StartupNorth

Category: Startups

  • The Organic Incubator

    Amielle Lake has an interesting take on something she’s calling The Organic Incubator. I’ve talked a lot about startup incubators on StartupNorth. Short of being a promotional piece for local Vancouver development shop Invoke Media is short on real argument. (The article could have easily listed Vancouver-based Nitobi with RobotReplay and PhoneGap; Vancouver-based OpenRoad with ThoughtFarmer or Toronto-based ExtremeLabs;  or Portland-based Portland Incubator Experiment; or Edmonton-based nForm with Kiiro).

    “The classic approach is to raise capital through government, institutions or private investors and then use that capital to setup infrastructure, such as office space, provide business mentorship, and make smaller investments.”

    I’m still not sure what the argument is? An organic incubator that is essentially a consulting shop that has a product development arm. The capital and infrastructure are provided by consulting services rather than a set of limited partners. It sounds like a bootstrapping model where the entrepreneurs perform the financial and human capital along with the diligence on opportunities.

    Unfortunately, I can’t find any data that support that the proposed organic incubator model is any more or less successful as the incubator of startups.

    My guess is that the professional services side does 3 things:

    1. Generate revenue
    2. Incubate human capital and talent
    3. Identify customer needs

    Revenue Tradeoffs

    The revenue generation presents a tradeoff between the growth of a successful consulting practice (see Hockey sticks and consultants) and investment in the creation of new ventures. This is a common challenge for early stage software startups, using consulting to get to ramen profitability. There needs to be a focus on being a product company and growth. This can often be lost with an intense consulting business.

    Talent Incubation

    Incubating human talent is one of the biggest benefits of a consulting practice. It teaches developers the business side and professional side of the equation very quickly. Understanding how companies make purchasing decisions and doing business development are critical skills for many entrepreneurs (go read How JBoss increased their deal size from $10k to $50k). Consulting businesses provide a great training ground for understanding customers and learning the skills necessary for delivery.

    Customer Needs

    Being in the trenches is a great way to see the problems of real customers. This is not exclusive to consulting practices. But it does provide a lot of designers and developers hands on experience with actual customers and the problems they deal with everyday. It’s a great way to observe, inquire and test the repeatability and salability of early stage products. Depending on your contract in particular the IP ownership from the consulting practice, it might even provide you the start of a code base.

    Do your homework!

    Understanding the tradeoffs and success factors is the responsibility of a founder. You need to understand the tradeoffs and risks for each decision, all you can do is make informed decisions and learn from your mistakes. Incubators and consulting practices don’t make it any easier and don’t appear to be an indicator of success.

    Resources

  • The Communitech Hub

    Communitech is getting $26.4m from the Ontario Government towards the creation of The Communitech Hub: Digital Media & Mobile Accelerator.

    “Located in Waterloo Region and serving technology companies provincewide, The Hub will help hardware and software entrepreneurs bring new tools, technologies and applications to market. The Hub will focus on commercialization, business development, access to financing and connecting clients with other digital media hubs across Ontario and Canada.”

    It looks like it is a physical space with resources to help entrepreneurs.

    “The Hub [is] a new centre that will help emerging digital media companies grow and succeed in the global market. In particular, The Hub will look beyond the entertainment sector to focus on companies creating hardware and software for industries, including advanced manufacturing, healthcare and finance.”

    It’s great news for Waterloo Region. Further support of a great organization with Communitech as a leader. Additional attention and awareness to a growing tech sector with companies like OpenText and RIM. And additional real estate development and construction jobs.

    What I am curious about is the relationship of the Accelerator Centre to The Hub? And what is the relationship to nGen? to MaRS? to RIC Centre? to OCRI? to Innovation Synergy Centre? Ontario Centres for Excellence? Is there a plan for where each of these pieces fit together? How about where these programs fit relative to local Economic Development Corporations? Is this really about creating an innovation and entrepreneurship based economy? Or is it about investing in third-party, arms length, pseudo-government agencies without looking like big government?

    So it’s a mixed bag. This announcement continues to show technology entrepreneurship is a focus of the Ontario Government’s plan to help seed a new economy by bring new companies to market. But there seems to be a focus on real estate as the first step in enablement. Any thoughts?

  • Interview with John Green of Savvica

    jumbotests I had an opportunity to catch up recently with John Green, cofounder of Savvica, and over an early morning breakfast got schooled on what’s new at LearnHub and JumboTests.

    StartupNorth: What is JumboTests.com? What’s the relationship to LearnHub.com?

    John Green: JumboTests is an extraction of core test preparation technology and content from LearnHub, and factored for a different audience and user acquisition model. Both sites are run by the same content, engineering, and community management teams here at Savvica Inc.

    SN: So what is the change in target audience with JumboTests?

    JG: LearnHub, although useful to English speakers everywhere, is targeted at the Indian student market. More than half of Savvica’s employees are in fact in our marketing team, which is based in Delhi, India.

    JumboTests, on the other hand, is not focused on any particularly geography; it is equally useful to anyone studying for the standardized tests covered on the site (including GMAT, GRE, SAT, TOEFL, and others). This makes JumboTests especially relevant in the US and other Western countries which have the majority of the test takers every year.

    SN: How are the user acquisition models different?

    JG: Visitors to LearnHub mostly come through search engines. LearnHub has several hundred thousand pages indexed by Google and other search engines, and we rank at the top for hundreds of popular search terms. The site has a mix of user generated content and content made by our expert staff. For instance, LearnHub has the world’s largest free GMAT question bank, which has thousands of questions developed by us and our community. It is very popular.

    Search engine traffic is less of a factor for JumboTests. Instead we are growing through strategic partnerships. Sites with existing, large, and relevant user bases (such as job sites, education sites, or portals) essentially embed JumboTests into their site using our partner platform. Our partners get hundreds of high quality practice tests that drive engagement, page views, and a split of the revenue.

    Since the JumboTests launch 3 months ago, we have entered into long term relationships with 3 partners, all top in their categories: TalentEgg, India.com, and The Globe & Mail. All of these integrations are already deployed and online.

    SN: So what’s next?

    JG: We feel both properties have a bright future. Between the 2 sites, we help over 350,000 students a month with test prep, university applications, and career advice. That’s a lot, but there are many more students that aren’t on our sites but should be.

    LearnHub is the largest education website in India, excluding reference sites like Wikipedia. But India has a long way to go in terms of Internet penetration. It has about 2x the Internet users as Canada, but it also has over 1 billion people. The number of Internet users in India doubled last year to 50-60 million. We are pegging our growth to outpace the Indian Internet penetration rate over the next 5 years.

    JumboTests is tackling a more mature market. That is why we are growing it primarily through partnerships. There are a lot of established online channels whose audiences would benefit from our unique content and delivery technology.

  • Impact National Conference & Impact Ventures

    Impact Entrepreneurship GroupImpact_blog_redlogo started life as a student group designed to help promote entrepreneurship as a career path. It was started by Kunal Gupta, now the founder & CEO of Polar Mobile. It started as a conference for students, “a one-day event in Kitchener, Ontario attracting 150 delegates”. It is still primarily a conference/event machine for student entrepreneurs. However, with the creation of Impact Consulting and now Impact Ventures (see below) this is changing very quickly.

    The next INC_logoImpact National Conference is happening November 20-21, 2009 at the Westin Harbour Castle on Queens Quay in Toronto. The conference features some interesting speakers including some familiar faces: Andy Nulman, Sunjay Nath, Ali Asaria, Jordan Banks, Saul Colt, Austin Hill, Mike McDerment and others. It looks to be a great conference with a great list of speakers in Toronto.

     

    What is most interesting to me is the announcement of the Impact 2010 Programs, including Impact Ventures.

    Many talented youth with innovative ideas steer away from an entrepreneurial path due to the numerous challenges, including funding and guidance, which they inevitably face; Impact Ventures was created to remove these obstacles. Impact Ventures strives to provide youth entrepreneurs with the seed funding, advisory services, workspace tools, and strategic resources they need at the crucial idea stage to create a successful business. Based on the successful Y Combinator model used in Silicon Valley to bring the next generation of ideas to life, Impact Ventures will help propel new startups to achieve their business objectives.

    The selection process consists of an application form and an interview; there is no business plan required. During the pilot, three to four ventures showing the most opportunity for growth and long term sustainability will be chosen for the first batch. This three-month program will bring these budding entrepreneurs to Waterloo, the technology hub of Canada, to present them with all the components each entrepreneur needs to help build their venture.

    Components for each selected Venture:

    • $15,000 in seed funding for an average of 6% stake in the company
    • Mentors available for hands-on help as well as advise
    • Advisory services including Legal, Accounting, Banking and more
    • Office Space in Waterloo to create an environment of collaboration
    • Themed weeks where experts related to starting a business will provide their insights and advice
    • Consultants to help a new company fill gaps in its initial organization

    Impact Ventures is dedicated to the implementation of the entrepreneurial spirit amongst Canadian youth and values the independence of each entrepreneur. We are not interested in controlling the direction of the company as we trust in the entrepreneurs to make the best decision for their company. We believe in a non-regimented and friendly atmosphere where you are allowed to develop your startup with little interference, numerous resources and advice when you need it. Impact Ventures is set to revolutionize the startup industry by giving entrepreneurs an excellent spring board that will launch them to their success.

    I’ve been talking with members of team creating Impact Ventures including Taimur Mohammad and Ray Cao since my post "Incubators, accelerators and ignition” back in April 2009. It looks like the Impact team has taken up the challenge and will be using their network of advisors, past members to help guide and mentor new companies. It also looks like they’ll be providing funding and consulting services to help kick start these early ventures.  There is a Waterloo residency requirement, which potential a detractor for many students actually enables students in the VeloCity program a formalized incubation phase beyond their residence. For many non-University of Waterloo students this provides students access to the ridiculous support network available in Waterloo (I’m looking at you TechCapital and Communitech and BarCampWaterloo). This is something that is definitely worth keeping an eye on.

  • StartupNorth Jobs

    GarageCollageThe hours at a startup might be long and the pay might just cover a six inch sub, but there is nothing more rewarding than being part of a team out to change the world.

    We’ve added a job board on StartupNorth to help Canadian entrepreneurs find great people to bring on.

    Since launching a couple weeks back we’ve had 26 postings, 2667 views, 129 applications, and 16 referrals.

    Companies looking to grow their team include: FreshBooks, Well.ca, Tungle, LearnHub, Fixmo, ThoughtFarmer, iNovia, and Xtreme, obviously some amazing opportunities.

    It is free to search and post, so head on over and check out: StartupNorth Jobs at http://jobs.StartupNorth.ca

  • StartupDrinks – Oct 28, 2009

    startupdrinks1[1]It’s time again!

    " Strong communities are better than weak governments." – Legatum Prosperity Index

    Announcing the arrival of Startup Drinks 4! We’re continuing to keep the spirit of the startup community alive, one pint at a time on Wednesday, October 28th, 2009 to be held at Finn McCools, 70 The Esplanade, Toronto, ON M5E1R2.

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

    Toronto

    Montreal

    • Wednesday, October 28, 2009 starts at 5:30pm
    • Brutopia, 1215 Crescent St [map]

    Ottawa

    Waterloo

    Remember, it’s about hanging out with other entrepreneurs and startups. Come out, be social and earn some social capital.

  • SmartHippo continues plot for world domination

    logo_smarthippo SmartHippo has named the former LendingTeam GM, Lori Collins, CEO. And they are expanding their European footprint through an exclusive license and partnership with Finacialred in Spain. This is definite traction and a step further down the growth path for George and the team in Montreal. A world-class CEO, a expansion into the European marketplace that allows a local entity to do the sales and marketing allowing the team to continue to work on the software platform. Super cool. 

    “As General Manager of the LendingTree Exchange, Collins was responsible for sales, relationship management, and product management for the LendingTree lender network. She was part of the executive team which increased revenues from $7 million to $476 million over seven years.”

    So what is SmartHippo?

    “SmartHippo.com uses the power of community to help consumers find the best mortgage rates and save money. SmartHippo allows any individual to post information and feedback on the rate they received, and to compare rates with other members of the community with similar profiles. Members of SmartHippo can see real rates reported by real consumers, and sort through banks based on feedback posted by other members of the community. “

    SmartHippo is an open, transparent marketplace where consumers help each other find the best financial products. Basically all of the those hidden gotchas, the little things that are often hidden in the fine print, that you only discover after a difficult situation. It’s about providing a platform that consumers can ask questions, share reviews, compare rates and experiences to make make informed financial decisions. SmartHippo is the underlying software platform that allows these conversations to take place.

    Huge day for SmartHippo. And there is an opportunity for local startups (well local to Montreal) to hear from a Valley veteran running a hot Canadian startup. Lori Collins will be delivering the closing keynote at StartupCamp Montreal on October 15. If you are in the Montreal area, the event takes place at the Society for Arts and Technology, 1195 Saint-Laurent boulevard, Montreal [map] from 6pm to 11pm. Make sure you take the opportunity to participate and meet George, Lori and the team.

  • Uken Games – Caution: highly addictive games

    This is part of a series on Extreme University and the first group of graduates from the Summer 2009 program (part 1: Assetize).

    superheroesalliance Uken Games is a social game developer based in Toronto. They build “highly addictive” social games on large social platforms including Facebook, Myspace, and iPhone. Their first game, Superheroes Alliance, has 50K active monthly users.

    Founders

    Founded by Mark Lampert and Chris Ye (Facebook). They are young developers and business school grads. Mark was one of the developers behind Twisted Trick-or-Treating and Twisted Gifts that are gifting applications that ran promotional campaigns for Nestle through the Halloween and Christmas holiday seasons where users could gift one another mini Kit Kats or a box of Turtles.

    Market

    “In 2009, an estimated $400 million to $600 million will be spent on virtual goods in the United States, and $5.5 billion globally, according to Brian Balfour, founder of Viximo. U.S. virtual goods spending was likely less than half that in 2008, and between $25 million and $50 million in 2007, Balfour said.” – San Francisco Business Times

    The opportunity behind social games and virtual goods is clear and doubling each year. “Mochi Media co-founder Jameson Hsu, reports that the company’s new virtual goods are earning at 10 to 20 times the rate of advertising” as reported by Virtual World News.

    Competition

    The competition in the social gaming space is high but given the extremely high rate of growth in the industry and the number of users who are just beginning to play games on social networks, competition is less of a factor. Because the games are generally free to play, users often play numerous games at a time, which expands the size of the entire market. The top competitors include Zynga, Playdom, Playfish, Serious Business, Hive7, and LOLapps.

    Zynga, Playdom, and Playfish are each very large, having user bases in the tens of millions across numerous games. Even so, they are all growing at tremendous rates. Zynga is rumoured to generate $200M in revenue by the end of the year according to a recent Inside Facebook article.

    Product

    Their first game, Superheroes Alliance, has 50K monthly active users on Facebook. In the game, users create a Superhero alter ego to complete missions, customize their super powers, hire sidekicks, and start rivalries with other superheroes. It’s free to play but for those users who want that slight edge and great customizability, they can purchase compelling virtual items (through a virtual currency) in the form of rare sidekicks/vehicles, special powerups, and bonuses.

    Business Model

    They generate 100% of their revenues through virtual good sales without any reliance on advertising. 80% those virtual good sales are direct, meaning customers pay with their credit cards or PayPal accounts. The remaining 20% comes in the form of CPA (cost-per-action) offers such as filling out a survey or signing up for a service like Netflix.

    Barriers to Entry

    Uken Games is an execution play. They have built a successful gaming platform that leverages key content concepts (superheroes) and social gaming and reputation. The ability to attract, engage and entertain users is core to their business.

    • Intellectual property
      There is nothing that indicates that there is any intellectual property protection for Uken Games. Intellectual property protections are not required to build a successful execution company. The uniqueness of the gaming platform and the ability to quickly adapt the platform for new markets will help Uken Games adjust course and launch new games rapidly.
    • Customer loyalty
      A large 50k monthly audience of players is great. Metrics around user signup, retention, attention and engagement would be very interesting to see. It would also be interesting to understand the conversion rates for users sharing with friends. The “addictive nature” of these games puts customer loyalty at the centre of the design and measures of Uken Games.
    • Network effect
      It’s a social game where you play your friends. Network effect is based on enjoyment and value to include new friends in the interaction. It is key to the success of Uken Games as a platform. SuperheroesAlliance is a great first game, the question of moving existing users to new games and continuing to attract new users will leverage the network effects of social media.
    • Sunk costs
      Traditional games are expensive to build. However, Uken Games has built a skinnable version game engine that has abstracted the interactions between users and allows them to build new games using new metaphors. It will be interesting to see how long the current platform remains relevant with users.
    • Research and development
      Uken Games currently has new games in development, which they plan to launch by early October. They are also working to support other platforms including Myspace and iPhone so that their games can be accessed through more channels. Leveraging existing social networks along with mobility platforms offers an interesting method for longer engagement and new social interactions.

    Summary

    The Uken Games team report that “Superheroes has already officially been banned from 3 offices during work hours due to its highly addictive nature”. As Uken launches more titles, the founders hope to see that number go up. It will be interesting to see more game titles on more platforms.

  • Just Launched: BumpTop Multi-Touch for Windows 7

    BumpTop has just launched Multi-Touch for Windows 7. This is on the heels of forming partnerships with some of the largest graphics card makers in the world including: HIS, PowerColor, and SAPPHIRE, who are now distributing BumpTop by bundling a free copy with their graphics cards.

    Cool, huh! Heck, I’d attend a Windows 7 House Party to give BumpTop Multi-Touch a whirl.

  • StartupDrinks – September 30, 2009

    startupdrinks[1]It’s happening again. It’s great to have a monthly social event for high tech entrepreneurs in Toronto.

    Bryan Watson of NACO and Robin Gittens of CEOFusion have stepped up to help coordinate the next installment of StartupDrinks in Toronto. Heri of Montreal Tech Watch and Robin Ahn & Raymond Luk of Flow Ventures are hosting the Montreal event. Scott Lake of StartupOttawa is hosting the Ottawa event. And Dan Silvestru from Covarity is stepping up to host an Waterloo event (the Waterloo event will be on October 6 to avoid a conflict with DemoCampGuelph).

    The Toronto Startup Drinks followed hot on the heels of DemoCamp with Yossi Vardi, which was a great event.  We are keeping the startup community alive, one pint at a time on Wednesday, September 30, 2009 at local fave Fionn MacCool’s on the Esplanade! Waterloo is happening on Tuesday, October 6, 2009.

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

    Toronto

    Montreal

    • Wednesday, September 30, 2009 starts at 5:30pm
    • Brutopia, 1215 Crescent St

    Ottawa

    • Wednesday, September 30, 2009 starts at 6pm
    • Cornerstone Grill at 92 Clarence Street (in the Market)
    • Register

    Waterloo