Billions With Zero Knowledge

I’m very excited to be able to post that we announced our angel financing at Akoha today.

Raising angel financing in Canada has unique challenges that I’ve written about here before.   Part of what was most fun about raising this round was the number of incredible investors I was able to meet.   Many of them joined us in this round, but throughout the process I was impressed by the growing strength and sophistication of Canadian angel investors.

Completing a $1.9 million dollar round for a stealth project had its unique moments, but the confidence and support that our investors have shown for the project has been great.

I’d like to welcome all our investors to the Akoha project and thank them for their support.

On Mon 28 Apr 2008. No Comments

Kara Aaserud wrote an interesting piece in Canadian Business Profit Magazine about the relationship between angel investors and the companies they invest in.

Ben Yoskovitz, Fred Ngo and I are mentioned in the article.

Combine those two interests, and it’s easy to see why angels often want an active role in management and decision-making. Such a high level of engagement makes finding an angel who is aligned with your vision and business goals as crucial a task as perfecting your investment pitch. Austin Hill, a Montreal-based investor and serial entrepreneur, says the most common mistake business owners make is treating private-equity financing as a mere business transaction. “I had one entrepreneur show up at my house on a Saturday morning, shove his product in my face and ask me if I was ready to invest,” says Hill. “Entrepreneurs need to understand it’s a relationship, something they should begin nurturing well before thinking of asking for money.”

For Benjamin Yoskovitz, CEO of Montreal-based Standout Jobs Inc., developing that relationship began with volunteer work for BarCamp Montreal, a conference for the city’s bustling technology-startup community. That exercise led to chance meetings with Fred Ngo, his eventual co-founder and chief technical officer, and Hill, who became one of his investors and chairman of Standout Jobs, which develops Web-based recruiting tools.

There are some additional quotes from both Ben and I where we discuss the importance of aligning common vision and having good communication with your investors.

Getting the right angel investors is one of the most critical decisions an early stage company can make.   It is one of the reasons I’ve criticized the speed dating approach of obtaining investors that is showcased on the CBC show Dragon’s Den. The show is good for entertainment - but it is still just TV.

While the market for angel investing in Canada still has a lot of maturing to do I am very optimistic about the organization of angel investors into funds, networks and the exchange of best practices that is beginning to occur.

On Mon 21 Apr 2008. No Comments

I’m incredibly proud to be part of the new Montreal Startup fund that launched this week.

Montreal Startup is a new $3 million dollar angel-backed seed fund, that is run by John Stokes & Daniel Drouet.  Both John and Daniel are very active in the local startup community and did an incredible job in securing the support & involvement of many of the cities angels and structuring a fund that is focused on a gap in the funding market.

Alongside my friends Alan Macintosh, Jean-Sebastien Cournoyer - I am involved a both as an investor & board member of the fund.  The rest of the investors include a who’s who of the cities seasoned & successful entrepreneurs with generous investment support from Investissement Quebec

Montreal Startup will be focused on seed stage investments where we will be assisting entrepreneurs in building venture ready companies by providing critical funding and mentorship.

You can read more about the funds focus in this announcement.

Kristina Tomaz-Young at VC-TV has a two posts about the launch up.

She also has some video from this weeks press conference up which I’m including here.

As Jevon points out on StartupNorth, a $3 million dollar fund isn’t a large fund for Canada but with our focus on seed style investments and the combination of the advisory capital with capital investments for early stage projects we are confident that this will help meet a needed gap in Montreal.  I also know of similar projects being initiated in Toronto & Vancouver and we hope this fund can serve as a model for replication across Canada.

In addition to the launch of the fund, Montreal Startup announced their investment in Standout Jobs.   As Ben points out, Montreal Startup joined iNovia Capital, my own funding and participation by some other angels in the previously announced funding of Standout Jobs.  Now that the fund has launched we are able to announce this investment which is a great example of how Montreal Startup is going to be also investing alongside angels & VCs for the best new startups in Montreal.

For some more comments on the fund here are some links I found interesting,

• Marc MacLeod, CFO at MobiVox (who writes a great blog on CFO life at a Startup)
• Boris Mann writes about the fund at Bootup Labs.
• Heri at Montreal Tech Watch covers the announcement and the investment in Standout Jobs.

If you are an entrepreneur in Montreal, looking for funding then MSU is open for business.

As always, Ben has a great post on what you need to know about Startup Funding.  Ben is a great writer and shares his experiences building Standout Jobs regularly on his blog which is a must read for those with an inkling for startup life.

On Sat 15 Mar 2008. [3] Comments

Interlogiq is holding a conference this Wednesday on Angel and technology financing.

I’ll be speaking that afternoon alongside Dan Mothersill from the National Angels Organization.  I’ll be speaking about some common myths of entrepreneurs & angels that I’ve encountered to try and shed some light on why these two groups so often fail to connect with each other.

In addition Le Reseau Anges Quebec will be holding a cocktail in the evening following the presentation by a number of companies looking to raise financing. (Disclosure: I’m a board member of Les Anges Quebec, but haven’t updated my disclosure & bio page yet)

If you are looking for funding for your startup, or are an angel looking to network with other investors I would encourage you to come to the event.

On Tue 11 Mar 2008. 1 Comment

Despite the cold weather, Montreal is hot for young entrepreneurs. La Jeune Chambre de Commerce will this Thursday the 28th of February host its 13th edition of Les Anges Financiers. This fast paced evening will give a unique chance to some lucky selected Start-Ups to show off their talent in front of the Montreal Angel community. There is also $25,000 in grants available to winning companies.  I attended last years event where I saw an interesting mix of local companies.

Unfortunately I’ll be travelling this week and miss the event, but I was in touch with Alexandre Teodoresco who is in charge of the event and asked him to answer some questions about the event.

Q: Tell us about the event. What is it exactly?

Les Anges Financier is a contest where 20 innovative Start ups from all over Quebec are selected by a jury made out of some prominent business people. These finalists then have a chance to present their business in front of the Angel community during the Gala of ‘les Anges Financiers’

The event has been organized by ‘la Jeune Chambre de Commerce de Montreal’ for 13 years in collaboration with the ‘Fondation du Maire’ and Economic Development Canada.

The event itself is a bit like a ‘Dragon’s Den’ but larger. The Angels can meet the entrepreneurs at their booth and then the finalist have 2 minutes each to come on stage and impress the community. 2 minutes that can change lives, you can feel the tension. 

Q: What is its mission and its vision?

Our mission is to help young innovative start ups in Quebec raise the capital they are seeking by giving them a unique visibility in front of the Angels community in Quebec. It is also to help the Angel community have access to first rate start ups in Quebec. Our vision is to be one of the most recognized events in Quebec when it comes to mixing up young entrepreneurial talent and Angel funds.

So far we have been lucky to benefit from great media coverage and great support from different governmental organizations as well as the business community. 

Q: How has the event helped young companies in the past?

The event has helped dozens of young companies raise money and get great visibility in the Angel community. We have witnessed great success stories in the past and some great ones are still in the making. Some past winners include, Liquid Nutrition, Pakwa Technologies, Arianne Controls, Opto Security, Emovendo, etc. these companies. Its especially rewarding for us to see some of those finalists come back now as Angels and investors.

Q: How can people participate?

The event will take place on the 28th at the Centre Mont Royal. At the moment, we are finalizing all the invitations for the Angels. So if you are an investor and want to spend a fun and inspiring evening with other Angels, it is very easy to register. Simply go on the web site, www.angesfinanciers.qc.ca .

On Sun 24 Feb 2008. 1 Comment

Instead of trying to answer the Aquinas like epistemological question of how many angels fit on the head of a pin, this post is about the changes that are occurring in the Canadian angel community for high-tech startup funding.

For a community of angel investors to be effective, there needs to be a density of intensity that creates, attracts and supports healthy deal flow and investment activity.  This density of intensity acts like a vacuum drawing entrepreneurial talent, mentorship, other investors and VCs providing a series of experiences and market data on what is working.  We see which deals & people attached to deals are worth re-investing in and it helps create the proper farm system for later stage investing and success.

Done right it creates a system that achieves escape velocity and can continue with its own momentum giving birth to many high tech success stories, that in turn feed talent, capital and mentors back into the community.

Historically there have been a lot of problems with the various attempts to organize the angel community in Canada.

While not the only example, a visible sign of these problems was the Toronto Angel Group and Toronto Venture Group suspending operations.  I only had cursory run-ins with these groups, but I know from many other angel investors and entrepreneur friends that these organizations failed to galvanize the community and service either the angel or entrepreneur communities effectively (despite a lot of volunteer effort by many people I respect and consider friends).

A healthy angel community that provides such a farm system for venture investors is becoming even more critical in todays market where rapid development and the lower cost of building web applications puts most deals below the venture capital radar. 

There is currently an oversupply of early stage capital in Quebec, with more then a billion dollars of new venture capital going into VC coffers in the last 5 years targeted at early-mid stage investing. Despite this we do not have enough companies reaching the threshold of being ‘venture ready’ to access this capital.

There are many exciting developments occurring in the Canadian early stage technology community, with Montreal seeing it’s fair share of that activity.

Beyond Montreal across Canada I’m seeing the seeds of an active community of early stage angel investors. One such example is the new Toronto-based angel group Maple Leaf Angels who are building a community of angel investors and have been quite active in doing deals in Toronto.

The National Angel Organization is working to focus some of this activity and last year published a great reference document on creating angel groups. Bryan Watson and Daniel Mothersill are actively helping seed and advise networks of angel investors on banding together.  People interested in angel investing (either from the point of view of an entrepreneur, or investor) can check out their document of best practices that explains many of the in’s and out’s of angel investing.

The role of angel investors is critical in Canada’s innovation ecosystem, and one that has been often overlooked.

Randy Komisar (entrepreneur, VC partner with KPCB and author of a great fable on high tech startups, The Monk & the Riddle) in this interview with Brown Hen points to a critical aspect of the Silicon Valley culture of innovation.

Successful people also reinvest in innovation; they want to be a part of the next big thing; they want to help mentor, guide and support aspiring entrepreneurs. This reinvestment is probably the most significant reason Silicon Valley is so prolific in terms of innovations.

To create this community we need to bring together the entrepreneurs and angel investors from successful companies that feed the density of intensity (i.e. Lot’s of deals with experienced mentors occurring quickly within the same geographic area).  Some of these deals with fail, but if the pace continues and a few succeed we will begin to see more of a cohesive investment, talent and technology community emerge with all the benefits that other geographic centers of technology innovation have created (NC-Raleigh, Denver, Israel and some of the activity out of Europe all come to mind).

This ecosystem also requires successful exits.  What would happen if Canada had a bunch of exists like Club Penguin (In the Gaming industry, Canada has a critical mass of talent and an ecosystem that we should be seeing more independent web-based game developers going out on their own)? What if we had a number of web-based exits like Flickr & StumbleUpon that find the mentorship, capital & management talent in Canada without choosing to go to the Valley?

That is what the valley has developed over the last 50 years, a very focused and rapid cycle of innovation & failure that creates expertise, learning and reached a critical mass of activity to achieve its own velocity to support new innovation.

This is not going to occur overnight.  It will take time, and the work of many dedicated individuals willing to put their own money, time and effort into building the communities of innovation that attain their own escape velocity.

This is not something any single person can do (people with more resources, time & experience than I have tried). My own contributions need to be measured given that I have a startup working towards launch and another team I support as Chairman & co-founder having just launched.

On my own part creating successful, high profile projects that our teams, investors and the community can be proud of is part of how I can best contribute to this ecosystem.  Given my focus on these projects, I’m no longer doing any direct new angel financing deals for the foreseeable future.

I am however involved in a number of initiatives to help support this type of ecosystem.

I am involved as an investor, and on the board of directors of Montreal Startup, a new early stage investment fund comprised of angel investors as the limited partners.  I am also serving on the board of directors of Les Anges Quebec, a new angel network being created in Quebec. 

With the help of my friend & local angel investor Patrick Lauzon, we organized & hosted a dinner called Founders & Funders last fall to bring together VCs, Angels and Entrepreneurs. This event was also held in Toronto, hosted & organized by Jevon McDonald and David Crow.  We are going to be hosting more of these across Canada with the help of other local groups.

I’ll be posting more details on these initiatives over the coming months.  Each initiative approaches the problems of early stage funding, creating exciting opportunities in different ways, but I feel they are all complimentary and provide me with an outlet to support early stage entrepreneurship while allowing me to stay focused on my day job

On Sun 24 Feb 2008. [3] Comments