StartupNorth

Author: PWC

  • Choking online media growth in Canada

    So let’s review what I did yesterday:

    1. Read about how video and social networks are helping to re-shape the Middle East
    2. Worked a bit on a start-up I’m advising called Shiny Art, which rents video art over the Internet
    3. Watched the amazing UGC documentary Life in a Day on YouTube
    4. Read Canada regulators are allowing ISPs to impose ridiculously low bandwidth caps on consumers and charge extortionary prices on those who exceed those caps

    The first three activities rely on (or at least are vastly improved by) high bandwidth availability. You need bandwidth to connect people, to share images and video, to communicate world-changing ideas, and create economic growth by (hopefully) getting a new business off the ground.

    Every day witness the trend of how social and video based applications are changing the world, but by allowing artificially low bandwidth caps to come into effect, Canada is essentially saying it is not interested in communicating ideas, fostering new media and business models, or growing its own online media industry.

    For an hour and a half yesterday, I watched YouTube’s elegant documentary about that looked at life on a single day on Earth. The documentary was shot  entirely by everyday  people from around the world. Could such an initiative ever be successful in Canada?

    It is laughable for Canada to say it wants to grow online media, and then allow caps bandwidth caps that choke off that very growth. Low bandwidth caps and online media are mutually exclusive ideas, they cannot occupy the same space at the same time. The economics are really simple, if you make bandwidth expensive, bandwidth-hungry applications (read: online media) will not take root.

    Case in point: as mentioned, I’m advising a company that I think has a pretty neat idea, let customers transform their HDTVs into canvases for contemporary art by providing video art rental over the Internet. Last weekend, when I explained the concept to a relative in Canada, he said it would be too expensive for some consumers. At first I didn’t understand what he meant but now I get it. If you only have access to 25GB/ month (or about 12 hours of viewing) would you spend that valuable bandwidth experimenting on a media service you know little about?

    Canada has for years fretted about how to build a cultural industry and in the digital age, it is harder to imagine a policy more damaging to that goal. Bandwidth caps basically say that if you have an idea to build or offer an online media service, do it someplace else, Canada isn’t interested.

  • 5 Thoughts on 5 Things I learned in 48 Hours

    5 Things I learned in 48 Hours – Techvibes.com.

    Some of my thoughts on some of his thoughts:

    #1 The Valley Feel- yes, it is true it does exist and it is unique to Silicon Valley.  That is not to say other areas don’t have a great innovation vibe, far from it! Some other areas have great innovation. But regardless where you are, it is good to stay on top of what is happening in the Valley.

    #2 The Valley Model- This I could take or leave. Yes, the Valley does have a unique VC-backed approach to innovation. But it isn’t the only way to fund and promote start-ups.

    #3- Think Small in Scope, and Large in Market- I love this idea. So true. Focus on what you want to do, do it super-amazing well, and then do what you do to conquer a huge (and growing) market.

    #4- You Can’t Phone It In- You really can’t. It takes work and preparation.

    #5- Be Yourself- Leave the impersonations to the comedians.

    #6- Start Local- I think this is the most interesting and ties in with points #1 and #2. Yes, be aware of what is happening in the Valley. Hell, be inspired by it, but don’t try to copy it (so I guess this ties in to point #5 also.) Find what is unique about your area and then build on that existing strength found, fund and grow your start-up.

  • How to prepare for a C100 Mentoring session

    We gearing up for the next 48 Hrs in the Valley here at C100 global HQ. We’ve learned a lot from previous 48 Hrs events so expect a few surprises, to be announced soon.

    But in the meantime, a few dates for you to be aware of:

    • Sept 29: Drop dead deadline for companies to complete the application form
    • Oct 7: Selected companies will be notified
    • Oct 13: First draft of mentor deck due
    • Oct 27-28: 48 Hrs in the Valley

    I know what you’re saying, “What the heck is this Oct 13 deadline? We gotta hand in drafts of our presentations??”

    Short answer: “Yes!”

    The upcoming 48 Hrs will be the C100’s eighth mentoring event and after each one the mentors always told us the same thing, “We wish the companies were more prepared.”

    That is a strange coincidence, because the companies always tell us, “Damn, I wish we were more prepared.”

    Well, the good thing about the C100 mentoring team is you only have to tell us something seven times before we start to take immediate action.

    To make sure everyone feels they are properly prepared, we are asking… nay, demanding… that all companies complete their mentor decks and submit to us by Oct 8 for feedback by our crack team of mentor experts.

    To help you out, here are some useful tips on how to prepare you 48 Hrs mentor deck:

    • Think of the biggest challenge  facing your company and talk about it. What exactly do you want to get mentoring on? (In C100, we call this the “challenge statement” meaning, what is the biggest challenge  facing your company right now)
    • Don’t get bogged down in technology: Mentors want to talk about business issues, not about speeds-and-feeds
    • Don’t talk history: Mentors want to discuss the here and now, the long road you took to reach your current destination probably isn’t relevant
    • Be specific: generic presentations get generic feedback. Drill down into one aspect of your business, describe what is going on, and ask for specific advice and feedback

    Here is a deck template all companies should follow. Your deck shouldn’t be more than nine slides long:

    1)      Executive Summary: Short bullet points what your company does and what is your “challenge statement”

    2)      The Market: Give mentors background on the market your company addresses

    3)      What do you do?: How do you address your chosen market

    4)      Who are your competitors?

    5)      Short background on the team (emphasis on short)

    6)      Financial snapshot including funding, revenues and expenses

    7)      Challenge statement: This is the most important slide of the deck… what issue do you want mentoring on? Be very clear and specific here

    8)      Context: How did this challenge come about? How have you addressed similar challenges in the past

    9)      Importance: Why is addressing this challenge important? What would happen if this challenge was addressed? What would happen if it wasn’t?

    Trust us, follow this template and your mentoring session will be way more valuable than if you didn’t.

    The goal is always to make the mentoring sessions as useful and impactful as possible. So we at C100 will be asking the companies early and often to provide drafts of their decks so we can help ensure they are prepared for the mentoring session and ready to go.

  • How to pitch to corporate VCs

    One way to segment  the world of  VC is into two camps: (1) financial investors and  (2)  corporate investors. My guess is that a lot of the VCs lurking around here are what you would call financial investors; meaning, they take other people’s money, invest it in start-ups and try to make more money.

    But there is the other type of investor, the corporate ones. These investors tend to work for a large corporation and invest the company’s money. Their goals are also to make a lot more money off of their investments but they are also tasked with producing a strange and esoteric thing called a “strategic return”.

    In a nutshell, these investors have to invest to make money, and to make their company smarter by learning from you, the clever start-up.

    For start-ups, having a corporate VC as an investor can have many benefits if the relationship is correctly managed including credibility, access to the corporations sales and engineering teams,  access to go-to-market channels, and opportunities to conduct joint R&D.

    So it is important that start-ups realize that pitching to strategic investors is not like pitching to financial investors. So here are a few ideas to get you started on your corporate VC pitch:

    1. Prepare a pitch: Sounds obvious, right? You’d be amazed at how many start-ups show up without a pitch. I guess  they think they can come in and talk shop for 30 or 45 min and that will be enough to land a deal. It isn’t. Show up prepared and ready to go.
    2. Know the company’s investment thesis: Companies aren’t shy talking about their investments, so there should be a lot written about past deals. Don’t come in with a canned investor pitch, read up on past deals and come in with a pitch tailored to the company’s investment thesis.
    3. Tell them why you’re relevant: Corporate VCs often have to get support from a BU for a deal, so help them position your company with the BU. Figure out which part of the company will be most interested in you and explain that in your pitch.
    4. Better yet, have traction: Come in with a history of working successfully with a BU. Show how investing in you will help you scale/innovate and make the BU relationship even more successful
    5. Don’t come in as a competitor: If you’ve built a competitive product that is better than theirs (or so you think), don’t think you’ll get money from them to keep you off the market. They won’t invest in you. They’ll probably just try to crush you. It is easier.
    6. Come in as a partner: If you and the larger company are in the same space, it doesn’t mean they will necessarily be interested in you. “You do software, we do software” is not a compelling reason for a corporation to invest.  Rather, tell them how your software (product, service) will help better position their software (product, service) in the market.
    7. Finances: Oh yeah, nothing drives corporate investors battier than being treated as  dumb money. You’ll need to come in and talk strategic alignment, but very soon the conversation will turn financial. Remember, these people live and breathe your markets every day,  so they can tell if your market sizes/growth assumptions are for real

    Meeting with corporate investors can be a maddening, time consuming process. They will ask a million question not only about your business, but on how your business relates to their business. So you need to know your business cold and their business cold. But if you come prepared with insight and some existing wins under your belt, this crazy process may have a profitable outcome.

  • Lessons from C100 Mentoring in Toronto

    We wrapped up another amazing C100 Mentoring (C1M) session the other week with mentors in San Jose talking live and in-person to a group of great companies in Toronto via Telepresense. As with all of these “TP” meetings, the wonder of the technology quickly melts away and the groups on either side of the video wall were able to really get down to business.

    We were fortunate in this last C1M session to have Rick Spence of the National Post sit in on the session and he shared his main take-aways in a recent article headlined:  Startups get face-time with Valley veterans.

    It is always interesting to read what main points a third party to a C1M session zeroes in on. From Spence’s point-of-view (with some of my commentary) the main things that the recent C1M start-ups need to think about are:

    • Keep it quick; or as he put it “sum up the pitch early.” He highlights that companies need to perfect the elevator pitch. Say what you do quickly and simply. Spence says 30 seconds but I would argue that event that is too generous for the real world (we give you some leeway in C1M, so 30 seconds is OK.) Out there, keep it to 15 to 20 seconds and keep it punchy!
    • K.I.S.S me! That’s right, when you’re out there trying to explain what it is you do, keep it short, sure, but please also “keep it simple, supplicant”* If your technology or application or web service or whatever cannot be explained in simple language then what you are doing is either (1) too esoteric for these crude Earthly market or (2) not explaining it right. If the answer is (1), you’ve got bigger problems but more often the answer is (2) and you need to step back, detach yourself from your product/service, and figure out how to articulate your value-proposition in a simple, compelling manner
    • “Focus, Focus, Focus”- I won’t add any commentary here. Just focus on those three words and the point is made
    • Note when I said “K.I.S.S. me!,” specific reference was made to articulating a“value-proposition,” that was on purpose. Sometimes we love to talk tech and how great our little service or gizmo works. If you’re after engineering brownie points, that approach works great. But if you’re after customers, forget the tech and focus on value.
    • Sales is what it is all about. There is only one group of people that can make any business successful, start-up or otherwise. No, it isn’t investors, partners, or event the founders themselves. The only group of people who can make a company a success is customers and securing their support is called selling. Make sure you find someone who knows how to do that.

    These insights are a very good summary of the conversation across all three companies. We touched on each of these points in one way or another with each company we met.

    In addition to the points listed above, the mantra that I was repeating for each company was segment and prioritize.

    I know that a lot of new companies have to throw whatever they can against the wall and see what sticks. That approach has its place, but it can also burn precious resources with little return. I’m a huge fan of looking across your (potential) customer based, segmenting them and then having a laser-focus on the ones that will be most profitable. Too often, I got the sense companies were trying to do everything all at once. Even if a product/service has multiple applications, there needs to be the discipline within a company to figure out which application has the most immediate promise and then going after the relevant customers.

    *I have to admit, I had to look up what “supplicant” means. The Dictionary.com definition was “a person who supplicates”, which wasn’t very helpful.

  • CanCon 3.0

    I was doing some evening reading I came across and interesting  thought on the intersection of social networks and content:

    Media is fast-becoming an important area for the social network. The news feed, long a place for friends to share personal photos and thoughts, is becoming more of a content discovery engine

    I’ve posited elsewhere on the role of content in the evolution of the Internet. In a nutshell, if Web 2.0 is the social web, then I respectfully submit for your consideration that Web 3.0 is the content web. What I mean by this isn’t that the Web 3.0 is about taking traditional content that has been available in traditional media (literature in books; movies on film; music on CDs) and putting them on the web, obviously we are well into that trend. What I’m referring to is entirely new forms of content that have yet to be created for the social web

    Then my thoughts drift to Canada and the potential behind Canadian start-ups. Canadians have always been innovators in content, even if that innovation didn’t happen at home. Note:

    So does all this bode well for Canadian content companies? As we think about national competitive differentiators, aspects of a country’s economy that sets it apart from the rest of the world- should we be thinking content?

    If Canadian start-ups could combine technology smarts and content smarts, could the result be a whole new class of content, the likes of which we haven’t seen yet?

  • State of VC in five years?

    Canada has a great financial sector, a growing economy, tons of smart people and a bunch of pretty snazzy exits recently. Yet, with all this Deloitte and the National Venture Capital Association still predict that the number of VC firms in Canada will continue to decline (hat tip: TechCrunch).

    ?

    Sure, Canada is doing better than US and Europe but we’re not doing so well versus the BIC. The first reaction may be that it is now conventional wisdom that China, India and (lately added) Brazil will  take over the world so it stands to follow more VC will set up in those countries. Fair enough.

    But deconstruct this a little further. The Canadian VC industry has already been decimated over the course of the past few year and yet, according to this survey, over a quarter of the respondents think it will shrink further. (The VC industry’s shrinkage in the US is a good thing I and many other would argue. Too much dead weight)

    And VCs follow exits, well recently Canadian companies have exited to Apple, Google and not to mention a pretty killer IPO. That should bode well for the VC industry over the next five years, but it appears that it doesn’t (Yes, these exits happened after the survey was held, but still….)

    In fact, it seems that achieving exits in Canada  is the number one barrier to expanded investments in the minds of VCs when they think about Canada.  Number 2 barrier is “lack of established venture capital community” which seems like a bit of a vicious circle.

    So what do you think? Should Canada be worried? What can be done to improve the five-year outlook on the Canadian VC scene?

  • Going global from day one

    Arguably, two of the most important centers of innovation outside of Silicon Valley are in India and Israel. The reasons of why this is are numerous and could form basis of someone’s PhD thesis but for the purpose of brevity I’ll only highlight one: global from day one.

    You talk to entrepreneurs from either India or Israel and they’ll surely weave great yarns about their companies (these are also two great storytelling cultures) but one thread that will be consistent is when the entrepreneur founded their company, they were immediately thinking of the global marketplace.

    In Israel, it is because the domestic market is too small and there are limited opportunities to sell regionally. The story in India is that while population is huge, it is very poor so the actual local market for technology or technology services.

    Faced with these challenges, Indian and Israeli companies would market to the US and Europe and often place key personnel in those geographies. Overseas became their across the street.

    In the past year, Canada has been thrust upon the global stage several times. Whether it is praise for our banking system, our brave forces, our Gold-medaled athletes, or our ability to throw a party, Canada as a country has been seen as a global leader.

    Will our entrepreneurs follow suit? Sometimes it seems that cross-cultural expansion from a Canadian perspective is an Alberta company selling into Quebec.

    Unfortunately, as often as you hear of grand global ambitions from Israeli, Indian (and American!) entrepreneurs, you hear of relatively modest ambitions from Canadian ones.

    All too often global expansion = US expansion. That is not the right formula.

    Here’s a fact that is sometimes a bit uncomfortable, many American companies consider Canada as part of their domestic market. The effort and planning these companies put into Canada is the same one they put into Wyoming. (OK, maybe I’m overstating the point)

    But here’s a suggestion, we should return the favor. Canadian companies shouldn’t think of the US as a “global” market but rather just an extension of the domestic one. When Canadian companies say global, they should mean it and have Asia, Latin America, the Middle East and Africa dead in their sights. These regions all have burgeoning and tech-savvy populations and are eager to get online.

    So whether we’re talking about consumer, enterprise, SMB or SP services or products, let’s see Canadian entrepreneurs putting the “world” into their WorldWideWeb plans. Canada’s got the world stage for the moment. Entrepreneurs, make your entrance.

  • Russia learning from Silicon Valley

    While everyone in Quebec and Ontario were doing the shake-rattle-and-roll, the Silicon Valley establishment was playing host to Russia’s  President Medvedev.

    Apparently having your economy rely solely on exporting oil and mafia dons isn’yt considered sound economic policy so Medvedev got his buddy Ivan Danko to show him around the at likes of Twitter and Cisco.

    In case you’ve been living in Siberia and haven’t heard, Russia wants to build its own Silicon Valley from scratch in a town outside of Moscow. So we guess Medvedev was asking around for the “how to” manual.

    This reminded us of a brief discussion we had over at the C100 website a few weeks back. You can check out the comments over there, but we’ve also reposted here to continue to spur a bit of debate…

    Does Canada need its own Silicon Valley?

    Tuesday, June 1, 2010 at 03:37AM

    OK, I’m going to pull the pin and lob a rhetorical grenade to get a discussion going…

    Have you head of Skolkovo, Russia? No? Apparently it is somewhere near Moscow and is the future home of Russia’s Silicon Valley. What? You don’t believe it? Well some US investors sure do, to the tune of $250 million. And this isn’t the only government backed innovation center that is being built from the ground up. There may be a Silicon Valley being built up in Russia but the Dubai has its sites firmly set to be the 21stSilicon Oasis. Century’s

    Both these locations have or are attracting talented engineers. Both of these locations have or are attracting massive amounts of capital.

    And they aren’t the only two countries that are trying to build their own flavor of Silicon Valley. There are probably a dozen similar projects in a dozen countries around the world. But one country that isn’t embarking on its own Silicon Valley master plan is Canada.

    If a US PE can come up with  250 million reasons why Russia will successfully build the next hub of innovation, surely Canada, with its improving investment climate and its refreshing lack of mafia domination could convince investors to put some green in the Great White North.

    Is Canada missing the boat? Does it need to create a chilly Silicon Valley somewhere near Alert in order to compete in the global high-tech market?

    Discuss…..

  • Mentoring Virtually in Toronto

    C100 is hitting the road (virtually) and will be bringing the next C100 mentoring session to Toronto. We’re working with our partners Extreme Venture Partners and are looking for three companies to participate.

    Interested? Please apply via our application process.

    Finalists will be notified week of July 12.