Comments on: Is money the root of our problems? http://davidcrow.ca/article/1805/is-money-the-root-of-our-problems Helping companies with marketing, product strategy, UX and development.. Tue, 07 Feb 2012 05:42:00 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Michael Garrity http://davidcrow.ca/article/1805/is-money-the-root-of-our-problems/comment-page-1#comment-2861 Michael Garrity Wed, 02 Jan 2008 19:02:00 +0000 http://blog.davidcrow.ca/?p=1285#comment-2861 <p>Hey David. Good topic and certainly not an easy one to answer. Here's what I can throw into the mix having just recently completed a good sized financing for our <a href="http://www.startupnorth.ca/2007/12/14/communitylend-raises-25m/">Canadian company</a>. I agree with Daniel that sometimes the delay in getting funding is partly due to the entrepreneur not aiming right. Most VC's have a particular formula for investing which works for them. If you're the type of company that easily falls into that formula and you can do a relatively reasonable job of selling it & there is a good chance there will be money available here (terms based on how many other VC's want your deal). If you don't match the formula and you're not interested in changing your company to try to match it (which I wouldn't recommend), then you have to refocus your aim and go after capital elsewhere. For us, the right formula was to widen our search outside of Canada and to look for Angel investors who had a passion for our particular business. It certainly wasn't easy but we were successful in getting the capital we needed and a group of folks with essential domain knowledge and passion for our business.</p> Hey David. Good topic and certainly not an easy one to answer. Here's what I can throw into the mix having just recently completed a good sized financing for our Canadian company. I agree with Daniel that sometimes the delay in getting funding is partly due to the entrepreneur not aiming right. Most VC's have a particular formula for investing which works for them. If you're the type of company that easily falls into that formula and you can do a relatively reasonable job of selling it & there is a good chance there will be money available here (terms based on how many other VC's want your deal). If you don't match the formula and you're not interested in changing your company to try to match it (which I wouldn't recommend), then you have to refocus your aim and go after capital elsewhere. For us, the right formula was to widen our search outside of Canada and to look for Angel investors who had a passion for our particular business. It certainly wasn't easy but we were successful in getting the capital we needed and a group of folks with essential domain knowledge and passion for our business.

]]> By: Michael Garrity http://davidcrow.ca/article/1805/is-money-the-root-of-our-problems/comment-page-1#comment-10694 Michael Garrity Wed, 02 Jan 2008 12:02:00 +0000 http://blog.davidcrow.ca/?p=1285#comment-10694 <p>Hey David. Good topic and certainly not an easy one to answer. Here's what I can throw into the mix having just recently completed a good sized financing for our <a href="http://www.startupnorth.ca/2007/12/14/communitylend-raises-25m/" target="_blank">Canadian company</a>. I agree with Daniel that sometimes the delay in getting funding is partly due to the entrepreneur not aiming right. Most VC's have a particular formula for investing which works for them. If you're the type of company that easily falls into that formula and you can do a relatively reasonable job of selling it & there is a good chance there will be money available here (terms based on how many other VC's want your deal). If you don't match the formula and you're not interested in changing your company to try to match it (which I wouldn't recommend), then you have to refocus your aim and go after capital elsewhere. For us, the right formula was to widen our search outside of Canada and to look for Angel investors who had a passion for our particular business. It certainly wasn't easy but we were successful in getting the capital we needed and a group of folks with essential domain knowledge and passion for our business.</p> <p>Hey David. Good topic and certainly not an easy one to answer. Here's what I can throw into the mix having just recently completed a good sized financing for our <a href="http://www.startupnorth.ca/2007/12/14/communitylend-raises-25m/&quot; target="_blank">Canadian company</a>. I agree with Daniel that sometimes the delay in getting funding is partly due to the entrepreneur not aiming right. Most VC's have a particular formula for investing which works for them. If you're the type of company that easily falls into that formula and you can do a relatively reasonable job of selling it & there is a good chance there will be money available here (terms based on how many other VC's want your deal). If you don't match the formula and you're not interested in changing your company to try to match it (which I wouldn't recommend), then you have to refocus your aim and go after capital elsewhere. For us, the right formula was to widen our search outside of Canada and to look for Angel investors who had a passion for our particular business. It certainly wasn't easy but we were successful in getting the capital we needed and a group of folks with essential domain knowledge and passion for our business.</p>

]]> By: Daniel Gibbons http://davidcrow.ca/article/1805/is-money-the-root-of-our-problems/comment-page-1#comment-2860 Daniel Gibbons Wed, 02 Jan 2008 03:17:05 +0000 http://blog.davidcrow.ca/?p=1285#comment-2860 <p>While the complaint is always that there aren't enough smart investors and funds in Canada, I think us entrepreneurs have to take some of the blame for not getting their businesses into a fundable state. There are plenty of high net worth individuals in Calgary, Vancouver, Toronto, everywhere, who make angel investments and would readily make more; they just don't see the deal flow they need to create a thriving funding climate for Canadian start-ups.</p> <p>I also can't understand Mark's comment that entrepreneurs will quit their regular jobs once investors buy in to their big idea. It just doesn't work that way; the entrepreneurs have to take the first step and spade fund the idea with sweat and / or money. If they're not fully committed to it in practice not just in principle, no investor will be either.</p> <p>I regularly attend DemoCamp in Vancouver, and it's great. Good community, fun interaction, etc. But frankly the businesses that present are generally far too early for outside funding. In addition, the discussion and questions are always far too soft and uncritical, with the audience reluctant to ask tough questions about the viability of the business model.</p> <p>Finally, the Founders Fund is a popular topic, but let's not forget that many of their investments directly involve the fund's partners, or other members of the PayPal mafia. For example, <a href="http://slide.com/">Slide.com</a> is Max Lechvin's deal, and Sean Parker was instrumental in the early stages of running Facebook. That profile of fund is simply not going to invest in 'interesting ideas' that are at the purely conceptual phase and don't have full-time founders.</p> While the complaint is always that there aren't enough smart investors and funds in Canada, I think us entrepreneurs have to take some of the blame for not getting their businesses into a fundable state. There are plenty of high net worth individuals in Calgary, Vancouver, Toronto, everywhere, who make angel investments and would readily make more; they just don't see the deal flow they need to create a thriving funding climate for Canadian start-ups.

I also can't understand Mark's comment that entrepreneurs will quit their regular jobs once investors buy in to their big idea. It just doesn't work that way; the entrepreneurs have to take the first step and spade fund the idea with sweat and / or money. If they're not fully committed to it in practice not just in principle, no investor will be either.

I regularly attend DemoCamp in Vancouver, and it's great. Good community, fun interaction, etc. But frankly the businesses that present are generally far too early for outside funding. In addition, the discussion and questions are always far too soft and uncritical, with the audience reluctant to ask tough questions about the viability of the business model.

Finally, the Founders Fund is a popular topic, but let's not forget that many of their investments directly involve the fund's partners, or other members of the PayPal mafia. For example, Slide.com is Max Lechvin's deal, and Sean Parker was instrumental in the early stages of running Facebook. That profile of fund is simply not going to invest in 'interesting ideas' that are at the purely conceptual phase and don't have full-time founders.

]]> By: Mark Evans http://davidcrow.ca/article/1805/is-money-the-root-of-our-problems/comment-page-1#comment-2859 Mark Evans Wed, 02 Jan 2008 00:06:49 +0000 http://blog.davidcrow.ca/?p=1285#comment-2859 <p>David,</p> <p>There are two approaches you can take to offering value-added services.</p> <p>1. The VC(s) provide the services as part of their investment in start-ups.</p> <p>or (and I think this is the more attractive option)</p> <p>2. VCs offer their start-up companies access to services on a pay-as-you-go basis. The benefit is the start-ups woudl receive volume discounts because they would be the VCs' preferred suppliers.</p> David,

There are two approaches you can take to offering value-added services.

1. The VC(s) provide the services as part of their investment in start-ups.

or (and I think this is the more attractive option)

2. VCs offer their start-up companies access to services on a pay-as-you-go basis. The benefit is the start-ups woudl receive volume discounts because they would be the VCs' preferred suppliers.

]]> By: Daniel Gibbons http://davidcrow.ca/article/1805/is-money-the-root-of-our-problems/comment-page-1#comment-10695 Daniel Gibbons Tue, 01 Jan 2008 20:17:00 +0000 http://blog.davidcrow.ca/?p=1285#comment-10695 <p>While the complaint is always that there aren't enough smart investors and funds in Canada, I think us entrepreneurs have to take some of the blame for not getting their businesses into a fundable state. There are plenty of high net worth individuals in Calgary, Vancouver, Toronto, everywhere, who make angel investments and would readily make more; they just don't see the deal flow they need to create a thriving funding climate for Canadian start-ups.</p><br /> <br /> <p>I also can't understand Mark's comment that entrepreneurs will quit their regular jobs once investors buy in to their big idea. It just doesn't work that way; the entrepreneurs have to take the first step and spade fund the idea with sweat and / or money. If they're not fully committed to it in practice not just in principle, no investor will be either.</p><br /> <br /> <p>I regularly attend DemoCamp in Vancouver, and it's great. Good community, fun interaction, etc. But frankly the businesses that present are generally far too early for outside funding. In addition, the discussion and questions are always far too soft and uncritical, with the audience reluctant to ask tough questions about the viability of the business model.</p><br /> <br /> <p>Finally, the Founders Fund is a popular topic, but let's not forget that many of their investments directly involve the fund's partners, or other members of the PayPal mafia. For example, <a href="http://slide.com/" target="_blank">Slide.com</a> is Max Lechvin's deal, and Sean Parker was instrumental in the early stages of running Facebook. That profile of fund is simply not going to invest in 'interesting ideas' that are at the purely conceptual phase and don't have full-time founders.</p> <p>While the complaint is always that there aren't enough smart investors and funds in Canada, I think us entrepreneurs have to take some of the blame for not getting their businesses into a fundable state. There are plenty of high net worth individuals in Calgary, Vancouver, Toronto, everywhere, who make angel investments and would readily make more; they just don't see the deal flow they need to create a thriving funding climate for Canadian start-ups.</p><br />
<br />
<p>I also can't understand Mark's comment that entrepreneurs will quit their regular jobs once investors buy in to their big idea. It just doesn't work that way; the entrepreneurs have to take the first step and spade fund the idea with sweat and / or money. If they're not fully committed to it in practice not just in principle, no investor will be either.</p><br />
<br />
<p>I regularly attend DemoCamp in Vancouver, and it's great. Good community, fun interaction, etc. But frankly the businesses that present are generally far too early for outside funding. In addition, the discussion and questions are always far too soft and uncritical, with the audience reluctant to ask tough questions about the viability of the business model.</p><br />
<br />
<p>Finally, the Founders Fund is a popular topic, but let's not forget that many of their investments directly involve the fund's partners, or other members of the PayPal mafia. For example, <a href="http://slide.com/&quot; target="_blank">Slide.com</a> is Max Lechvin's deal, and Sean Parker was instrumental in the early stages of running Facebook. That profile of fund is simply not going to invest in 'interesting ideas' that are at the purely conceptual phase and don't have full-time founders.</p>

]]> By: Mark Evans http://davidcrow.ca/article/1805/is-money-the-root-of-our-problems/comment-page-1#comment-10696 Mark Evans Tue, 01 Jan 2008 17:06:00 +0000 http://blog.davidcrow.ca/?p=1285#comment-10696 <p>David,</p><br /> <br /> <p>There are two approaches you can take to offering value-added services.</p><br /> <br /> <p>1. The VC(s) provide the services as part of their investment in start-ups.</p><br /> <br /> <p>or (and I think this is the more attractive option)</p><br /> <br /> <p>2. VCs offer their start-up companies access to services on a pay-as-you-go basis. The benefit is the start-ups woudl receive volume discounts because they would be the VCs' preferred suppliers.</p> <p>David,</p><br />
<br />
<p>There are two approaches you can take to offering value-added services.</p><br />
<br />
<p>1. The VC(s) provide the services as part of their investment in start-ups.</p><br />
<br />
<p>or (and I think this is the more attractive option)</p><br />
<br />
<p>2. VCs offer their start-up companies access to services on a pay-as-you-go basis. The benefit is the start-ups woudl receive volume discounts because they would be the VCs' preferred suppliers.</p>

]]> By: Omar http://davidcrow.ca/article/1805/is-money-the-root-of-our-problems/comment-page-1#comment-2856 Omar Mon, 31 Dec 2007 14:51:31 +0000 http://blog.davidcrow.ca/?p=1285#comment-2856 <p>I didn't eveb know there was a problem. I mean the fact that we're talking about DemoCamp17, StartupCamps in both Toronto, Waterloo, etc etc, shows that there is an incredibly vibrant community here. It's really amazing how things have taken off over the past year.</p> <p>Would a flood of money in the region help or hinder this gestation of ideas? Honestly, I think the harshness of the conditions makes for stronger companies in general. We have to be smarter, more flexible, and more innovative. And I actually think that is happening. And that's a Good thing.</p> I didn't eveb know there was a problem. I mean the fact that we're talking about DemoCamp17, StartupCamps in both Toronto, Waterloo, etc etc, shows that there is an incredibly vibrant community here. It's really amazing how things have taken off over the past year.

Would a flood of money in the region help or hinder this gestation of ideas? Honestly, I think the harshness of the conditions makes for stronger companies in general. We have to be smarter, more flexible, and more innovative. And I actually think that is happening. And that's a Good thing.

]]> By: Omar http://davidcrow.ca/article/1805/is-money-the-root-of-our-problems/comment-page-1#comment-10697 Omar Mon, 31 Dec 2007 07:51:00 +0000 http://blog.davidcrow.ca/?p=1285#comment-10697 <p>I didn't eveb know there was a problem. I mean the fact that we're talking about DemoCamp17, StartupCamps in both Toronto, Waterloo, etc etc, shows that there is an incredibly vibrant community here. It's really amazing how things have taken off over the past year.</p><br /> <br /> <p>Would a flood of money in the region help or hinder this gestation of ideas? Honestly, I think the harshness of the conditions makes for stronger companies in general. We have to be smarter, more flexible, and more innovative. And I actually think that is happening. And that's a Good thing.</p> <p>I didn't eveb know there was a problem. I mean the fact that we're talking about DemoCamp17, StartupCamps in both Toronto, Waterloo, etc etc, shows that there is an incredibly vibrant community here. It's really amazing how things have taken off over the past year.</p><br />
<br />
<p>Would a flood of money in the region help or hinder this gestation of ideas? Honestly, I think the harshness of the conditions makes for stronger companies in general. We have to be smarter, more flexible, and more innovative. And I actually think that is happening. And that's a Good thing.</p>

]]> By: Jeff Fedor http://davidcrow.ca/article/1805/is-money-the-root-of-our-problems/comment-page-1#comment-2855 Jeff Fedor Mon, 31 Dec 2007 01:39:06 +0000 http://blog.davidcrow.ca/?p=1285#comment-2855 <p>David,</p> <p>depends on what school of thought you're from. Some folks believe only that VCs are only money and are happy enough with that. Others are really looking for a business advisor/psuedo CFO/CEO/COO. </p> <p>Take a look at the VCs who are part of CVCA. Painting with a broad brush, the vast majority are from a pure finance background. Yes they've worked with startups but it isn't the same. I've flown on a lot of planes but that doesn't make me a pilot.</p> <p>Yes there are some entrepreneurs, operators and success stories that have gone on to become Canadian VCs-Rick Segal at JLA, Derek Smyth at Edgestone, Tim Jackson at TechCapital, to name a few but it isn't the norm in my opinion and that's where I think the problem lies. </p> <p>So as you point, out those management fees don't support an armada of support staff. To make matters worse, that tiny armada will want 'carry' if they're decent talent which means not just looking for a salary. There's only so many slices of the pie and so..</p> <p>Should VCs provide value-add? Like all things in life, it depends both on the company they're investing in (ie what's the past experience of the team) and the quality of the services.</p> <p>j</p> David,

depends on what school of thought you're from. Some folks believe only that VCs are only money and are happy enough with that. Others are really looking for a business advisor/psuedo CFO/CEO/COO.

Take a look at the VCs who are part of CVCA. Painting with a broad brush, the vast majority are from a pure finance background. Yes they've worked with startups but it isn't the same. I've flown on a lot of planes but that doesn't make me a pilot.

Yes there are some entrepreneurs, operators and success stories that have gone on to become Canadian VCs-Rick Segal at JLA, Derek Smyth at Edgestone, Tim Jackson at TechCapital, to name a few but it isn't the norm in my opinion and that's where I think the problem lies.

So as you point, out those management fees don't support an armada of support staff. To make matters worse, that tiny armada will want 'carry' if they're decent talent which means not just looking for a salary. There's only so many slices of the pie and so..

Should VCs provide value-add? Like all things in life, it depends both on the company they're investing in (ie what's the past experience of the team) and the quality of the services.

j

]]> By: David Crow http://davidcrow.ca/article/1805/is-money-the-root-of-our-problems/comment-page-1#comment-2854 David Crow Mon, 31 Dec 2007 00:58:52 +0000 http://blog.davidcrow.ca/?p=1285#comment-2854 <p>Greg,</p> <p>I think that the <a href="http://www.marsdd.com/mars/Events/Event-Calendar/Ent101.html">Entrepreneurship 101</a> is a great program but it's a lengthy one, i.e., starting in November ending in May. I was thinking about something more easily digestible. Maybe this is the one piece that is missing from <a href="http://barcamp.org/DemoCampToronto">DemoCampToronto</a>. a short presentation that mirrors the Entrepreneurship 101 schedule.</p> <ul> <li>Finding an idea</li> <li>Finding a business model</li> <li>Finding a market</li> <li>Bootstrapping</li> <li>Building and hiring a team</li> <li>How to market a product/service?</li> <li>Legal issues</li> <li>Pitchfest</li> </ul> <p>At "DemoCampToronto2":http://barcamp.org/DemoCampToronto2 we had Wayne Bradley from Development Associates present about the "SR&ED":http://www.cra-arc.gc.ca/taxcredit/sred/menu-e.html tax credit. The presentation was too long, but it's an interesting opportunity for Canadian startups to benefit from government programs. It's very similar to the great Ignite presentation about <a href="http://oce-ontario.org/">OCE</a>'s <a href="http://www.oce-ontario.org/Pages/Home.aspx">Investment Accelerator Fund</a>.</p> Greg,

I think that the Entrepreneurship 101 is a great program but it's a lengthy one, i.e., starting in November ending in May. I was thinking about something more easily digestible. Maybe this is the one piece that is missing from DemoCampToronto. a short presentation that mirrors the Entrepreneurship 101 schedule.

  • Finding an idea
  • Finding a business model
  • Finding a market
  • Bootstrapping
  • Building and hiring a team
  • How to market a product/service?
  • Legal issues
  • Pitchfest

At “DemoCampToronto2″:http://barcamp.org/DemoCampToronto2 we had Wayne Bradley from Development Associates present about the “SR&ED”:http://www.cra-arc.gc.ca/taxcredit/sred/menu-e.html tax credit. The presentation was too long, but it’s an interesting opportunity for Canadian startups to benefit from government programs. It’s very similar to the great Ignite presentation about OCE‘s Investment Accelerator Fund.

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