StartupNorth

Tag: funding

  • The VeloCity Venture Fund

    Some rights reserved Photo by Thomas Hawk
    AttributionNoncommercial Some rights reserved by Thomas Hawk

    Remember Ted Livingston’s insanely great donation to UW VeloCity, well it looks like it is being put to good use. The VeloCity team announced The Velocity Venture Fund. The University of Waterloo and the team at VeloCity are working to put that capital to use for students in the VeloCity residence. It looks like they are both testing their ideas (love this) to make sure students are interested before the full launch of a fund. They are running a contest for UWaterloo students that provides a seed grant of $25,000 + office space + incorporation.

    It’s pretty cool. I am hoping to learn more about the Fund that is launching in the fall. Jesse Rodgers is a huge asset to UW.

    What does this first version of the funding contest look like?

    • A hack weekend followed by a pitch night where 5 teams are selected and given $500
    • Those 5 teams come back in a month or so and have a chance to compete for $25 000 + incorporation + office space on their next co-op work term or following term (so for spring that will be fall)
    • That is all.

    To qualify for the competition:

    • A current student at the University of Waterloo
    • Do you have to live in VeloCity? No. But it would give you an advantage.

     

  • Real Ventures closes

    Real VenturesThis is great news for Canada, well at least Quebec until additional funds close. Real Ventures has launched today. With both JS Cournoyer and Mark MacLeod writing about the close of approximately $40MM of money that must be invested in Quebec. They are actively looking for seed investments in Quebec software, SaaS and Internet deals.

    “We are seed investors in software startups based primarily in Quebec, though we will do deals in other markets. We like to be 1st money in and like to lead. We can do seed rounds in the six figures to get a product in market and can participate in series A follow ons for those companies that are hitting the gas pedal.” – Mark MacLeod

    The great part about Real Ventures is the pedigree. The team is: John Stokes, JS Cournoyer, Mark MacLeod and Austin Hill. These are world class investors, entrepreneurs, executives and people who have had a hand in shaping policy, companies and entrepreneurs over the past few years.

    “For those of you who don’t know, Montreal Startup is a $5M seed fund that was founded by John Stokes, Daniel Drouet, Alan MacIntosh, Austin Hill, and yours truly. Mark MacLeod has since joined the team for Real Ventures. We invested in 15 web, mobile and software companies between February 2008 and March 2010, including Beyond The Rack, Status.net, Whatsnexx, Vanilla Forums,Recoset, mConcierge, Oneeko and SocialGrapes. For the majority of our investments, we were the first money in, acting as the lead investor. We hold board seats in most companies.” – JS Cournoyer

    Real Ventures is the real deal. Any entrepreneur in Quebec looking to raise a seed round should be talking to Real Ventures.

    Congratulations guys, here’s to closing some money that can be deployed in Ontario.

  • Conspiracy theories and hockey talent

    Photo by Kenny Louie http://www.flickr.com/photos/kwl/4398396665/
    Photo by kennymatic

    The brain drain. Canadian actors in Hollywood. This was a common thread for a in Canadian media outlets. But there is something new going on in tech north of the border. International corporations have been snapping up Canadian startups and talent. Foreign investors (think US Venture Capitalists) are looking north of the 49th parallel to actively deploy capital in high growth, scalable companies. Just look at the recent track record of activity in the past 9 months.

    Recent Exits

    • Layerboom acquired by Joyent.
    • Plan9 acquired by Apple.
    • Sysomos acquired by MarketWire.
    • SmallThought acquired by Twitter.
    • Opalis acquired by Microsoft.
    • Bumptop acquired by Google.
    • Sitemasher was acquired by Salesforce.
    • CoverItLive was acquired by Demand Media.

    Recent Foreign-led Investments

    • Highland Capital Partners invests in Montreal-based Beyond the Rack.
    • Bridgescale Venture Partners invests in Toronto-based Dayforce.
    • Bridgescale Venture Partners invests in Toronto-based Bluecat Networks.
    • FTV Capital invests $35M in Toronto-based Varicent.
    • Altos Ventures invests $4.5M in Toronto & SF-based Kontagent.
    • Metamorphic Ventures invests $1.5M in Toronto-based Chango.
    • Grandbanks Capital invests in Toronto-based iLoveRewards.
    • Grandbanks Capital invests in Toronto-based xkoto.
    • Panorama Capital invests $8M in Calgary-based Tynt.

    So just what is going on. Why the sudden interest and opportunity?

    1. A History Lower Valuations, Less Capital & More Traction
      When you look at the historical news archive from the Canadian Venture Capital Association (CVCA) about the state of venture capital in Canada you begin to see a common thread. Canadian companies generally raise less money than their US counterparts at each stage of growth. This leads to lower valuations and more traction from local investors and has created a generation of Canadian entrepreneurs that are used to funding growth from profits. In 2009, the US market saw US$18 billion invested through venture capital. Canada startups only raised approximately US$1 billion representing 5.5% of the US number (source: Wellington Fund blog). The challenge is that the Canadian economy is approximatley 12.5% of the US economy and this leaves a significant gap in the amount of potential capital being deployed to Canadian startups. There is a gap in the level of investment and the overall economic performance in Canada. This leaves a huge opportunity for other funding sources.
    2. Strong Local Communities
      When you look across Canada entrepreneurs are using the web, events and models developed locally and internationally to connect each other, share information and build successful startups. There are examples ranging from government funded initatives like the Accelerator Centre in Waterloo, WavefrontAC in Vancouver, the RIC Centre, MaRS, Lead to Win in Ottawa, and Communitech (there are a ton more). There are grassroots movements like DemoCamp, MontrealNewTech, StartupCamp and LaunchParty happening across the country. There are an emerging set of incubators and early investors like BootupLabs, Extreme Ventures, Montreal StartUp/Founder Fuel, and Mantella VP. These communities provide entrepreneurs opportunities to connect with other entrepreneurs and seed investors to share methods, pursue informed development and find mentorship and funding.
    3. Close Proximity
      As soon as you decide to get on a plane, the game has changed. It’s not about can I drive to a board meeting in less than 45 minutes. It’s about can I make return travel in the same day. Flights to Vancouver from San Francisco are only minutes longer than flights to Seattle. If you’re leaving the comforts of Silicon Valley to travel to Seattle, Boulder, or other destinations than you should consider Vancouver. Toronto and Montreal in the same geographical proximity to Boston, New York and Chicago. The decision for most investors has less to do with travel and more to do with finding great companies whose growth can be accelerated. Having an international border throws a couple of new complications (see the next section Taxation Reforms) into the mix but it should not prevent investment or acquisition. There might be taxation and immigration impact on
    4. Taxation Reforms
      Charley Lax at Grandbanks Capital was a vocal critic of Section 116 of the Canada Tax Act. However, on March 4, 2010 Finance Minister Jim Flaherty announced amendments to the Act that excluded shares of Canadian private companies. Basically, this removed a major tax barrier to foreign investment opportunities. A few of the deals listed above where completed before the changes to Section 116, significantly more seed and early-stage deals involving capital from US investors can be seen.

    The times are a changin’

    Grow 2010

    Conspiracy theories of Canadians infiltrating American companies are mostly true. But the brain drain is a thing of the past. Silicon Valley is heading north to find new deals, new talent, and new opportunities. Grow Conference in Vancouver is a prime example of the exploration north of the border. Elite investors like Rob Hayes of First Round Capital, Dave McClure of FoundersFund, Jeff Clavier of SoftTech VC are heading across the border to engage with Canadian entrepreneurs and startups. The Canadian Tech Mafia, sorry the C100, continues to show a strong presence with Rob Chaplinsky from Bridgescale, Chris Albinson of Panorama and others.

  • State of VC in five years?

    Canada has a great financial sector, a growing economy, tons of smart people and a bunch of pretty snazzy exits recently. Yet, with all this Deloitte and the National Venture Capital Association still predict that the number of VC firms in Canada will continue to decline (hat tip: TechCrunch).

    ?

    Sure, Canada is doing better than US and Europe but we’re not doing so well versus the BIC. The first reaction may be that it is now conventional wisdom that China, India and (lately added) Brazil will  take over the world so it stands to follow more VC will set up in those countries. Fair enough.

    But deconstruct this a little further. The Canadian VC industry has already been decimated over the course of the past few year and yet, according to this survey, over a quarter of the respondents think it will shrink further. (The VC industry’s shrinkage in the US is a good thing I and many other would argue. Too much dead weight)

    And VCs follow exits, well recently Canadian companies have exited to Apple, Google and not to mention a pretty killer IPO. That should bode well for the VC industry over the next five years, but it appears that it doesn’t (Yes, these exits happened after the survey was held, but still….)

    In fact, it seems that achieving exits in Canada  is the number one barrier to expanded investments in the minds of VCs when they think about Canada.  Number 2 barrier is “lack of established venture capital community” which seems like a bit of a vicious circle.

    So what do you think? Should Canada be worried? What can be done to improve the five-year outlook on the Canadian VC scene?

  • Weekend Reading

  • 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.