Back to Reality – Vancouver Enterprise Forum

index_r1_c3.jpgWhile the rest of us are sitting around moaning about the state of canadian venture capital, it appears that Vancouver is so over it, the Vancouver Enterprise Forum is at least.

This Tuesday, November 27th, they are hosting “Beyond B.C. VCs – tips for Sourcing Tech Funding from American Venture Capitalists”

In the November VEF event, we?ll hear from experienced American venture capitalists as they explain the fundamentals they look for when investing in B.C. and Canadian companies. How do you approach American VCs? What kind of information and potential do they want to see? What approach is best? These questions and more will be answered by Geoff Entress from Madrona of Seattle, which made an investment in Victoria based PixPo in 2006, and by Alex Gove of Walden Venture Capital of San Francisco.

This is not a small matter for Vancouver, which has seen its share of startups heading south for funding.

The catch? How long will startups stick around beautiful Vancouver, or anywhere in Canada, when their Venture Capitalist investors are beckoning them to come south. It starts with “let’s move the sales office”, and soon enough everyone but the developers are gone.

This is a subject that we will be diving in to more here. Would you rather take funding outside of Canada, or would you consider it a secondary option? Considering how tightly connected Canada and the US are, does it even matter? Do we need to be doing more to make it easier for american funds to invest here?

Razzle Clones Woot

Update: Caveat Emptor
Razzle made a serious misstep selling refurbished headphones as new. The first batch of customers felt burned and started discussing their experiences on Red Flag Deals. Razzle made another poor choice by posting a fake testimonial on Red Flag Deals (under the name lohervine); a site administrator outed them by comparing IP addresses. Razzle is offering refunds, but has not yet committed to covering shipping.

Woot sells refurbished items all the time, but they clearly state the item’s condition. While I doubt Razzle was set up to scam users, they really fumbled the ball losing the trust of their very first customers.

On the lighter side and as predicted, a customer ended up at by mistake.

Original Post
Razzle, Canada’s first deal a day site, launched today. The first deal: wireless headphones for $51.90. Too rich for your blood? Well join the site anyways, because they plan to giveaway a few items every so often.

The Montreal based site was founded by Ryan Closs, 26, who faithfully cloned Woot. Emulating a successful concept is a legitimate business strategy, so I am not going to criticize Ryan for that.

Think Bill Gates came up with the Windows GUI? Heck even Wal-Mart’s Greeter was an idea Sam Walton copied from K-Mart. And let’s not forget to mention the multi-million dollar exits Facebook clones are making (Germany, China). That said, I would have probably paraphrased Woot’s FAQ a little less closely.

Today’s launch had some to be expected hiccups. Fortunately, the admins were on the ball and put out the small fires in the comments. A longer term issue might be the domain name. It is pretty catchy, but direct navigation traffic will occasionally end up at by mistake. Those users are in for a surprise… not safe for work! There is a lesson here for other entrepreneurs, pay attention to abutting domain names!

Congrats on the launch!

Contact: Ryan Closs

Angel financing – What angels look for in a company: Management (part 4 of 6)

Now that you have given investors an overview of your product, market potential, and competition, they should have a good idea of what your company is all about and what its potential is. The next, and arguably most important topic, to cover is your company’s management. So why is management so important? Its because since early stage companies are risky and have a high chance of failing, investors look to the company’s management to ensure they have the experience, skillset, and connections to give the company the best chance of succeeding. A strong management team would include aspects such as:

  1. The CEO has a history of successfully starting and and selling companies – i.e. there is a past track record to give confidence that he/she can do it again
  2. The management team has worked together on past ventures – i.e. there is a past track record that the team works well together and there are no team dynamics issues
  3. The management team has deep experience in the industry – i.e. they have the credibility and relationships in the target industry to help get traction for the company?s product/service

Now there are lots of examples of first time CEOs that have established very successful companies. So don’t take the above that I am suggesting its not possible. What I’m saying is that for outside investors that don’t know you or your company, having a past track record of successfully doing a similar activity provides more comfort. You would probably approach things the same way if you were looking to hire a key employee for your company – you would want to find somebody that has strong past work experience in doing a similar job.

Since many early stage companies will not have a fully rounded management team, here are some strategies to handle this:

Missing positions
When a company first starts out, most likely the founders are wearing multiple hats in the roles they play. As the company grows, it is natural to bring on more members of the management team to add more specialized experience (i.e. a dedicated CFO, sales director, etc). Investors will understand this, so when you talk about your management team you should highlight the positions you feel it is missing and ones you would look to hire. This will demonstrate you can accurately assess your team and understand how it will need to change as the company grows. As some angel investors are looking to get involved with a company, they may be interested in joining the team to help the company or know of somebody else who would be interested. You should also be prepared to discuss what you see as your role in the company going forward and if you see yourself as always being the CEO. There may come a time when as a founder of the company you need to bring on another person as CEO that can take the company to the next level. I will talk more on this topic in a future article on founders syndrome.

Board / advisors
Another way to enhance the experience / credibility of a company’s management team is to build up a strong board of directors or advisory board. You would want to identify people that can provide value to the company in either the experience they have (i.e. if this is your first time as CEO you would want to find somebody that is an established CEO) or in the contacts they have (i.e. find somebody that is well respected/connected in the industry your company is targeting). By having these types of people involved with your company, you will be able to consult with them to discuss issues/problems your company is facing and tap into their networks to help open doors for sales, partnerships, alliances, etc. Another benefit is that it will help out the due diligence process with investors.

Usually the first thing a group of angels will do in evaluating a company is to reach out to their network to find somebody in the industry or who knows of somebody on the company’s management team to get their insights on what they think of the company. If you have well respected people on your board or advisory board that believe enough in your company to put their name behind it and spend their time to help out, it will go a long way in establishing outside verification that your company is onto something.

In my next article, I will talk about the financial aspects of your company to cover in an investment presentation. As always, if you have any questions, comments, or suggestions for future articles feel free to contact me: craig at