StartupNorth

Category: Canada

  • How to Hire Me, A Technical Co-Founder

    There has been a lot of buzz the past 6-8 months about hiring great technical co-founders. The implication seems to be that being a non-technical co-founder is a handicap of sorts and that CEOs buy sandwiches before the product is finished. Apparently coding & building great products is hard, but running the business is easy. Here are some articles:

    Why You Can’t Recruit a Technical Cofounder
    Quora – Technical Co-Founders
    Please, please, please Stop Asking How To Find a Technical Co-Founder
    Thoughts On Hiring a Technical Co-Founder

    I am a “technical co-founder” at Peek – I code, keep big scale systems up, hire & fire, set dev processes, and all that other technical stuff. So let me tell you about how I got recruited into Peek by Amol Sarva, @amolsarva.

    Sell Vaporware

    Amol had one VC committed to Peek in our A, and had a letter of intent from Target (yes – www.target.com – that Target) to sell Peeks nation-wide, in-store in the US. The status of the “product” – he had a carved out a wooden model of the Peek (ala Palm)!! And these deals were huge – a $15mm A round with half committed. Target – nation-wide for Christmas 2008!! These days I hear too much crap from “deal guy” founders about finishing product before doing deals. Lame. Be a stud – go sell vaporware. Go get real customers who pay you real money. Go find partners and distributors. I have seen countless, great sales guys in my life sell smoke and mirrors. Why can’t you?

    This guy hired me

    Hire Other Studs

    Amol had recruited John Tantum, former President of Virgin Mobile USA, as our chairman. He had an all-star marketing & retail guru lined up. Our advisory team was the president of BlackBoard, SVP strategy at Intuit, and the former head of the FCC. No matter what, I knew I was going to learn and have an awesome experience working with some great folks.

    Be Generally Awesome

    Amol was an interesting guy in general. He had a PhD in Philosophy from Stanford. He was/is building a new property in Queens. He took a photo that hangs in MoMA. The blog I write on is startupnorth, the “blogs” he writes on are Salon & Business Insider. Being generally impressive is important. The important question here is the Peter Thiel question, why is employee #20 going to come work for you? The weight of the CEO’s personality and accomplishments matter here. Senior guys will want to know the accomplishments of your business as well as the accomplishments of your management team. You have to be generally awesome enough to bring people in if you aren’t one of those super red hot, Twitter-esque companies.

    Be Top Amongst Your Peers

    Amol, while starting Peek, was mentoring other founders. He was one of the original members of Founders Roundtable. His peers looked to him for advice on starting a company.

    Now, I know this is a bit of a love-in of Amol. And it also probably feels like a pretty high bar. All you have to do is go get a PhD, raise $15mm and get a distro deal done with the second largest retailer in the US before you can hire great technical co-founders.

    Not quite. The main lesson is this. Forget your technical co-founder and realize that the “product” is one aspect of your business. Potentially an important one (also potentially a complete waste of time you need to pivot off of). You need to start consistently proving that you can make this business successful without having a “heroic engineering, product only” mindset. Can you on a day-in, day-out basis creatively solve the problems of the business such as acquiring customers faster/cheaper, reducing churn, recruiting great folks, financing the company’s goals, having great customer service, delivering everything on-time, getting great advice, navigating treacherous competitive waters, and so on and so forth. Can you relentlessly out-execute with or without the crutch of great product and fabulous engineering? The way you have built the business pre-launch tells me a lot about how you will run the business post-launch.

    If you can do stuff like Amol did, you’ll be fine. If you are buying sandwiches… sorry, go find someone else.

    I’d love to hear from other founders (technical or not) on how they both built their company pre-launch and how they found their technical co-founder.

  • National Survey of Canadian Angel Group Activity

    Snow Angel by Syymza

    Today, the National Angel Capital Organization (NACO) released statistics regarding Canadian Angel group investment activity in the Investment Activity by Canadian Angel Groups: 2010 Report.

    This study looked at the ‘visible’ portion of the Angel investor community – those that are members of Angel groups – as it is almost impossible to survey the entire Angel community. Different countries estimate the visible Angel community represents between 3% (US) and 12% (United Kingdom). Understanding this,  the findings presented below represent only a fraction of the actual Angel investment across Canada. They do, however, provide us with the most accurate snapshot of the activity in the community that we have today.

    Significant findings of this report include:

    • 90% of companies funded by Angel groups in 2010 were new, not follow-on.
    • Angel groups collectively received around 1,850 business plans. 14% were considered in detail, 32% received investment.
    • Angels groups invested CAN$35.3 million in 88 deals; an underestimate as some groups did not report the amount invested.
    • Co-investors were involved in 58% of investments and invested at least a further CAN$29.4 million.
    • Angels invested in a wide range of industries but with a strong technology focus: ICT sector (43%), Life Sciences (18%), and Clean Tech (16%).
    • 74% of funded businesses had revenue in 2010.

    Download a copy of the full report here: http://www.angelinvestor.ca/2010_Investment_Activity_Report.asp

  • BackType acquired by Twitter

    Backtype has been acquired by Twitter

    Congratulations Christopher Golda (@golda) and Michael Montano (@michaelmontano) on Twitter acquiring BackType. We’ve written about BackType since their acceptance in YCombinator (fortunate that we didn’t give iPartee their previous startup too much attention). This is another amazing acquisition of Canadian startups by a Silicon Valley company (make it 16 acquisitions since Jan 2011 see TechVibes). I think Dan was right, this could be a $1B year for Canadian startup acquisitions.

    The BackType team had already relocated from Toronto to San Francisco. And it looks like the relocation to the Twitter offices should be much easier:

    Our team’s relocating to the Twitter office. We’re very excited to not only join an amazing company that’s changing the world, but to continue building products in pursuit of our shared vision with Twitter.

    Finally, I’d like to thank all our investors and advisors, especially Y Combinator, Toni Schneider and True Ventures, Josh Felser and David Samuel from Freestyle Capital, Manu Kumar, Chris Sacca, Raymond Tonsing and Seth Berman.

    What is amazing/disappointing is that there are no Canadian investors along side the group of amazing investors assembled by Chris and Michael.

  • Let’s remove “entrepreneur” from the dictionary

    Editors Note: This is a guest post by Brian Sharwood (LinkedIn, @bsharwood). Brian is the President of Homestars (@homestars), the leading online free listing and rating company for Home Improvement specialists. Prior to HomeStars, he was a research analyst and principal of SeaBoard Group. Brian holds an MBA from Babson College in Boston and a bachelor of Arts from the University of British Columbia.

    CC BY-NC-ND Some rights reserved by ohmann alianne
    AttributionNoncommercialNo Derivative Works Some rights reserved by ohmann alianne

    I hate the word entrepreneur. It is overused. It has lost all meaning. Everyone is an entrepreneur these days. From the increasing attendance at DemoCamp, Startup Drinks, and Sprouter events around Toronto and across Canada you can find “entrepreneurs” that are people with ideas, corporate PR folks, lawyers, wedding businesses, etc. It ranges from founders of tech ventures to people looking for get rich quick schemes. In short who is an entrepreneur? Well just about everyone.

    The term entrepreneur is meaningless.

    I propose we split the people who live under the current word “entrepreneur” into three new words (which I won’t attempt to coin) which help us understand who these so-called “entrepreneurs” really are.

    The Entrepreneur as Artist

    These are the people with the great ideas. They are ones that are trying to change the world with something that’s never been done or seen before. In the tech world, they are often the hackers, who build a new web application with a vague idea of how they might make money for it. They might be the business person who sees a better process and sets it up, either on their own or within an existing enterprise. They are building something not for the money because it’s satisfying for them to create something that others love.  I constantly run across great ideas and great web apps that I say ‘that’s great, but I wouldn’t pay for it’, or I might just appreciate it for the sheer ingenuity of it, or it might be something to purchase to incorporate into another larger product. These are the creators of the ideas for the new economy.

    The Entrepreneur as Small Business Owner

    This is probably the group of people that encompass most of the people we encounter who label themselves entrepreneurs. They build businesses and run from from the consultants like April Dunford, bringing marketing insights and analysis to growing tech companies, to Jarrett Jastal, one of our clients, who runs StoneCote, a stone flooring company out of Hamilton. Running a small business is tough, and these people deserve to be lauded for taking risks and building companies. Often scrambling to meet payroll, watching a bank account dwindle, and trying to solve the many problems of operations. But many, if not most of these businesses are relatively small and non-scalable. They often rely on the skills and expertise of the founders and operators of the company rather than a product or brand. Another key ingredient to growth is risk, and these are our risk-takers.

    The Entrepreneur as Visionary Executor.

    The last group are the visionary executors. These are the people that the venture capitalists are looking for. The people who see the great idea, and know how to turn that idea into a business. They don’t necessarily need to be the founders, or even the people with the idea, although they often are. They are the ones who take that idea and make it into a business. Ted Rogers didn’t invent the products he sells, but he is the business visionary and executor who took a lot of great products and made them into a business through vision, foresight and understanding the market. Our innovation economy is driven by these people who take ideas, see opportunities and make businesses.

    It’s the visionary executor that we want in this country, building world leading businesses, taking great products and building businesses out of them. The small business people, and the artists are the required support. They provide the ingredients for the visionary to work with.

    So let’s forget the word entrepreneur or even founder, and define the term so we can understand who really changes the economy of this country.

    Editors Note: This is a guest post by Brian Sharwood (LinkedIn, @bsharwood). Brian is the President of Homestars (@homestars), the leading online free listing and rating company for Home Improvement specialists. Prior to HomeStars, he was a research analyst and principal of SeaBoard Group. Brian holds an MBA from Babson College in Boston and a bachelor of Arts from the University of British Columbia.

  • Desperately seeking early adopters

    Editors Note: This is a guest post by first-time entrepreneur Mike Potter (LinkedIn, @mike_j_potter) who previously was a Marketing Manager at Adobe, a project manager at Mozilla and an engineer at an Ottawa area startup. Mike has spent time running marketing programs for a large organization and has realized that power he held for many early-stage startups.

    It has been 5 months since I left my job at Adobe and started my own company, Arkli. We are building software to help create and measure integrated marketing campaigns. If I’d known how little it takes to help a startup, I would have tried to do far more when I was Adobe. It has been the experience of starting my own business, and demonstrating customer traction to potential investors and potential customers that I’ve come to realize how important 1 or 2 early customers like Adobe can be for a startup.

    Traction is the new black

    CC-NC-ND Some rights reserved by Jinx1303
    AttributionNoncommercialNo Derivative Works Some rights reserved by Jinx1303

    Demonstrating customer traction even in small numbers (particularly for enterprise or B2B startups) is the thing that helps you get the next meeting, the next introduction or the conversation that can really help your startup. For example, we’ve been in business for less than 7 months and we have 2 customers. When I was at Adobe, I would have said only 2 customers – that’s all you have? We had tens of thousands of customers. It was unclear that 2 customers could matter on the scale and scope of Adobe. Now running a startup, I look at it and say “wow, 2 customers, that’s great!”  Investors say the same thing.  Someone recently commented, “I’m impressed you’ve gotten customers without outside investment.” And it’s not just me, a panelist on BNN’s The Pitch congratulate Dalia Asterbadi (LinkedIn, @d_asterra) of realSociable on her partners and her user numbers. The best part is RealSociable hasn’t launched  yet!

    The reality is that getting customers to pay for something is really hard. Which is why when you’re starting out, everyone says going to take twice as long and cost twice as much as what you think. And it does, because its really hard to get early adopters. Silicon Valley is full of early adopters who help give traction startups. We need more of them in Canada.

    Getting to the chasm

    CC-BY - Some rights reserved by Original Nomad
    Attribution Some rights reserved by Original Nomad

    I really believe that the best thing a community can do to help local economy is to support local businesses and startups. We can argue about how much companies like RIM matter to startups. But it doesn’t have to be all mergers, acquisitions and corporate venture capital funds. It is not about new headcount or stock price. It’s about curiosity to seek out new solutions to your existing business problems.

    If you’re reading this, you’re probably interested in startups. Are you a founder? Do you work for a startup? Are you working for a larger organization? Here’s how you can help:

    Taking selfish advantage of an economic situation

    Look at your everyday problems. Are you struggling with accounting software, check out WaveAccounting. Everybody hates HR, have you checked out TribeHR? Can’t get your kids to do their chores, maybe HighScoreHouse can help make chores a game. Did you experience downtime because EC2 was offline for 5 days, maybe VMFarms can support you local and on EC2. There are a ton of startups with solutions to consumer and enterprise problems. It can be a struggle as a startup to raise your awareness event with early adopters. [Editor’s Note: There were 42 submissions and 5 accepted demos at the most recent DemoCamp. You can tune into the startup news sources like StartupNorth, NextMontreal, TechVibes and others. It can be a challenge but we’re working on better ways to discover Canadian startups. You can find early access to our redesigned StartupNorth Index of companies. It is currently running on our staging server, but the data model is solid an we’ll move all entered data to the production instance in the coming weeks.]

    We need to build and embrace a culture of early adopters. Look at your business operations, where are things not working as smoothly as you’d like. This is where you might be able to find a startup that you can take a flier on to help you improve the broken process. This is a chance to help an early stage startup.

    Become an early adopter of a startups product. Use it for 6 months and give it a shot. When you’re working for a fairly large company (employs more than 10 or so), you’ve got nothing to lose. [Editor’s note: Nothing to lose, other than your job ;-)]. Hopefully you will have found a product that makes you day-to-day responsibilities easier, smarter, faster, more enjoyable. You get to go home at the end of the day with a pay cheque, and hopefully fixed a broken part of your job with very little risk or cost.

    And you might have helped seed a startup. It takes so very little to help a startup demonstrate traction. A few customers which can lead to new investors which can lead into job creation in the community.  It’s a cycle of early adoption in that we desperately need to start in Canada.

    Embrace your role as an early adopter

    Rethinking crossing the chasm - Copyright Tara Hunt

    Nobody ever gets fired for buying IBM. This might be true. But you’ll be giving a lifeline and valuable feedback to an entrepreneur by choosing their products. One of the great thing about being a startup is that many of us are innovators and early adopters. Our mail has been in the cloud since 2005, when we embraced GMail (for the massive storage). The iPhone seemed like the best way to stop carrying an iPod and a Blackberry in 2007. We constantly seek out new and improved technology products. We need to embrace the same eagerness to try personal technologies in our organizations. Whether it’s new technology like Node.js or Cassandra, or a new way to track real-time team performance (looking at your Rypple).

    For startups traction is the new black. And it’s up us as middle managers and executives to seek out novel solutions. And in becoming a customer you might have just helped the next Facebook/Google/Oracle/Microsoft/Apple/etc.

    What new products are you using that are reshaping your business?

    Editors Note: This is a guest post by first-time entrepreneur Mike Potter (LinkedIn, @mike_j_potter) who previously was a Marketing Manager at Adobe, a project manager at Mozilla and an engineer at an Ottawa area startup. Mike has spent time running marketing programs for a large organization and has realized that power he held for many early-stage startups.

  • Does RIM Matter to Startups?

    If you haven’t heard by now, RIM is having a horrible year. Their earnings meeting yesterday was chock full of bad news:

    Q1 revenue: $4.9 billion vs. $5.15 billion consensus
    Q1 EPS: $1.33 vs. $1.32 consensus
    Q1 shipments: 13.2 million vs. 13.5 million units expected
    Q2 revenue: $4.2-$4.8 billion vs. $5.46 billion consensus
    Q2 EPS: $0.75-$1.05 vs. $1.40 consensus
    Q2 shipments: None given vs. 13.5-14 million units expectation

    One caption I read put it best – RIIMMMMMBEEEERRRRRRR.

    Out of the downfall the Globe and Mail was hypothesizing that the fall of RIM was catastrophic for Canada’s tech eco-system. The article was a bit light on fact as to why it would rip apart the Canadian eco-system, and my initial gut reaction was “RIM has almost no impact on any of the startups I know.” But then I decided to go and look at the facts.

    Since roughly 2008 RIM has bought the following Canadian startups:

    So they’ve probably flushed about $60mm-$80mm into the Toronto ecosystem over 3 years in exits. On top of that they have the BlackBerry Partners Fund (with about $150mm in cash) which has invested in several Canadian startups. Lets also not forget that the eco-system around their partners. BlackBerry’s platform has created opportunity for mobile dev shop’s like Fivemobile and Xtremelabs to exist. But it feels like those guys do most of their business in iPhone and Android.

    So between exits and investment via BB partner funds they have probably kicked in about $100mm to the Canadian startup eco-system over the past 2-3 years. Which is not something to sneeze at. Having said that, Google (not HQ’d in Canada) has kicked in probably close to $100mm in the past 12 months… just in exits. So maybe its also not something to brag about either.

    Putting these numbers together, makes me feel more ambivalent about RIM’s impact on the tech eco-system in Canada. Lets be clear, we’re talking about a decline in the short to medium term, not a total shutdown. In that decline I expect RIM to take an even lesser role in the eco-system than before. And I’m not sure it matters.

    (Small end note as a UW alumnus. I’m not sure RIM’s downfall will have that big an impact on the school either. Big companies like Microsoft, Google, Facebook are still going to fight over UW’s top talent – their won’t a shortage of jobs for UW’s engineering community anytime soon. Maybe Laurier’s business & marketing grads… oh low blow).

  • 2011 CIX Top 20 Nominations

    CIX Top 20 ApplicationWe’ve written about the work that CIX is doing in building Canadian Technology Accelerator with ties to the US. They continue to build a showcase for Canadian startups in a variety of emerging fields. They have recently announced the nomination process for companies to the Top 20 competition for 2011.

    Robert Montgomery (LinkedIn), Mark Greenspan (LinkedIn, @markgreenspan) and the team at Achilles Media has been working hard to deliver value to the startups that participate in CIX. And we’re seeing a number of past winners have success, traction and exits. Cognovision, the 2009 winner, was acquired by Intel. The 2010 winners included:

    It’s a great opportunity to get access to some of the movers and shakers in digital media and ICT in Canada. And hey, the press coverage doesn’t hurt either. The 2010 short list of 20 companies included an impressive set of digital media and software (ICT in larger player lingo), including:

    Hopefully the entrants for the 2011 cohort will be just as impressive.  If you are a Canadian startup working in Digital Media or Technology and have less than Cdn$10MM in revenue, you should consider applying.

  • 2011, The 1 Billion Dollar Year??

    Edit 1 – Techvibe just put together a more comprehensive list than mine – http://www.techvibes.com/blog/techvibes-comprehensive-list-of-canadian-tech-acquisitions-50-and-counting-2011-06-08. It is an even a bigger year than I thought!

    Edit 2 – I have been corrected that the Coradiant acquisition was more likely $100m-$150m. Updated below. Bigger than I thought! Glad to see I was “under-reporting”

    Interesting first 6 months to 2011. Check out this list of exits:

    Radian6 – $326mm
    Coradiant – $100mm (guess – this one has been tougher to size, some searching shows them to be around 100 employees with 10mm revenue?? That Akamai partnership feels pretty strategic though…)
    Pushlife – $25mm
    Tungle – $20mm (guess off of last raise/valuation)
    PostRank – $15mm (consensus guess from asking around)
    CoverItLive – $10mm (big guess)
    tinyHippos – < $1mm (4 employees)
    ———————————-
    About $495mm. Give or take $25mm depending on my math.

    Firstly, this is a perfect example of how VC exit math works and the power of a fundmaker like Radian6.

    But get this, we are exactly 6 months in and almost half way to…. well… July/August/December all kind of suck for doing deals… buuuutttt… maybe… maybe if I utter the amount… people will dream and we could maybe dreamily hit 1 BILLION DOLLARS in returns this year. Wow, 1 BILLION. Thats nine 0’s.

    The Net Value of All Exits for 2011?? (by Adam Crowe, some rights reserved)

    We’d need another big mama ala Radian6, and another 4 $20-$30mm exits. I could hazard a guess at a few companies that could exit for $20mm+ today and now, but the big, big question is, where will the big exit come from?

    Kobo Books (@kobo)

    They just raised $50mm. Not sure about the valuation, but we could size it at say $150mm – $300mm (I’d go higher because they are very young and having a $50mm raise means they have a vertigo inducing growth/revenue curve). And lets not forget the mainstream press chatting about an Apple acquisition. This could be a high 9 figure to billion dollar plus exit if something happens.

    Freshbooks (@freshbooks)

    They state over 2mm users on their home page. Lets say 10% are paying customers and they pay on average $30/month (looking at their pricing plans). 200k * $30/month * 12 months = $72mm in annual revenue. Even at 5% freemium conversion they are at $36mm. Thats a big customer base and a big chunky, sticky subscription revenue base.

    Would love to hear from folks. What other startups do we have hanging about that could do a big exit? Am I missing any of the 2011 exits to date?

  • GrowLab & FounderFuel Launch

    The Blues Brothers Car
    Attribution Some rights reserved by Stig Nygaard

    Jake: Here’s the plan: we put the band back together, do some gigs, earn some bread, bang! We’ll have 5,000 bucks in no time.

    Seems like I’ve been talking a lot about incubators, accelerators, catalysts, spark plugs, igniters and other programs designed to engage, educate and enable early-stage, emerging technology entrepreneurs. In the past 7 days, we’ve now seen the launch of new incubator/accelerator programs in both Vancouver and Montreal. The are 2 new programs both focused on bringing together the best talent, access to mentors, capital and networks beyond what many founders are capable of doing on their own. (Full disclosure: I am a mentor for FounderFuel).

    Vancouver » GrowLab

    GrowLabGrowLab has risen out of the ashes of BootupLabs. It includes a spectacular founding team that includes a group of people many of whom I call a friend, and even more importantly they are a group I deeply respect. The group includes:

    The deadline to apply to the GrowLab program is June 15, 2011. Accepted startups and founders spend 3 months in Vancouver and 1 month in San Francisco with an intense mentorship program. The program also includes office space in both cities plus up to $25,000 in seed funding.

    Montreal » FounderFuel

    FounderFuelThe FounderFuel is a new accelerator program with support from the team who started Montreal Startup and Real Ventures. It is a accelerator program that has been seeded with Cdn$2MM and has put together a great mentorship group that includes 85 entrepreneurs, executives, VCs, angels (and me). Ian Jeffery is the General Manager and the Partner at Real Ventures responsible for making FounderFuel work. I first encountered Ian as a competitor to his startup TinyPictures (I was running product at Ambient Vector/Nakama back in 2006). Ian successfully raised a big chunk of money and then proceeded to execute and eventually sell Radar to Shutterfly. I agreed to be a mentor just to personally ensure I get access to the team of mentors. It is ridiculous! The list includes >84 phenomenal leaders, executives, investors, entrepreneurs and people from Montreal and around the world. A sample of the awesome mentors (sorry for every I am leaving out):

    The deadline to apply to FounderFuel is July 1, 2011. Instead of a 4 month program, the FounderFuel program is “12 intense weeks”. It is also a cohort based program that provides $10,000/startup + $5,000/founder in exchange for 6% equity. The program provide access to mentors, office space in Notman House, and access to a culture and ecosystem that has bred success in the past.

    One Observation

    My one observation about both of these programs is that Debbie Landa was the only female listed. It is a really difficult and sad state. There are great number of female tech founders and leaders in Canada. I am disappointed not to see:

    These programs need to do better on encouraging diversity and actively seeking out different viewpoints. The good news is that it is easily rectified.

    Consider Applying

    The deadlines for GrowLab and FounderFuel are approaching quickly. If you are interested in what hopefully is a world-class incubator/accelerator program you should definitely give careful consideration to these.

  • Incubators, incubators, every where

    Photo by Jurveston
    Attribution Some rights reserved by jurvetson

    Is there an incubator bubble? Perhaps it’s an incubator arms race. When I wrote Incubators, Accelerators, and Ignition in 2009 there were not a lot of Canadian based incubators (the now defunct BootupLabs was the only one listed in the ReadWriteWeb article).

    Incubator Index +18

    There has been a rise of support for early-stage entrepreneurs across the country. Yesterday’s announcement of GrowLabs in Vancouver along with the launch of Foundery, Multiplicity Accelerator in Toronto, FlightPath in Edmonton, YearOneLabs in Montreal. There are existing players including Extreme Venture Partners, Mantella Venture Partners, Wesley Clover, Innovacorp and Real Ventures/Notman House. The are university incubators like UW Velocity, MEIC, LeadToWin, Ryerson’s DMZ, Next36. There are Communitech, WavefrontAC, CoralCEA, MaRS, NBIF among others.

    There are companies like Jet Cooper, Teehan+Lax incubating people and ideas (Rocketr & TweetMag). There are new programs like the Under 20 Thiel Fellows that had 2 Canadian students: Gary Kurek (LinkedIn, @gskurek) & Eden Full (LinkedIn, @roseicollistech).

    There is competition from YCombinator, TechStars and 500Startups – Andrey Petrov YC10 (@shazow), BackType YC08 – Christopher Golda (LinkedIn, @golda) & Mike Montano (LinkedIn, @michaelmontano), Rewardli 500Startups- George Favvas (LinkedIn, @georgefavvas) & Jean-Sebastian Boulanger (LinkedIn, @jsboulanger); A Thinking Ape YCW07 – Eric Diep (LinkedIn, @ediep), Kenshi Arasaki  (LinkedIn, arasakik) & Wilkins Chung (LinkedIn), InPulse YCW11- Eric Migicovsky (LinkedIn, @ericmigi), Vanilla Forums TechStars09 – Mark O’Sullivan (@navvywavvy) and others.

    There has been an explosion of support for existing organizations, there has been a rise of a new breed of incubator/accelerator/catalyst.

    How does an entrepreneur evaluate an incubator?

    Photo by Chris Devers
    AttributionNoncommercialNo Derivative Works Some rights reserved by Chris Devers

    Do you pick the incubator? Or does the incubator pick you? This is a business decision. It’s somewhere between chosing an investor and a service provider and picking where to go to graduate school. There are implications for incubators about which startups they choose to help. Their reputation, alumni and talent pool are determined by the people they let in.

    There is no magic formula and rationalization or justification can make any decision sensible. But when I advise entrepreneurs, I want them to think about:

    Pedigree & Reputation
    What are the exits? Who are the alumni? What do others think about the program? One of the big reasons that YCombinator has become so successful is the success of it’s alumni. It has been reported that the YCombinator portfolio is worth almost $3B. They have an strong history of helping companies succeed like crazy. Think about this in terms of post secondary education. What is your opinion of a computer science graduate from: Carnegie Mellon University, MIT, Stanford, UWaterloo, Slippery Rock University? The quality of the education might not be any different. But you need to consider the external optics of an incubator program, just like you do in picking a school.
    Alumni, Mentors and Advisors
    Who do you have access to? Does the pedigree or alumni network change your access to people? Think about YCombinator grads, they get access to Yuri Milner and Ron Conway and $150,000. That’s something most of us don’t have access to. What doors and connections that aren’t available to you today can be enabled by attending an incubator. Who are the mentors what have they built? For example, look at the great talent behind GrowLab – Debbie Landa (Dealmaker Media), Boris Wertz (Abe Books), Michael Tippett (NowPublic), Leonard Brody (NowPublic) and Jason Bailey (SuperRewards). These are some people with impressive histories of building, promoting, operating and selling startups. You need to think about your vertical, your customers, the connections to potential acquirers, etc. Are the people connected with the incubator beneficial to me.
    Culture
    You need to make sure that the culture is something you can work in. I can only describe the culture of places I’ve seen, but I look at Extreme Venture Partners and Mantella Venture Partners in mentoring, motivating and growing entrepreneurs. What is important to you? I watched the Like A Little video on TechCrunch Cribs, and there is no way I could live through that again. There’s nothing wrong with the culture, it’s amazing (disturbing), but I could not do it because my stage in life just would not allow it. My advice is that you visit the incubator, meet the people that are in residence, ask questions, observe, form an opinion.
    Funding or equity stake
    What do you have to give up? Equity? A board seat? How does it compare to other incubators? How much will you benefit from the network and pedigree, from the connections and mentors? This is a decision about do you believe the costs match the benefits? Do you have to move? How long can you survive on the capital?
    Free stuff
    This is a funny thing. What do you get for participating? SwagBag? Press? Boardroom for customer meetings? Hosting? Design services? Legal services? Templated documents? Do you get to attend StartupSchool? Do you get press coverage at your demo day? Do you get coffee? Dinner every other week. You’re in it to get the best deal to help your startup grow.

    Do you need an incubator?

    I’m curious about the feelings and opinions about incubators from:

    • Scott Pelton (@spelton) – GrowthWorks has previously invested in BootupLabs. Scott has worked with companies from incubators including Bumptop. Does having an incubator change your opinion or evaluation of young companies?
    • John Philip Green (@johnphilipgreen) – John has started LearnHub, been part of the early or founding teams of companies in Silicon Valley and now the leadership team at CommunityLend.
    • Leila Boujnane (@leilaboujnane) – Leila is a pillar of the community. She is the founder of Idee & TinEye. She advises startups and hosts events like HackDays.
    • Ryan Holmes (@invoker) – Ryan is a founder of HootSuite, he is also an advisor at GrowLab. Wasn’t HootSuite incubated at Invoker? What is the role of the incubator or companies in organic growth of new ideas? How should entrepreneurs evaluate an incubator vs being an employee versus something else?
    • Evan Prodromou (@evanpro) – Evan is the founder of Status.net and has raised seed money from MontrealStartup and continued to build an amazing product. I’m curious about his opinion on starting in an incubator.
    • Patrick Lor – Patrick cohosts DemoCamp in Calgary. He is on the board at Fotolia. He is an active angel investor. To the best of my knowledge outside of his involvement in SIFE he is not affliated with an incubator.
    • April Dunford (@rocketwatcher) – April is the best B2B Marketer in the world! I just said it on the Internets so it must be true. April has worked with lots of startups including NexJ and Janna. I wonder what her advice to a startup considering an incubator would be.
    • Rob Lewis (@robertslewis) – A drunken rumor says that Rob is starting his own media incubator in Toronto (possibly with ExtremeVP). And since Rob is a W Media Ventures portfolio company, I don’t want to see any puff PR pieces on TechVibes about GrowLab companies.
    • Chris Arsenault (@chrisarsenault) – One of the Jacques’ Mafia and an incredible investor. He has portfolio companies like Chango that have been incubated at Mantella VP. Are incubated companies better?
    • Danny Robinson (@dannyrobinson) – Now running BCIC and I’m curious at his opinion about what is rising out of  the ashes of BootupLabs and his thoughts on the incubator business model.

    More importantly, what do you think about this new bumper crop of incubators?