StartupNorth

Category: Montreal

  • MontrealStartup – A new $3m fund for Montreal startups

    monteral_star_up_logo_small.jpgWe spoke with John Stokes from MontrealStartup last week about an announcement they will be making today. They are announcing a new $3 million fund to invest in early stage startups on the Island of Montreal.

    MontrealStartup is a unique type of VC, they are a consortium of 20 partners, mainly entrepreneurs, based in Montreal who want to do what is best for Montreal. The investors in the fund include John Stokes, Daniel Drouet, JS Cournoyer, Alan MacIntosh, Austin Hill and Mathieu Duffar.

    At $3 million, it is also the smallest fund I am aware of, that isn’t necessarily a bad thing however. Having a small fund is going to force Montreal Startup to act and behave just like a startup. They are going to know exactly what you are going through, because they will be dealing with many similar bumps themselves. It will also force them to learn to adapt quickly in a way that other VCs may not feel the pressure to do.

    This new fund, which is composed of $2 million from The Ministry of Economic Development and a further $1 million directly from MontrealStartup, will be managed completely by MontrealStartup.

    The fund will look at investments between $50,000 and $400,000 to be made in startups who are focused on the Web, Wireless and New Media. MontrealStartup most recently invested in StandoutJobs, and will start investing through this new fund immediately. They are looking for startups who have solid ideas with some market potential but they aren’t necessarily looking for complete business plans. What I like about Montreal Startup, from what I have seen so far, is that they are focused both on providing capital to startups, and using their well established networks through their investors, who are all successful entrepreneurs.

    Due to the size of the fund, there is practically no management fee and the only opportunity for Montreal Startup to profit is to find the best deals that exist in Montreal and then to work hard to make sure that those startups are successful.

    This is good news for Montreal. I am looking forward to hearing about some deals getting done. If successful, Montreal Startup will be one of a new type of VCs in Canada who are far more engaged with local startup communities than ever before. The future success of these funds depends heavily on the amount of local startup activity, and it is in their interest to foster that in a more direct way than the typical VC has done so far.

  • IOUCentral – P2P Banking isn't always so simple?

    iou_logo.jpgWell, that didn’t take long. IOUCentral appears to have been essentially shut down by regulators here in Canada and they have disabled their loan and application functionality and are now repaying any fulfilled loans. The startup, which we covered, launched just a few weeks ago.

    We are not aware of the specific “regulatory matter” that seems to have shut down IOUCentral, and I won’t pretend to know enough about the banking industry to comment, but we did ask them about regulatory issues when we first interviewed them earlier this month. At the time they indicated that their legal agreements should have provided sufficient operating cover. It now appears that wasn’t the case.

    In a recent Toronto Star article, IOUCentral competitor CommunityLend indicated that they were focusing on making sure that regulators were satisfied before their launch.

    ” . . .CommunityLend executives hint they will have an edge because of the time devoted to satisfying a host of regulators across Canada.

    Marleau of IOU Central, however, is under the impression “there is no watchdog watching this business.” . . ”

    This now puts IOUCentral back in the race with CommunityLend and PeerMint among others to become Canada’s first peer-to-peer lending operation.

    We have asked IOUCentral for comment and will update this post with anything they have to say.

  • As The Web Turns – The tales of Capazoo

    250px-flag_of_montrealsvg.pngMontreal seems to be the hotbed for controversy in the Web 2.0 world in Canada. Where else could you find someone who will sell you the Brooklyn Bridge and someone else who will supposedly pay you for joining their social networking site? It is the latter, the multi level marketing site called Capazoo.com that is bringing us the latest dirty laundry.

    Capazoo is a social networking site, in this case it is a lot like MySpace, which charges anywhere from $25 to $35 a year for a membership. The big idea is that the more people I get to sign up, the more referral kickbacks I get. We’ve all seen this before in other disguises, in the case of Capazoo, they have attracted their share of B and C-list celebrities.

    I won’t even try to recount the whole story, but it seems to involve some brothers, at least one of which has been convicted of fraud before, a bunch of ex-NHL hockey players, some online porn kings and a bunch of investors who still don’t seem to know what is going on.

    capazoo.pngLa Presse, a French-Daily in Montreal has been digging in to the story (google translate) and it isn’t pretty. The two founders, who are also brothers, are now in court fighting over who has control of the company and they are also sorting out the small matter of who embezzled how much off the top from the investors money (one side is claiming it was a “10% commission on funds raised”).

    There was also the small matter that one of the two guys who were managing the company had decided that pornography should become a big part of the sites content (who knows — they may have made a fortune doing that), then add on the death threats that were going around and it seems you have something worth writing about.

    Heri has been covering this at Montreal Tech Watch and his last post on the subject stirred up quite a cat fight in the comments. You just can’t make this stuff up folks.

    I am not sure what to make of the whole thing. The worst part is that these guys have sucked a lot of investable money out of Montreal and have left a long trail of investors who probably now have a bad taste for web startups. I haven’t written much about Capazoo up until now because I always felt they were a very poor reflection of the entrepreneurs I know in Montreal. It remains one of the most exciting startup cities in Canada and judging by some of the great projects and startups I have been hearing about, it is going to stay that way for a long while.

  • IOU Central – Canada gets its first Peer to Peer Lending Company

    iou_logo.jpgIOU Central, a Montreal based startup, is launching today. They have staked their claim as Canada’s first Peer to Peer lending company. We covered the funding announcement of Toronto based CommunityLend back in December.

    Peer-To-Peer lending has been maturing quickly as a concept on the heels of successful sites like Zopa and Prosper, but Canada has so far had no such providers. Peer to Peer lending is a concept that takes a large group of lenders who are willing to lend out smaller amounts of cash and connects them with borrowers who need access to cash at a rate that is below the standard credit card rates, but they are generally willing to pay a higher rate than if they had to go to a bank. A lender can be anyone with a bit of extra cash that they would like to get decent returns on.

    iouscreen.pngFrom a borrower’s perspective, IOU Central operates much like any other lender, in that a borrower’s initial “rating” is based primarily on their credit score. You can however supplement that score by uploading a number of other documents to do things like prove your income, itemize your monthly expenditures and other things that can bump up your overall score.

    IOU Central groups borrowers into 5 tiers: A, B, C, R, and HR. Borrowers in each tier pay IOU Central a service fee on top of the loan of 1%, 1.5%, 2%, 2.5%, and 3% respectively. Service fees varies because IOU Central expects to have to spend more to recruit lenders interested in higher risk borrowers and expect to face higher operating costs servicing loans to higher risk borrowers.

    IOU Central charges Lenders a Lending Fee, which works out to about 0.5% annualized, calculated based on the amount of outstanding loans you have remaining each month.

    The company was conceived over a year ago and their site has been in development for just under a year. There are currently 7 full time employees and they have raised a round of funding which includes Angels and VCs, but they did not disclose the amount of funding.

    I asked Sam Bendavid, VP of Business Development for IOU Central, what sort of regulatory or legal issues they encountered running up to launch and he indicated that things were quite smooth. IOU Central is registered in Quebec as a lender and they worked closely with their law firm in developing their set of Legal Agreements.

    IOU Central will be focusing most of their initial marketing on potential lenders. This is a smart move as lenders will be far more scarce than borrowers. Perhaps the days of getting a loan from Uncle Vinnie are over, and Canada now has a safe, regulated, and legal place to secure peer to peer loans.

    Update: The Star provided some further coverage a few days later.

  • BlitzWeekend – ad-hoc startup launchpad

    blitz1.pngWhen Heri first announced BlitzWeekend, I thought it was a slightly better take on the various StartupWeekends which had been painfully going on. That would have been the easy thing to do, but Heri and the guys have taken it a few steps further. Blitzweekend will take place on March 1st and 2nd 2008.

    The result is less of a throwaway StartupWeekend and more like a miniature version of Y-Combinator or TechStars. Instead of building one big project, and then leaving the day-to-day operations up to a few unwitting volunteers, BlitzWeekend is a chance to kickstart your own startup that you will be moving ahead with.

    Because of that, BlitzWeekend will have a much more well rounded crowd than the normal hack-fests that we are used to. The sponsors, who include BDO Dunwoody, Embrase, Globalex and iNovia Capital, will all be at BlitzWeekend to provide early support and guidance to the startups.

    To accompany the weekend, BlitzMaker has also been released. It is a tool to help teams form, share their ideas and to organize before BlitzWeekend.

    BlitzWeekend is also reaching out to teams from beyond just Montreal. I would love to see a team from Toronto or Waterloo make the trip over to Montreal. The crew in Montreal has offered to help with expenses by organizing some couches and possibly contributing to travel costs.

    Heri described the event like this

    – we have partners and sponsors like iNovia Capital (VC fund specializing in early stage funding), BDO, Globalex, Embrase. Actually, it will be an opportunity for any new entrepreneur because the most promising projects will have access to advice from business consultants and key networks. You can view it as a launchpad for startups, à la TechStars

    – we will have experts for the event, in the case a team get “stuck” in major problems. each team is going to have “joker cards”, allowing them to call an expert in one specifi domain (technology, design, business plan, marketing etc.)

    – we will have a “make” track for developers or designers who just want to create a cool technology and are not sure yet about how to do a business plan. However, we will have a “startup” track, and we will have a panel of “judges” who will be giving them valuable feeedback about their product and business plan.

  • StandoutJobs raises $2m from iNovia Capital

    The news is finally public that StandoutJobs, a Montreal, Quebec company who we mentioned in our earlier post about DEMO08, has raised $2million from iNovia Capital.

    standout.pngWith this announcement and their launch at DEMO, StandoutJobs is taking back the veil on their business model. When we first saw them almost a year ago, StandoutJobs looked like a recruiting company that did videos, and we didn’t find it very compelling. I got to hear more a few months ago however over supper with Ben Yoskovitz, and it started to make a lot more sense. StandoutJobs will be providing a SaaS solution to companies that essentially lets them build a complete hiring page that is much more rich and user-focused than the normal “email [email protected]”. The pages are fully customizable and seem to be focused on helping the company display much more current and directly useful information to the potential hires. For a more detailed overview, check out this post on Mashable.

    inovia.pngiNovia Capital bills itself as a “seed and early-stage venture capital fund” with offices in Alberta (Edmonton and Calgary) as well as Montreal. They seem to be increasingly active with their investments and I am impressed that they took the entire $2million round to themselves, which likely speaks to the solid team that StandoutJobs has in place as well as iNovia’s willingness to get out there and shoulder some risk.

    In case you think you are being hit with a case of Deja Vu, you are right: StandoutJobs did previously announce that they had raised funding from Garage Ventures Canada, but this seems to have fallen apart. On the StandoutJobs blog:

    “As well, it?s time to announce a bit of news with respect to our financing. Although we announced some time ago that we raised money with Garage Technology Ventures Canada, that did not in fact come to pass. As we got deeper into the process with Garage, it was clear that it was not the best fit for us. We wish Garage the best of luck.”

    It seems that whatever came to pass with Garage did not take away from the credibility of StandoutJobs or the team there, as iNovia seems to have quickly seen the opportunity.

    Congratulations to everyone at iNovia and StandoutJobs.

  • See you tomorrow night – StartupCamp Montreal

    Wow, we are just coming off a great night last night at Founders and Funders and tomorrow we are hopping on the train and making our way to Montreal for StartupCamp Montreal.

    The final lineup for the pitches are

    1. Cozimo
    2. Tungle
    3. Streametrics
    4. iGotcha Media
    5. YourTeleDoctor

    I am still trying to get over how much interest there has been in Montreal for StartupCamp. Kudos to Philippe for putting things together so quickly and so well. I will cover the night live on the StartupNorth Twitter page. Tune in!

    Now, lets see how well the iPartee widget works:

  • Founders and Funders is a sellout, then on to Montreal

    fftag.gifFounders and Funders Toronto is just about sold out and we have a waiting list of 60+ people. It is shaping up to be a great evening. I can’t believe it came together so quickly. It was just a few weeks ago that David and I were talking about it. I also want to thank David for his hard work on this, we have both been pretty busy with other things and David has definitely been the leader on getting F&F together.

    People are coming in from all over the country for the dinner it seems, and there is a great core of Toronto funders and entrepreneurs who will be there. Keep an eye on the Founders and Funders website for more announcements. Also, a big thank you to our sponsors: Microsoft Mix and JLA Ventures.

    Then, we hop in the car, plane or train and head to Montreal:

    StartupCamp Montreal – January 23rd

    startupcamp-montreal-logo.gif


    StartupCampMontréal is scheduled next Wednesday 23rd at la SAT, from 6pm to 10pm. This is really coming together. I can’t get over how many great startups have applied to present. Montreal is absolutely buzzing these days. The event is totally sold out except for a few service provider tickets.

    I am looking forward to meeting as many people as possible while I am in town.

    5 startups were selected from the votes of 27 gurus:

    • Tungle: Easy appointment scheduling for groups
    • Cozimo: Real Time collaboration for designers
    • Streametrics: Provides metrics on the use of video on the web for publishers
    • yourteledoctor: Virtual visits with a doctor via the internet.

  • How to botch a launch: Razzle.ca

    We were excited to cover the launch of Razzle.ca here last week. Things were looking up: Razzle.ca was cloning Woot.com, an American 1-deal per-day site which has been very successful, and while there were a few technical glitches that needed to be worked out, Razzle seemed to have the business problems all worked out. Negotiating 365 deals in the space of a year can’t be easy.

    rs110_a_pro1.jpgIt turns out it’s not easy. The first deal to hit the front page of Razzle was for a pair of brand new Sennheiser RS110 headphones for around 50$. By all means, a great deal even with shipping costs factored in.

    The surprise was not just the great price however, as soon as the Sennheisers started arriving at the doorsteps of anxious purchasers, there was a new surprise: The headphones appeared to have been used, some even had hair still clinging to them and some were heavily scratched and had boxes which were ragged and torn.

    Razzle.ca has tried to respond to some degree, posting this notice on their site:

    Coming after several emails asking about the condition of certain Sennheiser RS116s we went and investigated more thoroughly. It looks like CERTAIN products included in our batch of Sennheisers were actually refurbished that we sold as new. We immediately contacted our supplier to ensure that if anything like this happens again there will be immediate repercussions.

    The biggest problem for Razzle isn’t that they sent out some bad headphones, it is that they have now alienated their core audience: early adopters. It is not easy to find the type of purchaser who jumps in with reckless abandon and starts giving their credit card number to a ragtag internet startup. Dozens and dozens of people did, most notable is the RedFlagDeals.com community who could have been a huge Razzle sales channel for years to come.

    To add fuel to the fire, it appears that someone from Razzle has been signing up for multiple accounts on RedFlagDeals and has been contacting members, one moderator on the forum noted that a pro-razzle post made by a brand-new user had the same IP-address (a sort of fingerprint for the internet) as another user who had previously identified himself as a Razzle employee.

    Strong buyer communities are critical for sites like Razzle.ca and Woot.com. Having customers encouraging each-other, providing reviews and ratings, and just generally promoting your site is the only affordable way to generate growth. Instead, Razzle now has product pages that look like this.

    So, here is your chance to learn from a botched launch, and here are a few quick tips avoiding a screw up like this one, which could very well be fatal. These apply to new web apps as much as they do to gadgets.

    • Seed your launch with great products, case studies and/or testimonials. Razzle would have been smart to offer a deal that was actually a great deal. Even if they did so at a loss, the goodwill they could have built would have been critical.
    • If you are working with a new supplier, test the product yourself. Don’t work with fly-by-night importers and refurbishers.
    • If problems do arise, respond passionately. Refund everyone completely, including shipping costs. Step up and take the punches.
    • Do not try to infiltrate established communities. Forums like the one at RedFlagDeals are very cohesive and it is easy for member there to spot fakes in their midst. You have to earn your way into these communities, which Razzle would have been better advised to do by offering great deals.

    Is Razzle dead? No way. If they are serious, there is still an opportunity to make this right. They should contact all of their affected customers to make sure they are happy with their purchase (pick up the phone guys) and for anyone not happy, they should send a replacement or pay for return shipping and offer a complete refund.

    The opportunity is to then return with good, honest, deals on a regular basis and to keep growing the community. If Razzle leaves even a single disgruntled customer out there however, they are dead in the water. The comments are open, did you buy from Razzle? What was your experience? Do you think they can ever recover?

    And good luck to Razzle, you are going to need it.

  • Razzle Clones Woot

    Update: Caveat Emptor
    Razzle made a serious misstep selling refurbished headphones as new. The first batch of customers felt burned and started discussing their experiences on Red Flag Deals. Razzle made another poor choice by posting a fake testimonial on Red Flag Deals (under the name lohervine); a site administrator outed them by comparing IP addresses. Razzle is offering refunds, but has not yet committed to covering shipping.

    Woot sells refurbished items all the time, but they clearly state the item’s condition. While I doubt Razzle was set up to scam users, they really fumbled the ball losing the trust of their very first customers.

    On the lighter side and as predicted, a customer ended up at Razzle.com by mistake.

    Original Post
    Razzle LogoRazzle.ca, Canada’s first deal a day site, launched today. The first deal: wireless headphones for $51.90. Too rich for your blood? Well join the site anyways, because they plan to giveaway a few items every so often.

    The Montreal based site was founded by Ryan Closs, 26, who faithfully cloned Woot. Emulating a successful concept is a legitimate business strategy, so I am not going to criticize Ryan for that.

    Think Bill Gates came up with the Windows GUI? Heck even Wal-Mart’s Greeter was an idea Sam Walton copied from K-Mart. And let’s not forget to mention the multi-million dollar exits Facebook clones are making (Germany, China). That said, I would have probably paraphrased Woot’s FAQ a little less closely.

    Today’s launch had some to be expected hiccups. Fortunately, the admins were on the ball and put out the small fires in the comments. A longer term issue might be the Razzle.ca domain name. It is pretty catchy, but direct navigation traffic will occasionally end up at Razzle.com by mistake. Those users are in for a surprise… not safe for work! There is a lesson here for other entrepreneurs, pay attention to abutting domain names!

    Congrats on the launch!

    Contact: Ryan Closs