A Start-ups BEST long-term strategy
Survive the short term.
Ian Graham
Rocket Fuel or Gasoline
I heard Paul Lem refer to VC funding as rocket fuel. I really like the connotation and think that it is most appropriate. The analogy is something like this; if you are a start-up in a very high growth market (revenue of $100M in five years) then rocket fuel will help to get you to lift off faster. Just be careful which direction your space craft is pointing before igniting. Many rockets exploded on the launch pad during the bubble days. There is a bit of rocket fuel out there if you know where to look, have a solid team, some traction and a believable business plan. I know only a few start-ups who need rocket fuel, although many others that think they do.
If you are like most start-ups I have come across then what you probably need is gasoline (revenue of $20M in 5 years). There is a gasoline shortage right now and no prospects on the horizon of anyone opening a gas station or a tanker truck showing up. In my opinion the government should be helping to open up start-up gas stations all over the country to help early stage (seed and pre-seed) entrepreneurs and start-ups and yes, government does have a role to play. The reason I say the government should get involved in some way is to incent private investors to invest in businesses in the very earliest stages of formation. Right now no one is doing it because it is to high risk. Find a way to remove some of the risk for investors and perhaps we will see some investment. There is one program I heard about that sounds very interesting, however, I am trying to track down more details, a post to follow soon.
Looking forward to the first start-up Petro-Canada.
Ian Graham
GAME ON!!
Ben forwarded me a cool link that I wanted to share. Game Day (weekend actually) is on at Carleton University from Friday January 30th to Sunday February 1st. A great line up of local talent and interesting game related stuff.
You can check it out here: C.U. Game Day
Ian Graham
Retail Fund CEO Round Table – Notes and thoughts
My initial thought regarding the presentation I attended yesterday is that this was more of a presentation and less of a roundtable. The third presentation by Tim McCunn was prepared in advance and presented to the audience with none of the comments from the round table session at the event included. If you have the solution before soliciting comments and feedback then the event should be called a retail fund presentation and not a CEO roundtable. At the end of the session a form was handed out and attendees were asked to sign to help further the cause of the retail fund.
Here are my general observations:
- Early stage funding means different things to different people
- Funding continuity is really important, Mashaad Koohgoli raised this point and I tend to agree
– Secure line of funding from seed to series X or IPO
– Perhaps a pipe dream, however, a noble goal
- This is event is a small step in the right direction, however, not clear on the motivation
The proposed solution:
- Any Qualified VC manager should be able to raise a retail fund
- Managed based on the same principles as OVCF
- Target Sectors: IT, BioTech, CleanTech
OK, let’s start with the obvious; what qualifies a VC to manage a fund? I guess if the manager can recruit retail investors for the fund that would be fine with me; however, there should be no matching government contributions from the taxpayer. The tax credit and such mentioned in the proposal ($200k maximum investment with 30% tax credit) should suffice.
OVCF is a series A and above fund rather than what I would call early stage, however, this goes back to my previous point; what is early stage funding? I would prefer to see any new retail fund start at the earliest stage of investment, say less than $1M. However, this fund seems to start closer to series A because they were talking about $4M and $5M payloads. This is a significant flaw, IMHO.
I understand that this is preliminary but, the target sectors of; IT, BioTech and CleanTech, IMHO really need to be sorted out. IT for instance is far too broad a sector, BioTech probably has some potential in certain regions of the province and finally cleantech is a case of (again IMHO) irrational exuberance.
The key issues I see with this proposal are:
- Needs to be smaller and regionally focused fund(s)
– Another Ontario wide fund is NOT the solution
– This was actually one of the strengths of the old LSIF model
- There needs to be a <$1M seed fund set up and this isn’t it
– Typical pay load mentioned was $4M to $5M
– How is this different that OVCF
- No mention of CAP on management fees
– Raised by Doug Cummings as a key issue with former LSIF
– Not addressed in this proposal
– Like to see a results based management fee myself
I am not sure who is sponsoring the travelling Retail Fund Road Show; however, it did seem to be very VC centric. I am not a fan of the VC funding model. While I support the concept of a new retail investment fund for seed and early stage funding what was proposed needs some serious retooling. In my opinion early stage funding starts with a payload of < $1M and should harness the wisdom of crowds for merit based award to start-ups. Ideally the new retail fund would also have contingency for continuity of funding to subsequent rounds. This fund payload is not significantly differentiated from OVCF, has an outdated administrative model and needs a serious rethink before I would support such an initiative.
Ian Graham
A Major Milestone – first customer win
One of my favourite start-ups in Ottawa and a company I have been following for the past two or more years is thinkRF. Lead by the dynamic duo of co-founders Nikhil Adnani and Tim Hember thinkRF continues to be a start-up to watch. Originally highlighted on Blogmatic “start-ups to watch 2007” thinkRF is a going concern that is gathering speed.
Like any good start-up thinkRF is building for the future, lean and mean. In fact to keep costs under control they enlisted the help of Nikhil’s young son to develop the logo to the left. Not sure if they will use it going forward, however, it hangs proudly in their home based HQ.
Friday November 28th is a monumental day for this young Ottawa Company and one where they acquired their first paying customer. Details of the customer and value are undisclosed, however, winning that first signed PO is a big step for any start-up.
I was a little late getting to the celebrations last night, however, did have the opportunity to sip some champagne (according to Yves the good stuff) with; Nikhil, Gilbert (rabble rouser), Yves and Allison. Good fun.
Congratulations to Nikhil, Tim, Quyen, Jean, Yves, Gilbert, Allison and the strong supporting cast that they have assembled.
Ian Graham
The Idea and the Wardrobe
I am in the process of reading “The Myths of Innovation” by Scott Berkun. An easy read packed with lots of cool stuff, certainly a book I would recommend. There are a number of blog posts brewing based on what I have read so far and likely a few more as I finish the last couple of chapters.
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When I read a book now I tend to do a lot of highlighting writing in the margins and bending pages to point to really interesting stuff. Plenty of highlighting and bent pages in this book and that is a good thing. There is one particular anecdote regarding ideas that I wanted to share.
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Chapter 5 is called “The Lone Inventor” and there is a sub-heading titled “The challenge of simultaneous invention”. The author presents what I would like to call the wardrobe analogy. Imagine that you go into a large department store and see racks of similar clothes as far as the eye can see. You shop about and then pick “your” wardrobe from the merchandise available. Basically you pick “your” clothes from an array of identical clothing although the same clothing is there in different sizes and such also available to everyone else. Then you take home your purchases and it becomes your wardrobe. People are always surprised later on when they see someone else in “their” clothes even though there were plenty available at the store for everyone to choose from.
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The clothes in the department store are like the environment or breeding ground for ideas and innovation. Your wardrobe is like that unique idea that you come up with that is entirely your own. In fact with the proper environment and circumstance many people will come to the same sorts of idea and innovation.
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Anyway, I thought the concept of “Simultaneous Invention” was a very cool idea. I hope someone else hasn’t beaten me to it.
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Ian Graham
Wednesday, Dec. 3rd – Start-up Studio – Toby Lutke – NOON to 1pm
Shopify is a hosted application used to set up user-friendly and professional-looking online stores and sell goods. Shopify allows users to organize their products, customize their storefront, accept credit card payments, and track and respond to orders — all without the hassle of running a physical store.
Tobias Lütke, CEO and co-founder of Shopify, has served on the core team of the Ruby on Rails framework and has created many popular open source libraries such as the Typo weblog engine, Liquid and Active Merchant. As an internationally invited speaker, Tobi has spoken on diverse topics such as startups, crowd-sourcing, and large server cluster optimization. He also maintains a popular tech weblog at too-biased.
Start-up Studio is much like “Inside the Actors Studio” hosted by James Lipton, however, Keith Cameron (aka Cameron) from Lang Michener will be acting as the host and moderator and the topic is start-ups and entrepreneurship rather than acting. The intent of the Start-up studio is to provide aspiring entrepreneurs and start-ups with an opportunity to get up close and personal with successful local entrepreneurs and to learn from their expertise.
Start-up Furniture and Computer Monitors for FREE
If there are any start-ups in need of furniture or computer monitors for FREE. Please drop me a note @ ian [@] theCodeFactory (dot) ca and I can point you to the source of the free stuff. The furniture and the monitors are from two different sources.
Here is a list of stuff that was available on Friday:
2 credenzas: HPIM 3058 and 3054
2 grey bookshelves (12x36x54): 3056
Metal table 36 x 24: 3055
1 grey secretarial desk: 3050
1 black 3-piece desk: 3065
1 little grey table/stand: 3057
1 secretarial desk: 3059
10 x grey fabric boardroom chairs: 3061 (need to be cleaned)
1 cherry desk: 3067
Ian Graham
