StartupNorth

  • Want to go to SxSW? You can get $687 in support

    sxsw.jpgTomorrow morning at 9am (Friday, February 8th 2008) there will be a meeting at Foreign Affairs and International Trade Canada?s Toronto offices (151 Young St, 3rd floor boardroom) to discuss their subsidy for any companies who are going to be going to SxSW. From what I understand, there was a meeting about it in Montreal today. I am trying to get some more information and will post back what I can find. Read this PDF for most of the information you need.

    There are a lot of Canadians going to SxSW and while the document names a few, it only scratches the surface. They mention panelists: Kris Krug from Raincity Studios, Steve Bocska from Hothead Games, Jennifer Ouano from Elastic Entertainment, Ron Thiele from Xpan Interactive, and Keith Clarkson from Xenophile Media, and I will add Ben Vinegar from Freshbooks.

    Keep your eyes out for Jonas and I as well, we are working out the details as we speak.

    RSVP to [email protected] if you will be able to make it.

  • Lift08 Venture Night: 5 Panelists and one MC and 8 pitches

    I am here at Lift08 in Geneva, Switzerland. Tonight is “Venture Night”, a startup launch-pad that had 50 submissions, which were narrowed to 8 startups who all demoed and presented their business case tonight. The format is a good one, and it is similar to Under the Radar: 5 minute demo and business model, 5 minute questions from panelists and 5 from the audience. This is a posh event, wine and Swiss breadsticks no less and the turn out is substantial for this “pre-lift” event (I’d estimate 400+). And the inimitable Guido Van Nispen as MC.

    A venerable panel featuring techcrunch europe, VCs and Angels, a top euro blogger and long time LIFTer Robert Scoble.

      1) Viewdle.tv
      A video search company. Find people in video, images, using contextual and voice cues. More than just tags. Very slick and ajaxy. Searches for clinton, then narrows by Iran, shows in search results streamable clip of Hillary speaking of Iran. Options: sort by tag, by content channel, and by timeframe and, oh god, they have video tag clouds (what is this 2006?). But the seach works in the demo, and it’s cool.

      Have widgets for blogs. Business model is video search sold to content producers (reuters) or video aggregators. Processing is computationally intensive, not trying to crawl or index web on their own (smart).

      2) holistis
      Converting online store visitors to buyers – 98% of online shoppers don’t make purchases. Uses past behaviors, intention and behavioral targeting to convert viewers to buyers. Turn known visitors into loyal customers through targeted content. Theory is to grow the 2% end of the funnel as more profitable than the 98% end.

      3) wuala
      Free and simple online hard drive. This has been done before. The twist, using distributed storage and bandwidth. You have to share your own HD and bandwidth to us it. Their catch phrase is to be the “skype of online storage” (great catch phrase). Judges are throwing softballs until vc asks about copyright infringement: do they have the same issues as youtube or ftp servers. Revenue streams, ads, photo prints, or sell premium services. They make sure data is available even if large part of network is down, they also back up on their own servers and their system works on bittorrent principles: fast downloads through fragmented storage

      4) Mixin
      What are other people doing?, I want to plan my Friday evening. Like a dopplr for activities with your friends. Nice looking screens. looks like a jaiku/twitter calendar mashup. This begs the question: why not bundle, or at least mash this up with existing social networks instead of creating a new one. I asked this question. They want to, and will support integration.

      5) IO
      Digital is more present in the physical world like table top computing, surface computing and like bumptop but real. For public spaces, skinnable walls and tables gorgeous interactive surfaces, rippling water and blooming flowers, more art than tech. VC panelist says there are a few funded competitors – which also means this is a validated market with some action in it. I’d like one of these for my living room. But they have no interest in making it cheap, it is not a consumer technology.

      6) cocommentwas launched way back at Lift 2006 syndicates and collects and aggregates blog comments tries to solve the problem of bog comment viability trouble is blog comments are less interesting than blog posts. Cocommenters comment more and are stickier. Rev model is ads, and conversation tracking. A lot of “former” users on the panel asking ome questions about performance, usability.

      7) clipperz
      Do you trust online services, do you trust them with your data? You should have control of your data. Keep it to yourself. Data is stored on cards that aggregates all your secure data and logins. talk about a vulnerability, get hacked once and they get everything. Admit that I don’t really understand this play or how it’s differentiated. Authentication and security is important, but in reality, mostly people say they do, but, in practice, don’t care. Many many startups before them have leapt onto this sword of federated online security management.

      8 ) Pixelux entertainment
      Digital molecular models. animate materials like materials instead of scripted animations. Metals bend like metal, trees bend like trees, great for realtime video game animations. It reduces the costs of video game production through procedural physics rendering. DMM physics engine, realtime animation libraries, based on glass, metal, wood, etc. the algorithms know how it will break, bend or shatter. For movie market or for games and animation. Flat fees, and licencing business models on titles sold by the millions. nice.

    Whew, a solid deck of demos. Now this is a larger scale of event (and these are later stage companies) than our typical democamp or startupcamp, but I’m left feeling that we in the Canadian community need to step up our game. A lot of good Tech here (with a capital T). Good polish of apps, good polish of demos and some impressive technology that could actually work (mostly). Bravo.

  • 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.

  • Canadian DEMOgods

    demogods You are all DEMOgods to us! As promised here are the DEMO videos from our very own: Standout Jobs (Montreal, QC), Cozimo (Montreal, QC), HealthPricer Interactive (Vancouver, BC), Rove Mobile (Ottawa, ON), SceneCaster (Richmond Hill, ON), and Xtranormal (Montreal, QC). Congrats guys!

    (more…)

  • Angel financing – Valuation (part 2)

    In the first part of this article series, I discussed reasons why valuation is important. In this article I will talk about how to come up with a valuation. Unfortunately there is no clear cut formula you can use. As with trying to value anything that is unique, such as a work of art, valuation ultimately comes down to a meeting of the minds of what the holder agrees to sell at and what the purchaser agrees to buy at.

    Practices used to value mature companies generally do not work for start-up companies in their early stages. This is because there are too many unknowns if the company will be viable and how much revenue it will make. This makes using a discounted cash flow method of valuation very subjective as you can support a wide range in valuation by the assumption you make on the company’s terminal cash flow. Using a comparables method of valuation is also problematic as you will probably only have data on VC or IPO deals which deal with companies that are at a later stage of development. The value for these companies is going to be higher as they have proven they have a viable product/revenue stream.

    In terms of practical guidance based on experience, a rule of thumb is to expect that if your company is looking for its first round of angel financing, then it will have pre-money valuation in the $1m to $3m range. This is based on the assumption that your company is pre-revenue or in the early stages of revenue, has a product that is close to going to market, has a partial management team assembled, etc.

    The main advice I can give around valuation is to be reasonable and be flexible. As I discussed in the previous article, having a high valuation for the first round of financing makes it harder for investors to realize their ROI objectives. So unless there is something really special about your company, it is not a reasonable expectation to get an eight figure valuation. Since valuation is so subjective, your best strategy is to be flexible in the early stages of the pitch. You will not be able to convey the full value of your company during a 20 minute investment pitch. You should state your valuation expectations but say they are open to negotiation. During the more detailed due dilligence meetings, you will be able to spend more time with the interested investors and have the opportunity to have more serious discussions on valuation & the aspects of your company you feel support your valuation target (i.e. strengths in management, product, barriers to entry, IP, market potential). You will also get to know your potential investors better.

    Successful companies generally look for ‘smart money’, meaning investors that are willing to contribute money as well as their knowledge & expertise to help the business. You may find your investors can provide expertise to help fill out areas on the management team or can open doors for the company to potential clients. In this case, the value that the investors bring to the table is far more than just money so you may need to accommodate this via a lower valuation to entice them to get on board.

    A final point of advice is to separate the valuation discussion from control. A lot of founders approach valuation along the lines of: I need to raise $X, I want to maintain 51% control of my company, therefore I’ll set my valuation to ensure that after I get the money, I will still have over 51% of the shares in the company. This is flawed logic as its fairly easy to structure a financing deal where investors get control of a company without owning 51% of the shares outstanding. If control is an important consideration, then as a founder your best option is to get the company as far as possible before requiring outside financing. As soon as you take on other financial stake-holders you will have other people?s money involved in your company so you will need to ensure they viewpoints & opinions are managed.

    In my next article I will talk about the due dilligence process. To view an organized index of all angel financing articles as well as see a roadmap of future articles, click here. If you have any comments or suggestions for future articles feel free to contact me: craig at mapleleafangels.com

  • 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.

  • Canadian Companies at DEMO08

    demo08logo2.jpgThere are 5+1 Canadian companies on the slate at DEMO08 today and for the next 2 days.

    DEMO is a sort of launch pad for companies who want to make a big splash with a launch or an announcement. It boils down to 2 days of pitches.

    Up front, DEMO has never made a lot of sense to me. You pay ~$18,000 just to get up on stage, and spend at least another $10,000 getting yourself ready. So, $20,000 to get up and pitch to a room full of people there to see a few dozen other presentations as well, all from difference industries and disciplines. The place probably isn’t crawling with customers, and my guess is that most of the presenting companies are funded already to some degree.

    That said, have spoken to a few people who have presented, or will be presenting this week, it is more obvious what DEMO is selling.

    Polish – To demo at DEMO, you have to have a polished and perfected pitch. You have 6 minutes to make a huge auditorium more excited about YOUR launch than all the others who will take the same stage.

    Exposure – Everything at DEMO is recorded and available on the web. I can personally admit to watching almost ALL the DEMO pitches every year. Some of them are just incredibly terrible while others inspire and impress.

    A Deadline – Once you launch at DEMO, you are going to get enough exposure that you have to have something for the public that is worth talking about. It is better to release early, and DEMO seems to drive a lot of startups to do that.

    Good luck to all the Canadian startups. I will post links to their presentations here when they are online.

  • It's a wrap – Founders and Funders Toronto

    The inaugural Founders & Funders went off without a hitch. It was a fantastic evening. It wouldn’t have been possible without our sponsors, thank you very much Microsoft and JLA Ventures, the event wouldn’t have happened without their support.

    Jess and Chris from Istoica snapped a fantastic pictures of the event and the attendees. The gallery from Founders & Funders event is available. Maybe we should do a set of hockey cards of Founders & Funders. On the back of each card it could have stats like amount raised, fund size, number of deals, etc. Until then, check out the pictures from Istoica.

    TechCapital and AideRSS Anand Agarawala, Bumptop Bogdan Chimleski Francis Fast

    Craig Fitzpatrick StartupNorth - Jevon & Jonas Tom Purves Leila Boujnane

    Selim Teja and Mark Skapinker Stephen Benson

    The goal of Founders & Funders is to create a social environment where the people who fund companies and the people who start companies can begin conversations outside of the pitch. As an attendee, I’ll extend an invitation to connect you with any other attendee you might have missed.

    Thank you for making the inaugural Toronto Founders & Funders a success. We look forward to hosting another event later in 2008.

    Cheers,
    David & Jevon
    Jevon and David

  • Game On Finance – Browser going to wallop Super Mario

    Last week we got our finance on at Game On, a top notch event by Interactive Ontario that brought together thought leaders from the games business. Right from the start it was apparent the games industry is incredibly diverse.



    Over half the attendees were in the console game business, by and large a mature industry. More than a few people didn?t appreciate their industry being called mature? but what else can you call it when $15 million is required to create a new console title and there is virtually no way to get a project financed without the backing of an established publisher like Ubisoft or EA. “The large investments required rule out venture capital interest” noted Randy Thompson of Argon Venture Partners, so financing a title more closely resembles feature film (without the promise of Hollywood glamour). Eric Zimmerman, Co-Founder of Gamelab, made a particularly incisive point by posing the question ?do ever more realistic lumbering 3d giants really drive greater entertainment value??

    Also in attendance were developers of mobile games. The mobile games business is currently controlled by carriers who use their decks (the preset homepage and application managers) to strong arm developers, control billing, limit distribution, and take a hefty cut. The challenges of mobile game developers are many, perhaps the most significant being porting (ensuring a game will work on the 1,500+ mobile phones on the market). Phil Giroux of Magmic Games, one of the most successful mobile game companies out there, noted Magmic spends significantly more time porting than creating new titles. There are definitely some opportunities in the mobile space for startups, but my guess is that they involve less game development and more figuring out how to ensure games work across devices. How many of you have tried entering the mobile application space? Have any of you succeeded?

    Bowser - Game OnBy far the most exciting space at least as far as startups are concerned is internet gaming. The flash enabled browser represents a distribution channel larger than xbox, playstation, and wii combined. There are of course challenges, internet users have grown accustomed to free. John Walsh, CEO of Groove Media, really blew the crowd away with their plan to monetize free games with in-game advertising and upgrades. Others must also be impressed, the Toronto based Groove Media has already raised $30 million, talk about taking it to the next level!

    We met a great group of Canadian entrepreneurs at Game On Finance. Vikas Gupta of Transgaming Technologies, John Walsh of Groove Media, and Nathan Gunn of BitCasters. We?ll be following up with profiles of each over the next few weeks, cause one thing is for sure, Canadian entrepreneurs will be behind the next revolution in gaming.

  • smartpatterns.com – Create your own Knitting Pattern

    smartpatterns.pngI wasn’t exactly sure what to think when I first took a look at smartpatterns.com, a Waterloo, On startup that has 2 employees and has been in development since 2003. Smartpatterns is a windows application, not a web application, that lets you create knitting patterns using a drag-and-drop interface.

    Once you have created an image of the sweater you want, and have added the proper measurements as well, the software will produce a standard knitting pattern that will let even an amateur create a complex piece, such as a sweater.

    Etsy.com is a great example of how a company can build and leverage an Arts and Crafts community in order to build a healthy market. I think SmartPatterns, with their knitting-specific tools, has a huge opportunity to create a market for custom-made knitted items. This might sound crazy to some, but there might be a market for it: On-Demand custom knitted sweaters, scarfs, afghans and more.

    One thing I loved about Indochino was their on-demand access to production labour that allows them to create tailored suits on demand. In that case, Indochino outsources to specific tailors in China.

    I don’t know a lot of knitters, but the ones I do know all love to create things for their friends and family. I can imagine that they might enjoy getting paid to knit just as much. A sort of return to a more primitive economy, but with all the efficiencies and possibilities of a piece of custom-design software like SmartPatterns.

    The opportunity for SmartPatterns is to provide their software so people can design the perfect item and then SmartPatterns provides the knitting pattern to the knitter, who will produce the item and then ship it to the buyer directly.

    Is there are market for custom-made knitted goods? I am not sure, but I am convinced that it is far more scalable and profitable to become a platform for a market than it is to simply be selling software to a small community of users. That said, SmartPatterns seems to have a solid tool that produces solid results for their users. That can’t be underestimated.

    Since their launch in December, SmartPatterns has brought in over 1000 paying customers and they have sold their first pattern to a yarn manufacturer (which I understand gets included in the yarn as a perk). That shows me that there is a huge need for their core product and that their opportunities to generate more profit, such as the way I suggest, could be something they experiment with as they grow their core market.

    SmartPatterns is Angel funded, but is currently seeking a new round of funding.