StartupNorth

  • Apply for Strata Launch Pad

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    It’s no secret that Big Data is hot. At O’Reilly’s upcoming Strata conference in New York, a panel of VC judges will be choosing the top firms with a Big Data story, who will present on stage during the Strata Summit on September 22.

    I’m one of the organizers of Strata, and it’s a fascinating sector of the industry. New ventures live or dies by their ability to analyze data. Big companies can revitalize ailing product lines with data-driven sales. And elastic computing atop public clouds make new kinds of services possible.

    If you’re a startup with a story to tell around data, or an established business that’s disrupting its industry with a new approach, we’d love to hear from you. You can apply at http://strataconf.com/summit2011/public/cfp/176, but don’t delay! Applications close on Monday, August 22 at 11:59 PM.

    If you’re chosen, you’ll get access to the Strata Summit, gain exposure to hundreds of industry influencers, and get a chance to launch at the leading Big Data event.

  • Nina Sodhi returns and BluTrumpet launches

    One of the great things about the number of exits (be they big or small) since 2010, is that they are enabling a new class of veteran, serial entrepreneurs. The knowledge, the contacts, the street cred, the capital – the second time around can be easier than the first. And it should be good for investors, hopefully some of the returning class will go for building big companies with $100mm+ exits instead of “getting paid” with a $20-$30mm exit.

    Take for instance Blu Trumpet, who launched a few days back. Led by Nina Sodhi, former COO of Bumptop – who were acquired by Google in 2010, Blu Trumpet is the first company to launch out of IAC’s Hatch Labs mobile incubator.

    Hatch Labs, a joint venture with IAC and Xtreme Labs, today introduce Blu Trumpet, an app discovery wall that lets advertisers reach millions of devices with clean, user-friendly ads. Blu Trumpet uses sophisticated design to provide publishers a non-intrusive app discovery tool that users actually enjoy, an alternative to banners, and a more creative way to monetize any app.
    “At Hatch Labs, we know the mobile space and we really saw a need for a new type of mobile ad platform that caters to the new app economy,” said Nina Sodhi, CEO at Blu Trumpet. “That’s why we aren’t focusing on display or pop ups. Blu Trumpet gets integrated into an app’s tab bar, allowing users to find us when they are curious and interested. The consumer is happy — and the publishers and advertisers benefit from that.”

    Blu Trumpet offers consumers a new, non-intrusive way to find cool apps without searching through lists of a million apps through Blu Trumpet’s in-app ad platform, “the app wall.” While in a favorite app, consumers can view the Blu Trumpet app wall to discover new recommended apps based on those they’re currently using.

    “It’s like getting a tip from a friend,” said Karthik Ramakrishnan, Blu Trumpet Product Director. “Consumers avoid intrusive pop up and banner ads, and get to discover recommended apps they’d probably never find otherwise.”

    I think Nina Sodhi becoming a GM at IAC and CEO of BluTrumpet, along with her amazing bio (UW Elec Eng, Harvard MBA, VP at Merril Lynch, COO Bumptop, etc, etc), puts her up there in the elite rank of Canadian entrepreneurs. And hopefully her results at IAC and with BluTrumpet will push some of the other recent “exitees” to come back and fight the entrepreneurial good fight. For instance, Jeson Patel, Anish Acharya, Anand Agarawala – aren’t you guys all coming up to 1 or 2 years at Google.. isn’t that enough time to claim your prize and start something new??

  • Red flags

    Red Flag Warning - Some rights reserved by Bob AuBuchon CC-NC-BY-SA
    AttributionNoncommercialNo Derivative Works     Some rights reserved by Bob AuBuchon

    This is an unfortunate story that entrepreneurs should read and understand.

    We start companies for a number of different reasons. We want to change the world. We want to solve problems. We are unemployable. We are crazy. And we stay up at night worrying about taking care of our employees, our customers, our investors.

    So it is hard to understand how well regarded funds wind down companies without providing information to employees.

    Investor immorality: The strange case of Blue Noodle

    Start-ups fail all the time. But there is a right way and a wrong way to do it. This is an example of the wrong way.

    On Monday, most employees of social media startup Blue Noodle didn’t get paid. They called their lead venture capital firm, which wouldn’t discuss the situation with them. They called their former CEO, who refused to pick up the phone. They called their lender, who said to call the venture capital firm. And thus the circle began anew.

    “In my more than 20 years of working in Silicon Valley, I’ve been involved on more failed companies than I’d like to admit, but there is always an orderly win-down process,” says John Montgomery, chairman of law firm Montgomery & Hansen. “It sounds like the VCs in this case are treating the company like a car they abandon in a parking lot with the keys in the ignition.”

    Read on…

  • The Story of Quack.com and How It Changed the Canadian Startup Ecosystem

    A few weeks past I posted about the hockey stick growth of exit in Canadian startups. Well, let me give some interesting colour to some of the cause of that growth.

    Quack.com is a company that most of you probably know very little about, despite its relative fame in the hey-day of the dot com boom. Back in the day when I was a student at Waterloo, I remembered Quack.com coming on compass and having some great recruitment events at the local pub, The Bomber. That was the last I heard of them. Little did I know that Quack.com would eventually help permanently alter the Canadian eco-system.

    Quack.com was a Silicon Valley based company. They built a really cool IVR service, cutting edge stuff in 1998 when they were founded. Steven Woods was co-founder, CTO and Chief Product Officer at Quack.com. Dan Servos later joined quack as its SVP Alliances and Sales. In the year 2000, they sold to AOL for a hefty $200mm price tag. Big exit, even by that era’s standard.

    A few years later Steven Woods & Dan Servos were at it again. Classic serial entrepreneurs – Steven started another company, NeoEdge which Dan joined. Not quite as big a success as Quack.com, but not every venture leads to a $200mm sale of your company.

    Fast forward to 2008. Dragged from the startup world kicking and screaming, Google steals Steven Woods and hires him as site manager and engineering lead for Google Waterloo. You have to understand how big this is. Steven Woods is a 2x entrepreneur with a big, big exit under his belt, also serving as an advisor & investor to several startups. He is a big deal in Silicon Valley, let alone in Waterloo where he should be recognized as an entrepreneurial god. Only the duo at 295 Philip St hold more entrepreneurial street cred than him in Waterloo. Not only is his startup background a big deal, but he has a fricking phd in computer science. An immense example of reverse brain drain if I’ve seen one. Which is ironic, since Quack.com/Steven Woods was famously ripped as being a big cause of Canadian brain drain when they hired 50 Waterloo grads in 10 months before selling to AOL.

    Check out what started to happen shortly after he came to Google Waterloo:

    1. Google acquires Toronto-based company BumpTop for $30m.

    2. Steven Wood’s old colleague, Dan Servos, ends up as CEO of Social Deck.

    3. Shortly thereafter, Toronto-based Social Deck gets acquired by Google.

    4. Toronto-based Zetawire gets acquired by Google.

    5. Toronto-based Pushlife gets acquired by Google for $25mm.

    6. Waterloo-based Postrank gets acquired by Google.

    (and now Dan Servos lands as COO of Locationary. Hmmmmm…)

    Steven Woods & Dan Servos have been machines, invigorating the Canadian startup ecosystem with new possibilities. Via his role at Google, Steven Woods has provided a real source of opportunity for entrepreneurs in Canada to do something with their company other than “move to the Valley”. 6 exits probably at near $100m in total money in under 2 years. Dan Servos has provided huge leadership to Canadian startups like Social Deck, Locationary, etc. This should be massive motivation to entrepreneurs. If you have success, find ways to be like Steven Woods and Dan Servos and help the ecosystem continue to grow. Don’t be like this.

  • Aaarggh – VC Funds Are Drying Up?

    Yesterday and today I’ve been trying to make sense of two different data points that came out on the Canadian business scene.

    One data point confirms that we are having a banner year across Canada. Check out the numbers:

    * Q2 private equity deals worth C$5.7 bln in Q2
    * Total deal value more than in all of 2010
    * Deal volumes up 40 percent over Q2 2010

    (Side nostalgic note, I love that Berkshire bought Husky, it was actually my first co-op job and I have always had huge respect for Robert Schad – a giant amongst Canadian entrepreneurs)

    As you know from several of my posts on exits, this and this, the startup high tech scene are big contributors here.

    So, this means that we are returning capital on investments made into companies in Canada, right? Which means, since there is a healthy market for exits, folks should be willing to supply funds to VCs to start companies…. right?

    Well, according to CVCA, it looks like VC fundraising fell flat on its face.

    Smith said slow fundraising by venture capital funds was undermining deal-making, with new commitments sliding to C$132 million in the quarter, from C$308 million last year.

    “VC investment, which has historically been the catalyst for knowledge-based economic growth, cannot effectively do this job until we take determined steps to ensure more stability,” Smith said.

    Falling fundraising is part of a continuing trend.

    In 2010, new commitments fell 24 percent from the previous year to their lowest level in 16 years. They fell further in the first three months of 2011 against the first quarter last year.

    WTF!?!?! Did VCs forget to cut cheques to their LPs? Are the companies getting bought out not VC funded? Something feels out of whack here. Are there simply not enough fund-makers ala Radian6 to make a reliable return on investment? We are doing some digging to get to the bottom of this. It does resonate that entrepreneurs should focus less on VCs for funding and need to be looking towards angels & incu-ellerators for their early stage funding needs.

    UPDATE: This article from the Globe really outlines how VC funds have been in long decline.

    Year VC invested/Companies Financed
    1998 $1,511,000/807
    1999 $2,617,000/810
    2000 $5,876,000/1,007
    2001 $3,747,000/720
    2002 $2,583,000/663
    2003 $1,613,000/615
    2004 $1,677,000/545
    2005 $1,699,000/558
    2006 $1,701,000/406
    2007 $2,051,000/402
    2008 $1,406,000/388
    2009 $1,039,000/337
    2010 $1,129,000/357

    These numbers tell something interesting – apparently in Canada its gotten more expensive to start companies??? In 1998 $1.5mm resulted in 807 companies getting financed, while in 2008 $1.4mm results in 388 companies getting invested. What gives?

  • Show me the money

    Canada $5 Bill and Snow - Some rights reserved by Bruce McKay~YSP CC-BY-NC-ND
    AttributionNoncommercialNo Derivative Works Some rights reserved by Bruce McKay~YSP

    I love when entrepreneurs tell me that raising capital in Canada is hard (it is). I love it even more when they tell me that they think “they should move to Silicon Valley” because raising money will be easier (it isn’t). It helps me determine which entrepreneurs are too egotistical, too delusional, too uninformed to really be effective raising money.

    There is a venture capital scene in Canada. It’s different than the scene in Silicon Valley or New York City. But there are people making investments in entrepreneurs. According to the CVCA in 2010, there was $484MM invested in IT in Canada (2010 Q4 VC Data Deck from CVCA [PDF]) with $271MM going to software & internet companies. There are issues like US Funds making larger investments than Canadian funds (looks like $2.5MM vs $1.1MM average deal size) or that US companies raise more ($8.2MM vs $3.6MM). But these are just the nature of the game. There are structural issues. It could be better. But to say it is nonexistent, that’s just wrong or lazy. And both are bad qualities in early stage entrepreneurs.

    I was asked by an entrepreneur about who where the funders in Canada. Here is my short list of companies that are writing cheques or are in the process of doing diligence on companies, i.e., prepared to write a cheque. There are a lot of companies like OMERS that are stage agnostic, but I’ve put them in the growth side given their deal history (in the case of OMERS it’s $1.5MM in WaveAccounting).

    So if you think it’s easier raising money in NYC, Boston or California. My advice is get your ass on a plane and try. Because it isn’t as easy as you might think.

    But don’t say that there is no Canadian VCs or venture capital money. Because that just makes you look like a moron.

    Suck it up, it’s hard raising money. Maybe you should talk to the Canadian investors and figure out why they don’t want to write you a cheque!

    Seed ($25k – $500k)

    Growth ($500k – $5MM)

    Expansion

    Who else is actively placing money with Canadian startups? No grant money, we’ll do that in a separate post, but who else is actively doing convertible debt or equity placements? How to define active? Either >3 deals in diligence or has deployed more than $50,000 ($25,000/placement * 2 placements). That seems fair.

    Who did I miss?

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    Attribution Some rights reserved by tao_zhyn

  • More GrowConf tickets via ShinyAds & Nokia

    Grow Conference - August 17-19, 2011 - Vancouver, BC

    Need a ticket for the Grow Conference?

    The generous sponsors of the Grow Conference are continuing to offer a few free tickets to some starving startups over the next week. We call this Conference Ticket – Ramen Class.

    Today’s tickets comes from ShinyAds.com and Nokia. These are two very different companies. One is the largest mobile phone manufacturer in the world, the other is a small startup trying to get companies on to their ad serving platform. They see the benefits for startups to attend Grow.

    To win these passes tweet the following today:

    RT to enter! “Hey @nokia – Please send me to the @growconf #growconf in Vancouver http://www.startupnorth.ca/ .

    Tuesday August 9th, Grow Conference organizers will pick the winners who will get a pass for Days 2 and 3 at the 2011 Grow Conference. *Note that travel and accommodations are not included, pay for your own flights and hotels and drinks you cheap and resourceful founders.

    The Grow Conference is a unique three-day conference that brings together the top minds in business, entrepreneurship, technology, and capital to inspire and engage the next generation of disruptive entrepreneurs. It doesn’t matter if your business is on or offline, the next-gen entrepreneur knows where their customers are and how to engage them. Today’s entrepreneurs are creating new opportunities, disrupting age-old markets, leveraging technology on their path to being tomorrow’s leaders. The Grow Conference is bringing the best minds of Silicon Valley and Canada together to share lessons learned and inspire action. Be part of this entrepreneurial revolution as we work together to drive innovation for the future. GROW is more than a conference, it’s a movement.

    Follow #growconf on Twitter @growconf

  • On becoming Silicon Valley North…

    Photo by Loozerboy - Some rights reserved CC-BY-SA
    AttributionShare Alike Some rights reserved by Loozrboy

    I am a bit of a shrinking violet. And I hate expressing my opinion about things. Like most Canadians I’d rather apologies for things and be polite. But I hate when I get asked by journalists, policy makers and others about how do we make Toronto (or Waterloo, or Ottawa, or where ever), the next Silicon Valley. This is just such an asinine view of how macroeconomics works and the historical development of the ecosystem in Silicon Valley.

    We should not try to be the next Silicon Valley or New York City or Shenzen or anything. We are Toronto. We are Montreal. We are Vancouver. We are Waterloo. We are something different. We should reject the label because it makes us look like fools. But we should learn from Silicon Valley as entrepreneurs and policy makers to create an environment that helps stimulate a similar environment.

    This is an old conversation. Joey and I have talked about it in the past:

    Debunking the Myth of “The Next Silicon Valley”

    Let’s start by removing the first myth that Toronto, and you can substitute in anywhere, can be the next Silicon Valley. Toronto does not exist in a valley. Sure there are valleys, like the Don River Valley in Toronto but the concentration of technology startups in this location is fairly low due in part to the conservation and provincial protections.

    Silicon Valley was quoted in 1971 to describe the number of emerging semiconductor companies and the surrounding computing companies that were concentrated in the Santa Clara Valley between San Francisco and San Jose, California. As far as I’m aware there are a few companies in the GTA working in silicon like AMD. Ottawa might have been able to make a claim in the 1990s for the Silicon Valley North with companies like Nortel Networks, JDS Uniphase, Tundra Semiconductor, Newbridge Networks and others. But for Toronto, just not going to happen. Waterloo might also have a claim with Pixstream, Rapid Mind, MKS, Arise Technologies, Research in Motion, and others working in semiconductors, wireless, hardware and software.

    Silicon Valley might at best be a concept for the concentration of new economic wealth creation. It is hard to argue about the amount of wealth created in the Silicon Valley region. It has been called “The Greatest Creation of Wealth in the History of the Planet”. The number of companies and the rise of modern venture capital has created a circuitous loop, a self-fulfilling prophecy, of companies and entrepreneurs that can generate more wealth. It has created the Traitorous Eight, the PayPal Mafia, Xooglers, the Facebook Mafia, the Netscape mafia that created Opsware & Andressen/Horowitz, etc. There are lots of reasons that regions should want to emulate the economic development that is present in Silicon Valley.

    But the desire to emulate a region, does not mean that we should expropriate a label like “Silicon Valley” when in fact it has very little to do with the people, the environment, the economy that we are trying to build. I’m sure if we personified “Silicon Valley” it would be flattered, but we should be trying to be something different. We are something else.

    Zombie Economies

    No City has a Lock on Innovation by Fred Wilson (@fredwilson) refers to a great article by Chris Dixon (@cdixon):

    “The entire world is now a rival to Silicon Valley. No country, state, region, nor city has a lock on innovation in technology anymore.

    The Internet has made this so, and there’s no going back. We will see Apples and Facebooks get built in China, India, Brazil, Eastern Europe, Western Europe, the Middle East, Africa, and plenty of other places.”

    We are competing globally. Don’t believe me, look at the firefight that our most recent billion dollar Canadian technology company is in for customers, brand, and it’s own survival. We need to build global companies. There are a great number of advantages to living in Canada, but we seem to be lead to by organizations that are interested in fighting for government dollars to build innovation clusters rather than creating new entrepreneurs and new wealth. Instead we’re happy to build a zombie-economy of companies around programs like SR&ED that are often used and abused by consultants and companies to sustain companies when there are no markets, no profits, no brains, no future. All things considered, free money is free money and as an entrepreneur in Canada I would/do apply for SR&ED credits and encourage others not to leave this on the table. But from a policy perspective, it drives me crazy! I hear about academics that run mediocre companies with <$2MM in revenue but sustain because of SR&ED. They’d rather raise 50 cents of government tax credits than “pivot” and get to “product-market fit” because that would require getting customers and actually understanding that we’re in this to build successful, sustainable companies.

    SR&ED and credits from other programs (OMDC, New Media Funds, etc.) are economic realities of our ecosystem. It is capital that is available to entrepreneurs. It is potentially non-dilutive capital that can be leveraged for growth and operational efficiencies. It should be embraced and explored, but it should be understood in the context that every dollar of customer revenue is infinitely more valuable than any tax credit or government grant. We are in business. The role of a startup is to find a scaleable business model, you might not find it the first time and the freedom/flexibility that programs like SR&ED offer you is the ability to get it wrong, to pivot and to try again. These programs are not a life support system for a bunch of non-businesses (or the people that can’t find a scaleable business model).

    The Next Silicon Valley

    Who knows where it will be? Fred Wilson assumes that “we will see Apples and Facebooks get built in China, India, Brazil, Eastern Europe, Western Europe, the Middle East, Africa, and plenty of other places”. This is great news for Canada and Toronto. Toronto is a diverse immigration hub:

    • Between 2001 and 2006, Canada received 1,109,980 international immigrants. The City of Toronto welcomed about one quarter of all immigrants (267,855) to Canada during this period of about 55,000 annually.
    • Half of Toronto’s population (1,237,720) was born outside of Canada, up from 48 per cent in 1996.

    Much of what we think of as innovation, is really just the creative tension between differing viewpoints. Toronto is diverse. We are home to many different cultures, peoples, ideas and ideologies. We have the basis to be a gateway to the rest of the world as we transition out of the American Century into something new. We are an excellent breeding ground for the mashup of culture’s, people, and ideas. The next Silicon Valley might not be in Canada, but we could become the bridge between cultures.

    What can you do?

    “Fortune favors the connected entrepreneur.” @jcal7 #trueuniversity via @hnshah

    There have been some changes to the Canadian startup scene in the past few years that are critical to continuing to help Canadian entrepreneurs:
    1. Stop referring to any part of Canada as Silicon Valley North.
    2. Set your expectations high! Don’t aim to be the Facebook for Canada. Why? Because the Facebook for Canada is Facebook! You need to be trying to build global companies, and you might validate it locally first. You want to play in the sandbox with the big kids, you need to act like you can play with the big kids.
    3. Stop thinking it will be easier if you move to the Valley. If you really feel that your only solution or course of action is to move to the Valley, then go, and show me that you can make it there. Otherwise it is just hot air, and a regurgitation of some rhetoric you read on TechCrunch or VentureBeat. If you can make it Silicon Valley or Hollywood, you should go try and stop telling me that it is easier to make it there than here.
    4. Start talking about all of the other great companies in Canada. We can all be coopetition. Help your friends. Make frenemies. The more people talking about activities, startups and people in Canada the better. There are a tonne of great startups and we all need to be ambassadors for the community as a whole. End your pitch deck with: 5 most recent fundings of Canadian companies and 5 other startups in Canada any potential investor might be interested in.
    5. Support legislation that makes it easier for entrepreneurs to immigrate to Canada. Support Startup Visa Canada. This can’t and won’t hurt any of your chances of making it. To be protectionary or isolationist is silly. Embrace one of the things that makes Canada great.

  • Can’t make it to GrowConf? Try TechTalksTO

    Tech Talks TOWe’re big fans of all of the technical community efforts going on across the country. I have the privilege of going to Vancouver next week for GrowConf, but we want to return the favor to local entrepreneurs and students in the GTA. We have 5 tickets for TechTalksTO.

    The effort to encourage participation by local students was led by the team at Uken Games.

    Uken is planning on sponsoring tickets for 3-4 students to attend http://underground.techtalksto.com/. We’ll also be sponsoring the event in general. I was wondering if we could promote this giveaway through an article on StartUpNorth. We haven’t figured out the criteria for selection but we’re thinking either a short paragraph of why we should choose you and a short code puzzle.

    I have purchased my ticket for the event, but I am unable to attend. We will give away one ticket per day starting today until all 5 tickets are gone. Someone else can figure out when that is.

    Uken Games

    How to win a ticket TechTalksTO?

    To win these passes tweet the following until Thursday:

    RT to enter! “Hey @startupnorth @ukengames – Please send me to the @techtalksTO Underground ($INSERT_LINK_TO_YOUR_BLOG/COMPANY).”

    This is a great local event. For developers by developers. Must attend, like the venerable events like FutureRuby and RubyFringe. It is great to see Toronto Ruby Brigade, TechTalksTO, TechnologicTO, AndroidTO, HTML5 Web App Developers and others engaging and supporting the community.

  • Need a ticket for the Grow Conference?

    Grow Conference - August 17-19, 2011 - Vancouver, BC

    The sponsors of the Grow Conference are offering a chance to win one of a few tickets to some starving startups. Each day a new sponsor will give away tickets, the best way to stay on top of the latest opportunity is to follow #growconf on Twitter @growconf.

    The first ticket is sponsored by Pagemill Partners, a premier investment bank located Silicon Valley, with  with as many as 1/3 of their transactions in a given year occurring on a cross-border basis.

    To win these passes tweet the following today:

    RT to enter! “Hey #pagemillpartners – Please send me to the @growconf #growconf in Vancouver (LINK TO YOUR BLOG/COMPANY).

    At the end of each day, the Grow Conference organizers will pick the winners who will get a pass for Days 2 & 3 at the 2011 Grow Conference. You’ll need to arrange and pay for your own travel and accommodations.