

    The credit crisis means less money, it means less “risk taking” cash in the system. Compound this a US and European economy compressing and consumer spending drying up and you have Startups that need to address burn rates. What is the quickest way to reduce burn, spend less, therefore merge complementing technologies than building them out yourself…this is creative given this is not the norm in the start-up world.

    Being creative means thinking out of the box. It means looking at both the Revenue and Cost lines. Merger addresses the cost equation. Revenue is addressed simply by either charging for your service or giving it away and making money through affiliate/advertising relationship e.g Ryan Air. If European and North American consumers are slowing down spending, and you have a web based business targeting these consumers (who have PC/Internet at home) what do you do? Go to China and India where your service is not relevant or your medium (the PC) is second to mobile? More likely you will be better off becoming commercial sooner by using less cash.

    Cheers,

    Reply
  14. Heri Avatar
    Heri

    Husein, I totally agree on what you just wrote.

    The part I was not so sure was your first comment where you wrote in great lenght about advertising rates. I was thinking that startups should look beyond Ads for their business models

    Reply
  15. Jevon Avatar
    Jevon

    I am not a big fan of ad-based models either. The main reason I get queasy about them is that the market for ad inventory seems so volatile and competitive. More competitive than convincing a customer to pay for something valuable.

    That said, there are much better models than ads display. Bankaholic ( http://www.bankaholic.com/ ) recently sold for $15million based on their Lead-sales model. Fascinating and important for startups to understand.

    Reply

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