StartupNorth

Category: Venture Capital

  • iLoveRewards closes $4.7million Series A

    Here is a company worth talking about.

    iLoveRewards took a big problem and found a quirky and economical solution to it. This is the kind of company had me gushing 10 seconds in to the pitch. I’m sure that John Albright and company saw it from a mile away.

    ILoveRewards is sort of like one of those midway games that pumps out tickets every time you get the ball in the middle hole.

    In the case of iLoveRewards, employees of a company can earn points for things like good attendance, hitting sales targets or customer satisfaction. As these points build up, the employee can redeem them through iLoveRewards.

    Todays announcement is that JLA is contributing an additional $1.5 million to the round which will be used to create a US-focused brand for the service as well as to finance more sales and marketing initiatives.

    iLoveRewards competes with more established companies such as another favorite of mine, SuccessFactors, and I have no doubt that the competition will be moving to copy some of the novel things that iLoveRewards has been doing.

  • How Startups will save Venture Capital in Canada

    Last night I pitched the audience for the second time on How Startups Will Save Venture Capital in Canada. I first gave this talk in Moncton at Third Tuesday NB and the response was great.

    The title is “Why Startups Will Save Canadian Venture Capital”, and it doesn’t let anyone off the hook. It isn’t a criticism, but instead it is an analysis and a call to action for both Angels, VCs and Entrepreneurs. Things are pretty busted up right now and it is time to start talking about what we need to do to make a difference.

    My thesis is simple: Startups just aren’t getting started in Canada nearly as often as they should. This isn’t about education levels, creativity or even for a lack of cash floating around this country. This is about ambition.

    This is about hustle.

    Most entrepreneurs have heard that things aren’t great for VCs right now. LPs are shaky, some funds are crashing, others are just throwing their hands up, and for a lot of startups it seems like no matter how many people you pitch, you aren’t getting anywhere. I tried to put some hard number behind that, and they paint a scary picture.

    This goes two ways, and nobody wants to sit around while we all whine and moan that nobody can get funded. It’s time to build companies that are worth something.

    We need to focus on building our local startup communities more than ever. Local communities are important because they are far easier for local Angels and Entrepreneurs to connect to, and they also act as a great filter to help find people who need national and international exposure.

    Smart funders are going to see these communities as huge opportunities. There ROI for VCs getting connected to the startup community is not only obvious, but well documented. In the US we see VCs hustling in a way that you just don’t see much of here in Canada. Every time I hear a VC rant on about how Canadian entrepreneurs aren’t aggressive enough, it drives me nuts, because they are no different.

    It is great to see Third Tuesday’s taking off on the east coast, and events like DemoCampEdmonton really starting to get going (there are 90 signups for their next one!), but we also need to focus on making sure that there are Startup-focused events where people need to answer to questions about their market, operations and sales.

    If we can get early stage companies off the ground, then the outlook for VC in Canada starts to look a lot different. Canadian funds will have to compete against American money, but they will start to get to see great ideas and entrepreneurs at the early stage. There are a few missing pieces to this plan, but the point is that it is time for us all to stop fretting and just get on with it.

    If we can build amazing startups, the money will find its way.

    This is my manifesto for saving Venture Capital. It isn’t sexy, but it just might work.

    *because someone inevitably does not “get it” — the comic strip at the top is a JOKE meant to characture what some would say is the VC impression of entrepreneurs, and the entrepreneurs impression of VCs.

  • praized.com – Local, niche, reviews and communities

    Lets say that you run a highly successful online community of blond vegans who have a penchant for Prosciutto. You would like to manage local reviews for that community, but you do not have the technical ability or the data you need to get it kick started.

    Montreal based Praized is an innovative solution in the heavily contested local listings and review space. Praized is designed a white-label platform that integrates seamlessly with editorial content by using either an API or plug-ins that are compatible with SixApart?s MovableType and WordPress. Bloggers and site editors can embed snippets of merchant information within posts or news articles to drive traffic to their Praized-powered local section. Praized also designed its platform to be available to Facebook application developers and others through an API.

    Praized communities enable users to search, discover and discuss places with like-minded people. Users benefit from discovering the ?long tail? of places via discussions on lesser known local merchants that struggle to be found through Web search. End-users also get real value from social tools that allow them to tag, comment, bookmark, share and vote on places that matter to them.

    Praized is bringing a really novel and sensible approach to local listings. Realizing that you can bridge the gap between the hype-local and centralized business models can bring opportunities in a lot of markets, and that is what Praized is doing here.

    The first Praized-Powered community is now active at Mocolocal and they also recently announced distribution agreements with Yellowbook in the US and Yellow Pages Group Co. in Canada.

    Other Canadian local-search and review companies include iBegin, who have moved in to the data wholesale business, and ZipLocal (TSX:ZIP) who recently launched ZipDating. Praized does go beyond just reviews and listings, they also have a recommendation system that allows users to suggest places and things to friends in their social network, including Facebook.

  • VenturesWest shuttering offices, several people gone

    After a day of posting great news from three startups, I hate to end things on a sad note.

    The Canadian VC community is getting hit hard again, this time it looks like VenturesWest is on its heels. The Ottawa office has been shuttered several key folks have left.

    Departures appear to include Chris Laird, David Mcintyre, Maha Katabi as well as Robin Axon, who has been a supporter of the startup community here in Toronto.

    There is no official word yet as to what is going on and whether this is a reshuffling or whether the fund is being wound down. There have been persistent rumors lately indicating the latter. We will try to get some word tomorrow when someone is picking up the phone.

    The Canadian VC industry in general seems to be paying the price for poor returns in the last few years with more and more of the talk on the street focusing on funds being unable to raise new rounds from LPs and the mood was decidedly bleak at the recent CVCA National Convention. Is this the beginning of a trend, or just a bad blip in the Canadian VC story?

  • Y Combinator Accepting Winter 2009 Applications

    Y Combinator is now accepting applications for the winter 2009 funding cycle happening in Mountain View, CA. It’s possible for Canadians to get accepted to the Y Combinator program. All of Canada is following the exploits of Michael Parkatti and Mike Marrone during the summer cycle in Boston. We’ve covered the story, with Austin Hill interviewing both Michael and Mike. It’s important for Canadian entrepreneurs to apply. The Y Combinator program is about the experience and connections that you can build during the three month program.

    The Winter 2009 Y Combinator is offering $5000 + $5000n where n = the number of founders in exchange for between 2-10% of the company. Assuming 2 founders and Y Combinator owning 6% of company, this works out to a pre-money valuation of $250,000 and a post-money valuation of $265,000. It’s a great way to seed a company.

    Jevon talks about startups being about execution, the Y Combinator program is all about execution.

    7. Once your company exists, we’ll write a check to it for the rest of the money. You can spend the money however you want.

    8. Y Combinator is not an incubator. We have space you can use if you need to, but we expect you to work out of wherever you find to live. It is no coincidence that so many successful startups have started this way; it’s the ideal setup for the initial phase.

    9. Throughout the 3 months we have regular office hours for startups who want to talk about what they’re building, or get advice in dealing with investors. We also have occasional open houses at YC on Thursday afternoons.

    10. From January through March we’ll have dinners every Tuesday for all the founders. At each dinner we’ll invite an expert in some aspect of startups to speak.

    It is a program that is designed to help you take an idea, and learn to execute with very little capital resources. The benefits of mentorship, guidance and a growing network of alumni and entrepreneurs in Silicon Valley and around the world. You get enough cash to pay for your living expenses for 3-4 months. You get a cohort of entrepreneurs you can have a shared experience with. You have scheduled diners with the Y Combinator team and an expert about some aspect of startups. You get 2 investor days where follow on investors are brought in and use the Y Combinator to do deal flow. It’s a great opportunity.

    The original motivation for Y Combinator was benevolent, but this is not a charity. If our investments pay off, we can invest in more startups, and if they don’t, we can’t keep doing this indefinitely. So we’re looking for startups we think will succeed.

    If you’re a small team of Canadian entrepreneurs looking for a chance. You should fill out an application the deadline to apply is October 17, 2007.

  • $205M Ontario Venture Capital Fund

    Funding for emerging Ontario companies dropped from $1.5 billion in 2000 to $236 million in 2007. The number of Series A rounds has reached a 12 year low. Clearly there is a problem, one with long term implications. And so the Ontario Government has stepped up to the plate, investing $90M into a fund of funds in partnership with OMERS Capital Partners, RBC Capital Partners, Manulife Financial, Business Development Bank of Canada, and TD Bank Financial Group for a total commitment of $205M.

    This fund of funds will be managed by TD Capital Private Equity Investors who will in turn spread the $205M across Ontario venture capital and private equity groups who will be responsible for making direct investments.

    A minimum of 80% of the funds will be invested into Ontario companies. 75% of funds will be allocated to venture funds who invest in emerging companies, the remainder being set aside for private equity funds who invest in mid-market companies. It is anticipated that the fund will be invested over four years starting this year. All this translates to approximately $123M to be invested in emerging Ontario startups.

    “The decline in Ontario venture capital has coincided with greatly lowered investment by institutions such as pension funds and insurance companies. In 2000, institutional investors represented 21 per cent of venture financings. This has dropped to one per cent or less in the period from 2005 to 2007.”

    It is rumored that the capital co-invested by the other limited partners is secured by the Government of Ontario’s $90M. If this is true, what the Ontario Venture Capital Fund is really addressing is the unwillingness of Canadian institutional investors to continue supporting Ontario’s venture capital funds. It seems dismal returns have soured LPs on the asset class or perhaps the venture funds they had previously invested in.

    In the last three months two funds have closed rounds almost as large or larger than the OVCF. In March iNovia closed on a $107M fund and in May JLA closed on a $150M fund. Unfortunately, the $123M is likely to be spread across the same old funds. No one ever got fired for making the safe bet. The question is, what does an additional $20M in five preexisting funds do for Ontario? I would hazard to guess that the best possible result of the OVCF would be the creation of 1-2 new venture capital funds based in Ontario.

    Ever the optimist, I suggest we focus on the bright side, three good things might come of the OVCF:

    1. Institutional investors rediscover Ontario’s venture funds and pleased with returns from the OVCF decide to increase the amount of capital they commit for investment in early stage growth companies.

    2. $123M is invested over the next four years across 15-30 Ontario startups. Some of who might not have been able to raise money otherwise. More money = More startups.

    3. A new crop of venture investors emerge, with greater skill, luck, or just plain old good timing and reinvigorate the ecosystem, going on to raise new funds to provide all the growth capital Ontario startups need.

    Ultimately the onus is on Ontario’s entrepreneurs to build companies that can scale. Money is everywhere. 59 per cent of foreign venture capital invested in Canada is invested in Ontario. Ontario’s venture funds are only as good as the companies they invest in. So get back to work! There is $123M more now available to fund your startup.

  • Pride and Prejudice – Why startups need community

    I was feeling extraordinarily proud of Idée last night when I saw that they received glowing coverage on TechCrunch. It is well deserved, and it seems like they are just getting started in terms of press coverage. They recently had a huge profile in the Financial Post, written by David George-Cosh (who has been getting more and more connected with the Toronto community as of late). We have been tracking Idée for a while now.

    Then as I kept flipping through my news feeds, I came across an embarrassing update about MediaScrape, which Heri and Mathew Ingram both covered well. When we first posted about MediaScrape, Tyler Cavell, the founder, responded in a much more succinct way than he did to TechCrunch’s latest post. Heri had even convinced me to lay off and see how things work out.

    I almost feel like I am doing Idée a disservice by mentioning them in the same post as MediaScrape. Where Idée has focused on perfecting their technology and winning customers, MediaScrape seems to be prone to distraction and tends to make simple matters much more confusing and difficult than necessary.

    Heri made the point in his post yesterday that when entrepreneurs are disconnected from their local community, they seem to be more likely to go off the rails. I think Heri is on to something that investors need to take in to consideration when investing.

    Again, Leila and the crew at Idée are a great contrast and example of how to do things right. While Idée is possibly the busiest startup in Canada, and one that is spending its own money (ie: they have no time to waste), they still manage to be tightly connected to the community here in Toronto. Leila is constantly organizing, co-organizing or speaking at events, and when she isn’t doing that, she spends a lot of time each week mentoring other startups.

    Capazoo and MediaScrape, according to Heri, have never made it out to a single Montreal event and have generally kept a distance from their local startup community.

    Perhaps one of the measures that investors, both Angels and VCs, take in to account when deciding whether they want to put money in to a startup or an entrepreneur should be whether or not that person has been able to take the time to connect with a community of startups. That way you know they have a social and professional circle that will keep them accountable, demand progress and that will criticize their execution, rather than patting them on the back and telling them they are going to be rich.

    If your friends tell you that you will be rich and famous, then you have the wrong friends.

  • CVCA – "The Face of Change" – Montreal

    I am heading to Montreal next week for the Canadian Venture Capital Association’s annual conference. The theme this year is “The Face of Change”, and the idea is to look at what causes change in the VC and Private Equity worlds.

    I am excited to be going for a few reasons. The biggest one is the fact that I have been making a lot of noise recently saying that Canadian VCs need to spend more time connecting to the startup community, and Suzie Dingwell Williams recently said the same thing, so turning down an invitation to the only national VC conference in Canada would have been a little backwards.

    The other reason I want to go is to spread the word about some of the great startups that are popping up these days. We have been lagging behind on writing profiles (I know I know I know), but we are always telling people about some of the cooler ones we are seeing.

    I promise to make a few posts during and after the conference with some notes on what goes on when VCs get together. (besides Scotch tastings that is!)

    Will any of you be there, or in Montreal during those days/nights? (May 28th-30th). I would love to meet up.

  • TSX Venture Exchange Entrepreneurial Bootcamp

     tsx-bootcampModerated by Sean Wise, Wise Mentor Capital

    Decide if Public Venture Capital (PVC) is right for you. TSX Venture Exchange’s Entrepreneurial Bootcamp is tailored for CEOs and CFOs of aggressive growth companies considering raising capital from the PVC marketplace over the next few years. This workshop will explore the use of PVC as a growth tool for emerging companies.

    Topics include:

    • How to decide if going public is right for your company
    • The Capital Pool Company® (CPC) Program
    • Picking the best and most cost-effective advisors
    • How to pitch for public capital
    • Why PVC may work when private VCs are not interested or an attractive option

    Register, Cost: $65.00

    What: TSX Venture Exchange Entrepreneurial Bootcamp
    Cost: $65.00 Moderated by Sean Wise, Wise Mentor Capital For more information please contact: Debbie Bamforth, TSX Venture Exchange, at (416) 947-4411 or [email protected]
    When: Wednesday, May 28, 2008 1:00 PM to 5:30 PM
    Where: MaRS Centre

    101 College Street, Auditorium B
    Toronto, ON   Canada

  • CIX – Our chance to create something great?

    I think a lot of people considered CIX, held in Toronto last week, to be a simple extension of the defunct Canadian Venture Forum. The Canadian Venture Forum, which was dealt a fatal blow last year with the death of the Toronto Venture Group, did look very similar in a lot of ways. A slew of companies were all hawking their wares and pitching for financing from Canada’s Venture Capitalists, and while there were at least 20 startups there vying for attention, actual VCs seemed to be hard to come by regularly.

    The CIX is not perfect. The concept of pitching a room full of VCs for money has some serious flaws, not the least of which is the fact that the majority of the VCs who attended CIX in the morning did not stick around to see the pitches in the afternoon. Add on top of that the likelihood of this conference giving birth to a successful deal directly from the pitches, and you are in for a lot of disappointed attendees.

    It is my hope that CIX will look a lot different next year. Normally that would be too much to ask, but in the last few months I have gotten to know Robert Montgomery, the invisible hand behind the CIX conference, and he gives me hope.

    In order to remain relevant, the CIX organizers need to now connect with the community and find out what was relevant, and what wasn’t. The two communities that the CIX touches, Startup Entreprenurs and Angels/VCs, will have different needs, and the trick will be to address both.

    I do not believe that what the two groups need is either pitch sessions with 10 back-to-back pitches, nor does either community want a series of panels that offer little real value. What we need are connections, rapidfire demos and a venue for the best and most aggressive Startups AND VCs to stand out.

    The way I see it, Robert and his staff have a lot of work ahead of them, but they aren’t the only ones. If Robert will step up and listen, we have to be ready to pitch in and do our part.

    In the next few days I will post a few of my experiences at CIX. Some were very positive and some were a lot less encouraging.

    What would you change? Is this a hopeless beauty contest? Should we boycott CIX next year, or should we embrace it?