Welcome Rogers Ventures

Posted on February 12, 2010 | Leave a comment

Reposted from NACO Blog – October 22, 2009.

REPOST NOTE: This is a timely repost as I am looking forward to learning more about Rogers Ventures this afternoon from Sean Evans. More to come! -12 Feb., 2009

We were a bit busy, here at NACO, with the National Angel Summit last week, so missed the fact that Rogers Ventures launched. Their mandate?

We invest in technology, entrepreneurs, and Canadian innovation. Rogers Ventures is a venture-style funding mechanism for start-ups with lots of value add. We invest our money, our leverage, our experience, and other strategic contributions to get Rogers Venture portfolio companies on the path of accelerated development and market growth. Technology innovation was fundamental to our founder, Ted Rogers, and remains a strategic pillar of our company today. Rogers Ventures is also committed to supporting community-level programs and initiatives that accelerate innovation momentum in this country. We look for great talent and powerful ideas and invest in their success. We work with the community to support a healthy innovation funnel. We believe that the start-up community and Rogers Ventures need each other right now. It’s about our collaborative success.

If what they say is true, and given their actions so far, Rogers Ventures could be quite a nice addition to the entrepreneurial ecosystem as a partner and co-investor with Angel investors. Welcome!

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Tom McKaskill: Invest to Exit

Posted on February 12, 2010 | Leave a comment

Reposted from the NACO blog – Jun 8, 2009

Exits have become a very hot topic, for obvious reasons, in the international Angel investor community over the last year. Canada’s own Basil Peters recently released a book on the topic, titled Early Exits: Exit Strategies for Entrepreneurs and Angel Investors (But Maybe Not Venture Capitalists). I have just received my copy, but from what I have read so far I am quite impressed.

Over the weekend another book on Angel investor exits came to my attention, put out as a free eBook by Dr. Tom McKaskill, called Invest to Exit – A pragmatic strategy for Angel and Venture Capital Investors.

This book provides a detailed examination of the investment and exit opportunities in financial and strategic ventures. Underpinning the creation of value in both of these ventures are the drivers of high growth potential… The major recommendation in the book is that Angels and VC investors should focus on strategic value investments. These investments have very focused exit strategies which generally have lower execution risks, shorter timescales and higher returns than financial trade sale exits or IPO exits.

The book provides a detailed analysis of the product or service characteristics which create strategic value, a set of guidelines for identifying strategic buyers and processes for setting up the investment deal and the strategic sale.

The focus of both of these books reinforces the fact that Angels need to focus on exits, the more strategic the better, from the very earliest stage of due diligence and investment . Hopefully, with the guidance of both of these books, both Angels and entrepreneurs will enjoy “more successful, more frequent and more profitable exits“.

Dr. Tom McKaskill, CPA

Global serial entrepreneur, consultant, educator and author, Dr McKaskill has established a reputation for providing insights into how entrepreneurs start, develop and harvest their ventures. Acknowledged as the world’s leading authority on exit strategies for high growth enterprises, Dr. McKaskill provides real world experience with an educator’s talent for explaining complex management problems that confront entrepreneurs. Recently retired from the Richard Pratt Chair in Entrepreneurship at the Australian Graduate School of Entrepreneurship, Dr. McKaskill is the author of a range of books for entrepreneurs covering such topics as new venture growth, raising venture capital, selling a business, acquisitions strategy and angel investing.

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Approaching Investors: Executive Summary or Slide Deck

Posted on February 12, 2010 | Leave a comment

Reposted from the NACO blog – 2009/05/07.

Mark MacLeod, writer of StartupCFO, conducted a poll recently with interesting results.

“Following up on a comment to my earlier post today about executive summaries, I decided to do a quick twtpoll of investors to see what they preferred: a short written summary or a short presentation?

Between the poll and several e-mails we have a small but statistically relevant sample that is overwhelmingly in favour of presentations (25 out of 32 responses). One anecdotal observation: angels seems to prefer one pagers. Every VC who wrote me preferred the presentation.”

In my experience, I’d say that this poll accurately sums up the preferences of both groups. Angel groups in Canada (and indeed globally) are now almost all using Angelsoft, an Angel group deal flow management tool and community. The first step in using signing up on this platform for any angel group is the filling out of a form which generates a one-page executive summary.

The first step in The catch, of course, is that to produce either document, a one page executive summary or a slide deck, of any quality an entrepreneur really must work through all the logic involved in preparing a full business plan and the financials that accompany it.

My recommendation to entrepreneurs: Remember that they are engaged in a sales activity when they are raising financing. You are selling your company. Slides, executive summaries, business plans, your web site, etc. are all part of the collateral you need to help you close the sale. Take time when completing your executive summary to be sure you put your best foot forward.

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I have been negligent…

Posted on February 12, 2010 | Leave a comment

I was asked last night if I had a website. My answer: “Of course, thought it functions more as a blog.” This answer got me thinking, however, and I realised that I have been completely neglgent in posting and cross-posting here for over a year! So, it is now time to catch up on my posting and cross-posting. More to come!

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Batten Down The Hatches: Company CEO Advice

Posted on October 13, 2008 | Leave a comment

Over the past week I have seen a flurry of notes from Angels and VCs to their portfolio companies commenting on the recent economic instability.

The message echoed by all: Batten down the hatches! Review your budgets. Make the cuts you need to. You may not get another round of financing in the near future.

Two such groups that have sent out messages advising their portfolio CEOs of some of the steps they might take to weather the economic storm they are going to face for what many have estimated will be at least the next 18 months, are Sequoia Capital and angel investor Ron Conway.

Ron noted, in an article with TechCrunch, that the current situation is much like that in 2000. So much so, that he simply dug out the e-mails he sent then and circulated them again. The advice:

The down draft in the stock market sends us some obvious “signals” and we can’t help but mention them.

  1. If you are in a funding cycle, you should raise your funding as soon as possible and raise as much as possible.
  2. Many companies are ignoring certain VC leads we’ve provided in order to concentrate on the top tier only. While we have preached that in the past, this is no longer the case. Currently, top-tier VC bandwidth constraints, coupled with the market down draft, make it very important to take meetings with any VCs where you can get their attention. We have been working hard to open up this new bandwidth.
  3. You must aggressively examine and pursue M&A opportunities (unless you have over 12 months of cash reserves!) ro insure you have critical mass (including funding, customers, rolodex power, market share, cash, synergy, etc.).
  4. Be realistic on valuations – they will fall so be ready and willing to co-operate.
  5. Look for corporate partners to invest so you can raise more money. You should also consider a sale of your company to your corporate partners.
  6. If you are entering a funding cycle start raising money sooner rather than later.
  7. While it’s safe to say entrepreneurs have had negotiating leverage with the “down draft” in the market, the VC community will start exercising their leverage.

I highly advise you to read the full TechCrunch article that goes into much greater detail.

The second group whose advice I think it important to convey is Sequoia Capital. They sent around the slide deck that you can find at: Sequoia Capital on startups and the economic downturn

The most important piece of advice here, I think, is manage what you can control, including your spending, your growth assumptions, and your earnings assumptions.

Companies everywhere have a hard path ahead of them over the coming months (years?). Only those that can create real value, and reach breakeven by stretching their pennies razor thin will flourish in an environment such as this. Can do this? If not, it is time to learn quickly or risk being left in the ‘valley of death’.

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The Perfect is the Enemy of the Good

Posted on September 26, 2008 | Leave a comment

The perfect is the enemy of the good. – Voltaire

Far from a sanction of shoddy work, or an excuse not to think things through, Voltaire makes an excellent point that all start-ups should pay heed to. Attaining perfection, be it in a technology or a business plan, becomes infinitely more difficult as you get closer to achieving it.

There comes a time in every start-up’s life where the CEO must decide that the technology is good enough for the market and the business plan significantly addresses the majority of the issues he is likely to face.

At that time the CEO has a choice:

  1. Tweak and tune the technology or business plan alone in the basement to make it ‘perfect’ (something I would argue you will never achieve that way anyway…); or
  2. Get out there, sell, get the market validation a company needs to grow, integrate customer feedback as you grow.

At some point every would-be entrepreneur must decide to jump into business and make a go of it – and potentially fail. Working to perfect a business plan or technology is the deceptively safe alternative. Why deceptively? Because, in the end, all you have is the unrealised down-side of opportunity cost. I have seen a number of people fall into this trap. Don’t let it happen to you. Get out there, even if what you have isn’t perfect, it might just be good enough to start a killer business.

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An Introspective Look at Startup Killing (Potential) Mistakes

Posted on August 27, 2008 | Leave a comment

Mike McDermant, CEO if Freshbooks, wrote a great blog post today, 7 ways I’ve almost killed FreshBooks.

Mike has led Freshbooks to a great place over the last few years, having built a great product sooths a point of pain for many people, myself included. I highly recommend that you check both this post and his product out. The 7 ways? Well:

  1. Thinking we had to move faster than we did
  2. Placing my faith in a spreadsheet
  3. Thinking we had to spend more than we did
  4. Placing my faith in consultants
  5. Underestimating word of mouth
  6. Believing we could not get this far without doing “x”
  7. Doubting ourselves too much

For full details, see his post.

Thanks, Mike, for being so open about this. A lot of startup CEOs could learn from your experiences

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Idée Beta Now Open!

Posted on August 20, 2008 | Leave a comment

It is my great pleasure to say that Idée has now opened their TinEye beta to the public!

Captained by Leila Boujnane, CEO, Idée has developed TinEye to be the first image search engine on the web to use image identification technology. TinEye lets you submit an image to find web pages that contain that image.

As someone who often works with images, TinEye is a dream, helping me find out where and how an image appears online, find modified versions of unmodified images or vice versa, and research the usage of editorial or stock images.

If you ever work with images I highly recommend that you sign up for the Beta.

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Entrepreneurs as Artists: A Comment

Posted on June 22, 2008 | Leave a comment

I very much like the comparison Mike McDerment, CEO of FreshBooks, made recently between entrepreneurs and artists.

As a fan of Romantic Realism, a term that usually refers to a type of art that deals with the themes of volition and value while also acknowledging objective reality and the importance of technique, to me, Mike’s is an very fitting comparison.

An entrepreneur, like an artist, must:

  1. Choose to shape/reshape/create something new he thinks will be of value to the market based on, hopefully, objective information he has gathered; and
  2. Produce something that:
    • Works for the customer and meets their needs (Technology – 10% of the failure of early-stage companies);
    • Satisfies a market need, is accessible to the market (they understand it!) and acts according to the realities of the market (Market – 30% of the reason for failure of early stage companies); and
    • His/her team’s personal competencies can deliver (Team – 60% of the reason for failure of early stage companies).

The comparison could continue but I think Mike did a great job of it!

I would say one thing, in addition to Mike’s comments, about starving artists: Entrepreneurs, like artists, Starving Artistmust produce something of value to their customers.

If an artist or entrepreneur engages in an exercise that only focuses on the product and not ensuring it garners traction in the marketplace they deserve to starve if, after labouring for years they find out that the market doesn’t have a use for it. Someone paying for your art/product is the true litmus test of your art/product’s worth, not to mention your company’s worth when trying to find investors!

Starvation may mean two things:

  • The market signalling that your product is not relevant to it, that it is not understood, that it is priced outside what the market will bear, or that you are doing something else wrong in conveying it’s value;
  • That you are making the conscious choice to ‘starve’ and push all profits back into the venture to grow it.

Entrepreneurs in the latter category, Angels are waiting to hear from you!

On another note much delayed note, I would like to add Freshbooks to the Tech Tools section of my blog. They have created an amazing suite of tools that I use to keep my invoicing and books clean! An example, perhaps, of a company providing a much needed product to their market? Absolutly!

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Team NOT Idea Makes A Company

Posted on May 15, 2008 | 4 Comments

I truly enjoy what I do these days. I get to work with great start-ups and the people that fund them.

One such company was Cambrianhouse. I met Mike Sikorsky a few years ago at the Canadian Venture Forum (a now dead venture forum) and absolutely loved where he was trying to take his company. In the last week, though, it seems the Cambrianhouse model (hopefully not the company!) has been relegated to the deadpool. The reason: Team.

In this case it was not the company’s team, but the teams meant to commercialize Cambrianhouse’s crowdsource-developed products.

As Mike commented:

The limiting reagent in the startup equation is not ideas, but amazing founding teams.
A key assumption for us, which proved out NOT true: given a great idea with great community support and great market test data, we would be able to find (crowdsource) a team willing to execute it OR we could execute it ourselves. We needed amazing founding teams for each of the ideas – this is where our model fell short.

What we learned: it would have been better to back great teams with horrible ideas because most of the heavy lifting kept falling back on us, or a few select community members… Trying to find people willing or capable to take on the offspring (our outputs) of the CH model was hard and/or incredibly time consuming.

This is a well documented fact: the TEAM is the MOST important aspect of any start-up company, NOT the technology or the idea. Though technology might be an enabler, according to a study conducted on Morgenthaler’s companies that failed, only 10% failed because of the technology or idea compared to 60% failing because the team couldn’t make it happen.

So, let Cambrianhouse’s lesson, and that of hundreds of other start-ups be a lesson to any and all entrepreneurial companies: Technology or a great idea are good to have, but, whatever you do, concentrate on ensuring you have a WORLDCLASS team.

As for Cambrianhouse, good luck, Mike, with your efforts to keep crowdsourcing alive – I still believe the concept (and your tool to make that concept functional) has a role to play in the future of innovation, especially given the recent acceptance of open innovation and network-centric innovation/commercialization.

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