StartupNorth

Tag: venture

  • An Investor’s Rendition of ‘Twas the Night Before Christmas

    by Travis Cocke (sourced from Seth Levine)

    ‘Twas the night before Christmas, when all through the land
    Not a banker was lending, not even “Gold-Man”
    Foreclosures were hung by the courthouse with care
    In hopes that Hank Paulson soon would be there.

    The Bankers were nestled all snug in their beds
    While visions of bonuses danced in their heads.
    And my teachers in their offices and me in my room
    Had just settled an argument about the depth of the gloom

    When out on Wall Street there arose such a clatter
    I sprang from my bed to see what was the matter
    Away to the computer I flew like a flash!
    Started up the ticker, and threw up some cash…

    The i-banks on the brink of another bad blow
    Sell all your stocks and look out below!
    When, what to my wondering eyes should appear?
    Green on the screen as the Fed interfered

    With the same old chairman, so ready to lend
    I knew in moment it must Big Ben
    More dovish than Greenspan, his governors they came
    And he printed and lended and called them by name!

    “Now Lockhardt! now, Lacker! now, Evans and Plosser!
    On, Geithner! On, Fisher! On Yellen and Krosner!
    To the Treasury! To the Mile High Mint!
    Now print away! Print away! C’mon now print!”

    As credit spreads that before defaults do fly
    When they meet with an obstacle, they drop green from the sky
    So up to the Capitol the governors they flew,
    With a chopper full of money, and Rick Wagoner, too.

    And then, in an e-mail I read from a friend
    Capitalism was dead, and this was the end
    As I sold my last stock and started to cry
    On the TV came Buffett and he said “Time to buy.”

    He was bullish on stocks, from Nike to CVX
    And his portfolio was tarnished with options and CDS
    A bundle of buyouts he had flung on his back
    And he looked like a genius, just following his knack

    His stocks how they fell! His returns how scary…
    Yet his cash-how it swelled! And His letters so merry…

    He was chubby and cheerful, a right jolly investor
    And I smiled when I saw him, despite my dreadful semester
    A twinkle in his eye and the use of his cash
    Soon gave me the know that stocks wouldn’t crash

    He spoke not a word, but went straight to his work
    Shoring up balance sheets, and buying preferreds
    And laying his finger aside of his nose
    And giving a nod, UP & UP Berkshire rose!

    He sprang to his NetJet, to his pilot gave a whistle,
    And away they all flew like the down of a thistle.
    But I heard him exclaim, as he drove into the sky,
    “Happy Trading to all, and to all a good buy!”

    Featured Image by Kevin Dooley

  • 9 Tips to Network Your Way into a VC Job

    [Editor’s Note: This is a guest post by Jared Gordon . Jared is an Investment Manager at IAF and is a lawyer by training (though we don’t hold that against him). The post summarizes Jared’s experience in both finding a gig at a Canadian VC fund and his conversations with others about these elusive positions. ]

    CC-BY-20 Some Rights Reserved Photo by Robert Couse-Baker

    It is that time of year again, when my inbox fills with requests for coffee from graduating students asking for two things: “How do I get a job in venture capital?” and “How do I get a “biz dev” job at a startup?” I always appreciate the initiative of people reaching out to me, but I thought I would share some tips to maximize everyone’s time.

    Getting a job in venture capital is hard.

    It is not impossible. But it is very hard. If you are the kind of person who is interested in venture capital, you will probably ignore anyone who says the problem you are trying to solve is hard. If you are the kind who is committed you will also realize it is not about the money. We do it because we love working with startups.

    There are not many funds out there, but at least that narrows the focus of your search. To give you a better idea, there are maybe 10 non partner venture capital roles in all of Canada. Everyone I know in venture capital has worked many years to get here. It requires drive, energy, time and a lot of networking. In truth, the only way to get a job in venture capital is networking.

    The Difference between PE, IB and VC

    The journey prepares you for the job once you get here. People I met with along the way are people I now do business with on a daily basis. Also, the job hunt is a chance to demonstrate to the community what kind of person you are and what kind of value you add.

    Before we jump into the tips, there is a difference between PE (Private Equity) and VC (Venture Capital). Beyond the huge difference in compensation, VCs spend a lot more time understanding the dynamics of specific markets and verticals than they do on financial analysis. In PE you spend your time building and reviewing financial models. When working with startups, you spend some your time crafting financial models, however, the calculations and models are very different.

    There is no template for working in VC

    Some basic tips on how to network your way into venture capital are listed below. These tips are about how to get in front of the people you need to get in front of and how to make the most out of that meeting. There is no template for working in venture capital. Some of us have advanced degrees some don’t. Increasingly, having spent time at a startup is becoming more common. Having strong technical talent is a rare but desired commodity. If you can identify how technically hard a problem is, that will set you apart.

    9 Tips to Getting a VC Job

    1. Don’t send a message over LinkedIn – This one is my primary pet peeve. A lot of the job of being a VC is being able to find information. Every investor’s email is available somewhere.
    2. Warm intros work best – Did I come to speak to your class? Did I come speak to your friend’s class? Do we know anyone in common? Anything you can do to create a connection between us will make me want to spend more time helping you.
    3. Don’t be scared to cold email – Cold emailing is a great skill to learn and have. You never know whose interest you might catch unless you try. Why not reach out to Fred Wilson? A partner at Kleiner who went to the same school/has the same interests as you? I find the cold emails that work best have great subject lines and can bring attention to something I, and the person I am emailing, have in common.
    4. NO FORM LETTERS – These are just insulting. You should be spending at least twenty minutes crafting each email. The person you are trying to get in front of has a linked-in profile/about.me page/bio somewhere. Use that information to show them that you value their time and advice enough to put some work into getting the meeting.
    5. Be persistent but not annoying – When I do not get a response from a warm intro, I follow up after a couple days. Some people have poor inbox management skills and stuff falls to the bottom. It is nothing personal. The person definitely saw your email and it shows persistence and that you value someone’s time when you follow up. With cold emails, if I do not hear back I will wait a couple days and send a quick second try. If I hear nothing, I leave it be.
    6. Be clear in your ask – The clearer and more direct you are about your ask, the easier it is for someone to know if they can help. Nothing is less appealing than a note asking to “learn more about venture capital.” The internet has cast the profession wide open, with more information available online now than was available to VC associates five years ago. You can learn about everything from VC funnel management, what the average day for a VC is like to the difference between European and American style waterfalls. Examples of good asks would be: “You are an early stage VC. While doing my MBA, I mentored startups and participated in Startup Weekend. Can I get half an hour of your time to talk about how I can transfer what I learned in school to a job or what else I can do to make myself a competitive candidate?” or “I want your job because I like working with early stage startups. Are you hiring? Can we make some time to chat so when you are, or when you know someone who is, you think of me?”
    7. Once you get the meeting, don’t blow it – You have only one chance to make a first impression.I spent the first months of my networking journey wasting a ton of important people’s time. I would sit across from them in boardrooms, coffee shops, and their offices and talk about myself for an hour.It took a meeting with Jeff Rosenthal of Imperial Capital to set me straight. He would not remember if you ask him, because the meeting was so bland. Jeff ended our meeting with some advice. He told me that everyone who got a second meeting walked into his office with a list of companies they would look to invest in. They proved they were capable of doing the job they were seeking. You can do that too.Look at the person you are meeting with and what spaces interest them. Use Crunchbase and Angelist to identify some promising startups and why you like them. Be prepared to defend your thoughts. This discussion is more interesting (and fun) then hearing about your involvement in the investment club or student government. One person I met with had a presentation he had put together on three trends in technology that he found interesting and why. They showed they were capable of hitting the ground running on day one.
    8. Follow up is key – Always make sure to send a thank you and take care of any action items you might have left the meeting with. If the person you are meeting with did not follow up on theirs, no harm in waiting a couple of days and sending a polite reminder.Following up does not end with the thank you note. It is always great to hear from people you have helped along the way about where they landed or how their search is going. This becomes especially important when it comes to the last tip…
    9. Coming close to something? BRING IN THE BIG GUNS!! – When you know there is a position and you have met with someone at the firm or submitted an application, now is when the networking pays off. You can make up for a lot of flaws in your resume by having someone you trust recommend you for a gig. If you treat your network right and maintain good relationships, they will have no problem making a call to get your application moved to the top of the pile.

    This is where hard work pays off

    Mark Suster summed it up in a comment on a blog post by Chris Dixon:

    “The people who “sneaked into” the process were:

    1. great networkers
    2. great networkers and
    3. had other people contact me on their behalf (great networkers).

    But if you don’t have GREAT street cred already don’t hassle the VCs. Just accept that it isn’t likely you’ll get in without doing great things at a start-up first.”

    Chris Dixon agreed “Yeah, when I got my job in VC it was like a political campaign. I had one partner tell me ‘I’ve heard you[’re] a great guy from 6 people’ – which wasn’t an accident. I had done so many free projects, favors etc for VCs and startup and then I asked them to make calls on my behalf. It’s brutal.”

    The venture capital community is a very small tight knit community. And the number of potential gigs is very small. It is a lot of effort to build the relationships and connections to get a job working at a venture fund. (Before you even consider this, you might want to brush up on Venture Math 101 and figure out why you really want to do this).

    Additional Reading

    Here are some great posts from people with more experience and authority on the same topic:

    Still want some of my time? I am not going to tell you how to find me, but if you can figure it out, I look forward to chatting.

    Photo Credit: Photo by Robert Couse-Baker  – CC-BY-20 Some Rights Reserved

  • 2011: Glass Half-Full or Half-Empty for Canadian VC?

    Editor’s note: This is a cross post from Mark Evans Tech written by Mark Evans of ME Consulting. Follow him on Twitter @markevans or MarkEvansTech.com. This post was originally published in February 14, 2012 on MarkEvansTech.com.

    CC-BY Some rights reserved by waferboard
    Attribution Some rights reserved by waferboard

    First, the good news about Canada’s venture capital landscape. In 2011, investment activity climbed to the highest level in four years ($1.5-billion), a 34% increase from 2010, although it is still significantly below the record activity ($2.1-billion) reached in 2007.

    The bad news is there’s still not enough supply to meet rising demand, plagued by “continued weakness” when it comes to fund-raising.

    The good news-bad news scenario was spelled out in the Canadian Venture Capital Association’s annual report. For those of us in the glass half-full camp, the increase in investment and the number of deal is cause for optimism.

    As well, 2011 saw a spike in M&A activity with 34 deals, including two each by Google, Facebook, Zynga and Salesforce.com. And there was a flurry of incubators and accelerators established, including Extreme Startups last week.

    Before anyone gets carried away, Canada’s venture capital landscape is a long, long way from being solid, let alone robust. There’s still not enough venture capital for seed, series A or major rounds. And don’t expect U.S. investors to pick up the slack.

    In a press release, CVCA president Gregory Smith said there is concern about whether enough fund-raising can be dong to support the demand for investments. This situation was illustrated by the fact new commitments to Canadian VCs were flat last year at $1-billion.

    “Canada has a historic opportunity to become an innovation leader,” Smith said, adding that “in order to act decisively on this opportunity, we must first overcome challenges to supplying VC funds that, in turn, supply entrepreneurs.”

    So what’s the solution? How can Canada’s venture capital community do a better job of supporting the startup community? There is not easy answer to a problem that has been around a long time and doesn’t look to be changing any time soon. It’s not going to be an easy fix from government or U.S. investors or institutional investors waking up to the idea of venture capital investing.

    Perhaps the answer to the problem is this: success. If more startups and mature high-tech companies are acquired, that could (emphasis on “could”) encourage investors (angels, VCs and institutional) to get more involved. Success has a strange way of helping people to see the light or new opportunities that they otherwise would have dismissed or not seriously considered.

    That said, success is a double-edged sword. Without enough financial support, it is hard for startups to have enough powder to become acquisition targets. If they’re not interesting targets, there’s no acquisitions and, likely, less interest from investors.

    So which side of the fence do you sit on? Are you bull or a bear about Canada’s VC landscape?

    Editor’s note: This is a cross post from Mark Evans Tech written by Mark Evans of ME Consulting. Follow him on Twitter @markevans or MarkEvansTech.com. This post was originally published in February 14, 2012 on MarkEvansTech.com.

  • 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?

    Some rights reserved by tao_zhyn CC-BY
    Attribution Some rights reserved by tao_zhyn

  • Incubators, incubators, every where

    Photo by Jurveston
    Attribution Some rights reserved by jurvetson

    Is there an incubator bubble? Perhaps it’s an incubator arms race. When I wrote Incubators, Accelerators, and Ignition in 2009 there were not a lot of Canadian based incubators (the now defunct BootupLabs was the only one listed in the ReadWriteWeb article).

    Incubator Index +18

    There has been a rise of support for early-stage entrepreneurs across the country. Yesterday’s announcement of GrowLabs in Vancouver along with the launch of Foundery, Multiplicity Accelerator in Toronto, FlightPath in Edmonton, YearOneLabs in Montreal. There are existing players including Extreme Venture Partners, Mantella Venture Partners, Wesley Clover, Innovacorp and Real Ventures/Notman House. The are university incubators like UW Velocity, MEIC, LeadToWin, Ryerson’s DMZ, Next36. There are Communitech, WavefrontAC, CoralCEA, MaRS, NBIF among others.

    There are companies like Jet Cooper, Teehan+Lax incubating people and ideas (Rocketr & TweetMag). There are new programs like the Under 20 Thiel Fellows that had 2 Canadian students: Gary Kurek (LinkedIn, @gskurek) & Eden Full (LinkedIn, @roseicollistech).

    There is competition from YCombinator, TechStars and 500Startups – Andrey Petrov YC10 (@shazow), BackType YC08 – Christopher Golda (LinkedIn, @golda) & Mike Montano (LinkedIn, @michaelmontano), Rewardli 500Startups- George Favvas (LinkedIn, @georgefavvas) & Jean-Sebastian Boulanger (LinkedIn, @jsboulanger); A Thinking Ape YCW07 – Eric Diep (LinkedIn, @ediep), Kenshi Arasaki  (LinkedIn, arasakik) & Wilkins Chung (LinkedIn), InPulse YCW11- Eric Migicovsky (LinkedIn, @ericmigi), Vanilla Forums TechStars09 – Mark O’Sullivan (@navvywavvy) and others.

    There has been an explosion of support for existing organizations, there has been a rise of a new breed of incubator/accelerator/catalyst.

    How does an entrepreneur evaluate an incubator?

    Photo by Chris Devers
    AttributionNoncommercialNo Derivative Works Some rights reserved by Chris Devers

    Do you pick the incubator? Or does the incubator pick you? This is a business decision. It’s somewhere between chosing an investor and a service provider and picking where to go to graduate school. There are implications for incubators about which startups they choose to help. Their reputation, alumni and talent pool are determined by the people they let in.

    There is no magic formula and rationalization or justification can make any decision sensible. But when I advise entrepreneurs, I want them to think about:

    Pedigree & Reputation
    What are the exits? Who are the alumni? What do others think about the program? One of the big reasons that YCombinator has become so successful is the success of it’s alumni. It has been reported that the YCombinator portfolio is worth almost $3B. They have an strong history of helping companies succeed like crazy. Think about this in terms of post secondary education. What is your opinion of a computer science graduate from: Carnegie Mellon University, MIT, Stanford, UWaterloo, Slippery Rock University? The quality of the education might not be any different. But you need to consider the external optics of an incubator program, just like you do in picking a school.
    Alumni, Mentors and Advisors
    Who do you have access to? Does the pedigree or alumni network change your access to people? Think about YCombinator grads, they get access to Yuri Milner and Ron Conway and $150,000. That’s something most of us don’t have access to. What doors and connections that aren’t available to you today can be enabled by attending an incubator. Who are the mentors what have they built? For example, look at the great talent behind GrowLab – Debbie Landa (Dealmaker Media), Boris Wertz (Abe Books), Michael Tippett (NowPublic), Leonard Brody (NowPublic) and Jason Bailey (SuperRewards). These are some people with impressive histories of building, promoting, operating and selling startups. You need to think about your vertical, your customers, the connections to potential acquirers, etc. Are the people connected with the incubator beneficial to me.
    Culture
    You need to make sure that the culture is something you can work in. I can only describe the culture of places I’ve seen, but I look at Extreme Venture Partners and Mantella Venture Partners in mentoring, motivating and growing entrepreneurs. What is important to you? I watched the Like A Little video on TechCrunch Cribs, and there is no way I could live through that again. There’s nothing wrong with the culture, it’s amazing (disturbing), but I could not do it because my stage in life just would not allow it. My advice is that you visit the incubator, meet the people that are in residence, ask questions, observe, form an opinion.
    Funding or equity stake
    What do you have to give up? Equity? A board seat? How does it compare to other incubators? How much will you benefit from the network and pedigree, from the connections and mentors? This is a decision about do you believe the costs match the benefits? Do you have to move? How long can you survive on the capital?
    Free stuff
    This is a funny thing. What do you get for participating? SwagBag? Press? Boardroom for customer meetings? Hosting? Design services? Legal services? Templated documents? Do you get to attend StartupSchool? Do you get press coverage at your demo day? Do you get coffee? Dinner every other week. You’re in it to get the best deal to help your startup grow.

    Do you need an incubator?

    I’m curious about the feelings and opinions about incubators from:

    • Scott Pelton (@spelton) – GrowthWorks has previously invested in BootupLabs. Scott has worked with companies from incubators including Bumptop. Does having an incubator change your opinion or evaluation of young companies?
    • John Philip Green (@johnphilipgreen) – John has started LearnHub, been part of the early or founding teams of companies in Silicon Valley and now the leadership team at CommunityLend.
    • Leila Boujnane (@leilaboujnane) – Leila is a pillar of the community. She is the founder of Idee & TinEye. She advises startups and hosts events like HackDays.
    • Ryan Holmes (@invoker) – Ryan is a founder of HootSuite, he is also an advisor at GrowLab. Wasn’t HootSuite incubated at Invoker? What is the role of the incubator or companies in organic growth of new ideas? How should entrepreneurs evaluate an incubator vs being an employee versus something else?
    • Evan Prodromou (@evanpro) – Evan is the founder of Status.net and has raised seed money from MontrealStartup and continued to build an amazing product. I’m curious about his opinion on starting in an incubator.
    • Patrick Lor – Patrick cohosts DemoCamp in Calgary. He is on the board at Fotolia. He is an active angel investor. To the best of my knowledge outside of his involvement in SIFE he is not affliated with an incubator.
    • April Dunford (@rocketwatcher) – April is the best B2B Marketer in the world! I just said it on the Internets so it must be true. April has worked with lots of startups including NexJ and Janna. I wonder what her advice to a startup considering an incubator would be.
    • Rob Lewis (@robertslewis) – A drunken rumor says that Rob is starting his own media incubator in Toronto (possibly with ExtremeVP). And since Rob is a W Media Ventures portfolio company, I don’t want to see any puff PR pieces on TechVibes about GrowLab companies.
    • Chris Arsenault (@chrisarsenault) – One of the Jacques’ Mafia and an incredible investor. He has portfolio companies like Chango that have been incubated at Mantella VP. Are incubated companies better?
    • Danny Robinson (@dannyrobinson) – Now running BCIC and I’m curious at his opinion about what is rising out of  the ashes of BootupLabs and his thoughts on the incubator business model.

    More importantly, what do you think about this new bumper crop of incubators?

  • The best laid 15 year plans

    Southern Alberta Railroad Tracks
    Photo by ecstaticist

    OMERS and ABP announced the launch of INKEF Capital, a € 200 million venture fund that is focused on deploying € 100 million in Canada in 5 years.

    “In the first five years, € 100 million is anticipated to be invested in start-ups in each of the territories, the Netherlands and Canada. The initial portfolio will naturally be weighted towards early stage companies which will mature over the fifteen year term. Deal flow will come from various sources, including technology transfer offices of universities, informal investors, regional funds and from spin-offs of new technologies by existing companies.” 

    This is great. It’s nice to see new capital getting ready to be deployed to Canadian entrepreneurs. What’s interesting is the reason that INKEF believes it is differentiated than other capital:

    “INKEF Capital distinguishes itself from other investors by its long term investment horizon and active mentoring of the start-ups.”

    Makes me wonder what the other firms have been doing? Passive mentoring? It will be interesting to gather more details as content becomes available (Currently http://inkefcapital.com/ is not active and the WHOIS record returns a registrar and intellectual property firm in the Netherlands). This looks it is a direct investment vehicle for OMERS & ABP,  “programs for direct investment as a promising new strategic option”.  I can’t wait to hear Mark McQueen’s take on this, but given we’re in Day 9 of his hunger strike I suspect that you’re stuck with my limited insight.