StartupNorth

  • Savvica is Back – Payoff for holding on!

    savvica-logo.gifJohn and Malgosia Green started Savvica in Toronto three years ago. Savvica was run on a shoestring budget. John and Malgosia were hitting the pavement hard, working on financing deals, partnerships and generally promoting Nuvvo, a do-it-yourself online course community. It was hard, thankless work, and eventually it was time to make a decision. Running a startup out of your basement can be grueling. If you’ve been there, you can empathize, at some point you have to step back and re-asses.

    So, after 2 years, John and Malgosia decided to take jobs in San Francisco. The benefits were obvious: Gain loads of experience, keep working in startups (they didn’t file themselves away in boring jobs), make connections and give themselves some financial breathing room.

    johnandgosia.jpgHere is where their story takes a turn for the better however. Just when we all thought that Savvica was done for, John and Malgosia did the smart thing. They didn’t “go out of business”, or take down the site. They didn’t declare it a failure and start preaching about all the lessons they learned. Instead, they kept burning a little midnight oil, still looking for a deal or an opportunity, and most of all, they kept their dream alive.

    Well, hard work pays off and things have finally turned around for Savvica. They have taken investment from an India-based e-learning company that was happy to have Savvica headquarter itself anywhere in North America. John and Malgosia packed up their things and headed straight back to Toronto.

    If you know John and Malgosia, as most of us here in the Toronto tech scene do, you know they are not only hard working, but also incredibly helpful to other startups. We are all excited to have them back here in Toronto and we can’t wait to see them at DemoCamps, Torcamps and whatever other things are happening.

    Savvica is hiring a handful of Rails engineers and I am sure there will be more hiring soon.

  • Do you know a great wordpress designer?

    Startupnorth needs a better look. The current design, a hacked version of a free template, is pretty darn ugly. A lot of people comment on how ugly it is, so we figure it’s time for a change.

    So, please contact us with any suggestions or offers (if you are the great designer that you know!).

  • Mobivox takes $11 Million

    mobivoxlogo.jpgMobivox, a Montreal based startup has just raised $11 Million from IDG Ventures, Brightspark Ventures, and Skypoint Capital Corp.

    Mobivox is a value-added VOIP services provider focused on cell phones. They can let you connect to your own Skype account via your mobile, and can also handle your long distance calling. They also offer free calling to a huge number of countries.

    In some ways, their service is a sort of glorified calling card, having you dial an access number and then patching you through, but addons like Skype access, free calling to some countries, voice recognition, SMS Call Back, Conference Calling, Mobile-to-landline transfer and Group Calling all put Mobivox way ahead.

    It would be amazing if Mobivox started incorporating some GrandCentral like features, but my guess is that they will focus on building out their existing business first.

    Mark Evans had some kind words in his review of their service back when they first launched in May 2007.

  • Garage invests $2.5 Million in Lure Media, now a software startup

    MontrealTechWatch got to it first, Lure Media, a Montreal based company had a busy week last week. While the rest of us were filling up on Turkey, they closed a deal to purchase IMPACT, IS, the makers of two products: Impact Designer and Impact Showroom. Before that was done however, they signed off on $2.5 Million in funding from Garage Canada.

    Impact has been around for over 20 years, and is a well-established leader, Lure Media now seems set to position themselves primarily as a software provider with ancillary support services. They will also launch an entirely new piece of Business-to-Business software they are describing as: ” Business-to-Business Exchange supporting the global commercial and residential interior design industry. ETERIORS will link manufacturers of luxury lifestyle products to their respective dealers, interior design professionals and high-spend customers on a transactional, digital backbone that evolves into the standard network for electronic commerce and rich media in the global luxury lifestyle market.

    It is interesting to see Garage Canada play a role you might expect more traditional private equity group to handle. While this deal is probably the size Garage Canada is more comfortable with, the deal may have just been too small for the larger equity players, leaving a nice gap for Garage to fill with what is probably a safe bet in comparison to typical VC deals. The fact that they are launching a new product out of the merger also puts the deal closer to Garage’s territory.

  • Angel financing: Getting the money more quickly

    As a follow up to my last post on timelines to getting angel financing, in this article I will talk a bit about how the process can be done quicker.

    Recall in my last post, I mentioned the timelines were based on a scenario of applying to an organized angel group. This naturally introduced some time overhead to go through a selection process in advance of presentation to the group’s members. One way to speed things up is to try find one angel investor that can meet your initial financing requirements. You will cut down the time required to make your initial pitch as well as make the whole process of due diligence and term negotiation quicker as you will only be dealing with one person and not have to deal with many different people with different viewpoints, priorities, and schedules.

    On the flipside you may not find one investor that is comfortable with focusing that much captial on one venture. Many angels prefer to invest smaller amounts across wider number of companies so they can mitigate their risk. If you do deal with a group of angels, make sure you identify a lead angel in the group that can help be your company’s champion and help keep the group focused and provide leadership to driving the deal to closure.

    Also recall in my last post, a lot of the time was spent going back and forth to agree on terms and get the legal documents finalized. It goes without saying that for your company’s lawyer, make sure you have one that has done angel deals in the past, is experienced with the main investment terms used for these types of deals, and will be able to be responsive during the timeframe when required. You may be thinking, if this takes so much time, why don’t I just draw up all terms & conditions beforehand so when I present to angels I have this all completed. You can do this, however it heavily depends on your situation. If your company is viewed as a ‘hot’ deal with a lot of interest or if you already have lined up a couple of lead investors and are just looking for some additional investors to top up the round, then this may work for you. Angels may feel they need to accept your terms if they want to particiapte in the deal. On the other hand, if your company does not stand out from the other deals on the go and angels do not feel they need to take your terms and want to invest on their own terms or structure of financing, then you run the risk you spent all the time and money to prepare these documents only to need to have them extensively revised.

    As I said in my last article, the best thing to do is start early and in particular start to build up relationships with people who will be able to help you during the financing process. If you take a step back, think about what you are doing. You are getting in front of a group of people, probably most of them you have not met before, and then asking them to collectively invest six figures of their personal money into you and your company. This takes a level of mutual level of trust from both sides that is going to take time to build up. I’ll talk about this in a future article.

  • b5Media Launching Spekked – The big part of the Long Tail

    picture-1.pngWhat happens when you’ve made a business out of publishing hundreds and hundreds of niche blogs? b5Media, a Toronto based startup that has taken funding in the range of US$2-million co-lead by Brightspark Ventures and J. L. Albright Venture Partners, is the owner of a vast amount of posts and articles on a few dozen subjects and finding new ways to capitalize on that asset can get tough.

    Today, b5 is taking a leap and is launching Spekked. The project is labeled “Beta”, which either means that the technology is young (it’s an aggregator of other b5media blogs, all based on one common subject), or it means the entire business idea is being tested. My guess is that it is a combination of both.

    As any startup begins to accumulate assets, it is critical to put them to good use. Like the guys at AideRSS, who previewed a set of tools at Democamp which uses their existing data, b5 is starting to zero in on larger segments of their market by combining many products (in this case, content) in to one re-focused stream which will have a much broader appeal. Spekked will also act as a funnel in to b5’s deeper offerings in that particular category.

    The challenge for this project will be to avoid losing readers who may stop reading 5 regular b5media blogs and instead just tune in to the one aggregated blog.

    If this works, you can bet there will be a lot of other branded combination blogs from b5 to come.

    We are working on a profile of b5media, which we hope to post soon.

  • Angel financing – How long until I get the money?

    In any early stage company, availabiliy of cash to fund operations & growth is an area of prime concern. So in this article I will talk about the timelines around securing angel financing. I will outline a hypothetical week by week timeline as a company progresses through the funding process. Obviously every situation will be unique so take this all in context.

    In this example, let’s assume that your company is undertaking its first round of raising funding from an outside source (i.e. not friends or family). I will also assume that your company is operating, meaning it has an initial management team, defined its business plan, and has started work on its product or service. The company does not necessarily have to be generating revenue or have launched a product however the founders have at least drawn up a plan for where they want to take the company and are working towards it. The company is seeking funding via an organized angel group and is targeteting to raise $250,000 from 5 to 10 investors.

    Week 1 – You research and select an angel group, get the two page company application form, spend the week writing a compelling request for funding all neatly summarized in two pages.

    Week 2 – You submit the form, call the angel group director to ensure the form was received, ask about what happens next and answer any questions the director has on your company.

    Week 3 – The angel group selection committee meets to review all applications received in order to select the 2 or 3 that will present at the group’s next meeting. Good news, you get a call later on in the week informing that your company is selected and will be invited to present at the next meeting in 2 weeks.

    Week 4 – You get together with the management team to work on the presentation. Develop the slides, rehearse, rehearse, rehearse.

    Week 5 – You dry-run the presentation with as many people as you can, get loads of suggestions, make revisions, rehease, rehease, rehearse.

    Week 6 – You give the pitch to a crowd of 30 people, 15 minutes for the presentation and 15 minutes of questions. Things go well and 14 people express interest in having a more detailed meeting with your company. A date is set for the following week when everybody’s schedules work.

    Week 7 – Spend the week preparing for the angel due dilligence meeting.

    Week 8 – Have a 3 hour meeting with the angels. 10 people end up attending. Review the business in more detail, answer questions, discuss ideas on how to take the business forward. Angels ask you to work on some follow up information and say they will discuss things amongst themselves next week.

    Week 9 – You prepare and send angels the additional information they wanted. Angels privately meet to discuss and determine what needs to be researched more.

    Week 10 – Angels continue their due dilligence, you answer any questions they have and supply them whatever information they require.

    Week 11 – Angels meet and determine there is interest to proceed and begin work on a term sheet.

    Week 12 – Term sheet is given to the company. You review with the management team, discuss with your lawyer. Some terms not acceptable so you work on a revision and send it to your lawyer.

    Week 13 – Your laywer reviews the revision and suggests some changes. You have a conference call with the laywer & management team to finalize. Your counter-proposal is sent to the angels.

    Week 14 – Angels review, have conference call to discuss, give to their lawyer to review. Changes required so they work on a new revision.

    Week 15 – New revision is reviewed by the angel’s laywer, finalized, and then sent to the company. You review with your team & terms are acceptable. Good news, you have agreed on terms and angels have tentatively fielded $225,000 across 8 investors.

    Week 16 – You start to work with your lawyer to draft up a new shareholders agreement and other closing documents. Angels continue with due dilligence.

    Week 17 – Your lawyer provides you a set of documents. You review and don’t like the wording of certain points. You and the management team have a conference call with the lawyer to discuss.

    Week 18 – Your lawyer provides a new revision, you review and are comfortable. Documents are sent to the angels.

    Week 19 – Angels review and send to their laywer. Lawyer reviews & makes revisions. Angels have conference call with lawyer to discuss.

    Week 20 – Angel’s laywer finalizes revisions and they are sent to the company to review. You review, your lawyer reviews, everything is satisfactory. Angels final call for investment commitment results in $200,000 across 6 investors.

    Week 21 – Closing documents are prepared, pick a closing date, execute signatures on all documents, get cheques. Congratulations – you are funded!

    So in this example, from start to finish the process took around 5 months. As I mentioned, this is just a hypothetical example and it obviously omits a lot of details. Your actual scenario may be longer or shorter. As a case in point, if you were to go through another couple of review cycles to finalize documents between your company & your laywer and the angels & their lawyer, you can easily see how this could add another month to the process. Remember that although this may be your top priority, the other parties involved may be working on other deals or cases and not have the time to give this the same level of focus and priority that you will.

    The main take away is that when looking for funding – make sure you start early and plan for how long it will realistically take. You clearly do not want to be in a situation where you desparately need cash when you are working on deal terms as you may need to accept terms you are not comfortable with.

    In my next series of articles, I will walk through the various areas that angels look for in evaluating a company and what should be part of the investment pitch. As always, if you have any questions, comments, or suggestions for future articles feel free to contact me: craig at mapleleafangels.com

  • BarCamp Canada!

    BarCamp Canada LogoMark your calendars, BarCamp Canada is coming to town! Montreal is hosting Canada’s first-ever nationwide BarCamp, to be held next month, Saturday, November 3. For those of you not yet familiar with BarCamp, it is an unconference par excellence. While I can’t tell you exactly what will be presented (the schedule is set that day), I can guarantee it will be one of the most engaging experiences of the year.

    Anyone with something to contribute or with the desire to learn is welcome and invited. The only cost is participation. So plan a car pool, jump on a train, or find a cheap flight. This event you don’t want to miss.

    What: BarCamp Canada
    Where: Montreal, Quebec, Canada
    When: Saturday, November 3, 2007
    Cost: Participation (Free!)

  • ConceptShare – Online Collaboration

    images1.jpgSudbury, Ontario based ConceptShare is one of the best examples of a fast growing, healthy and original startup in Canada. They have gone from idea, to execution and now to business development in a short period of time. They have done it all from Sudbury.

    The idea was simple enough. You have any sort of artwork or video, and you need to bring in other people to help edit and refine your work. The old way of doing things was to email your files around and have people open them locally on their PC. With Conceptshare, your co-workers, partners and others can simply log in and see what you are working on, and they can offer their own suggestions right there on the spot. Collaborators can draw right on the screen, they can make notes and leave messages for eachother.

    I won’t go any further in to just what Conceptshare does, because their name is descriptive enough and their website is even more helpful. They also have one of the best demo movies of any startup out there.

    Differentiating in a muddled market
    “Collaboration” is not a new idea. The market for collaboration tools is endless and highly competitive. Instead of jumping in to that big, endless fight, ConceptShare worked hard to focus on a basic set of needs for what was initially a very defined market (graphic designers). By doing things right and in a smaller puddle, ConceptShare turned in to the perfect tool for a lot of things. They now have customers doing almost every sort of collaboration you can imagine, and they are just getting started at going after these new markets.

    ConceptShare also made one critical smart move up front. They didn’t try to do real-time collaboration. That would have included real-time audio chat, video chat and all sorts of extras that most customers don’t really want. Instead, they built their tool around how people really work: asynchronously. If you want me to review a document, or new graphic design, I don’t want to have to meet you online at a certain time to discuss it: I would rather just pop in and make notes when I have the time.

    A critical mistake that competing companies have made, in my view, is that they focused on real-time. Real-time requires a change in the user’s behavior, and trying to change behavior rather than compliment it is almost always a road to failure.

    Staying Focused
    Bernie, Scott and Chris have spent the last year and a half working on ConceptShare with incredible focus. Right from the beginning, when they were running around the first Mesh conference with their laptops, doing demos for potential investors, they have been role models of how to just do it when it comes to starting your own company. While a lot of would-be entrepenurs will wonder “should I do this”, etc.

    An Angel Round, and on to VC
    To really get off the ground, Conceptshare raised an undisclosed amount of Angel funding. The fact that they were able to get their funding in place so early is a testament not just to their great idea, but the hard work these guys continue to put in.

    The guys are now hitting the road to raise a round of Venture Capital. The decision to go down this road was not an easy choice for them to make. They tell me that they are more concerned with finding the right kind of VC than they are with just taking money from anyone. They are looking for a partner to help them grow the business.

    Overall, I think it is a smart move for a company in their position. They are arguably the market leaders in a space that is only just starting to come in to itself. I would be surprised if Scott, Bernie and Chris didn’t have their pick of VCs, as well as some pretty favorable terms. Let’s cross our fingers that they don’t end up having to go south like StumbleUpon, iUpload (now Awarness), or flickr.

    And now…
    This week ConceptShare has doubled it’s workforce and has brought on Will Pate to help drive the company ahead. Will is an experienced community builder and will be doing that, and I suspect other work, with ConceptShare. Hiring smart is critical and Scott, Bernie and Chris have been careful about who they bring on.

    So what else is next? A search shows that they own the domain conceptnation.com, which looks like a preview of some sort of new crowd-based marketplace or network. So, I am guessing that it won’t be long before the guys have big announcements coming out left and right.

    Contact: Scott Brooks

  • Free Software and Open Source Symposium – Toronto

    Seneca’s 6th Annual Free Software and Open Source Symposium takes place October 25-26th, 2007 – 9:00 a.m. to 5:00 p.m. on the Seneca@York Campus in Toronto.

    The Symposium is a two-day event aimed at bringing together educators, developers and other interested parties to discuss common free software and open source issues, learn new technologies and to promote the use of free and open source software. Sessions at the symposium include:

    On first blush, anyone unfamiliar with the spread of Open Source and Opens Source tools and programs might wonder how something like an Open Source Symposium can apply to a startup. The truth is that the lessons that Open Source Software advocates have learned in the last 10 years are critical to understand as a startup. Grassroots marketing, low cost development, and community participation are all critical components of getting a startup off the ground. Ryan from Unspace gave a great talk there last year.

    Registration is open and you can register here.