The Three P’s of a Technology Company

I wear two hats – one as a Managing Director at OMERS Ventures and the other as an independent corporate director.  In both gigs I get asked the same question a lot: “What determines if a company is “venture fundable”,  post-seed financing?”.

It is certainly not black and white but here is my best shot at an answer.  I bucket company dynamics in three groups: people, product and progress.  

   People are the founders/operators of the company

   Product is the product vision, product market fit, and total addressable market

   Progress is traction and proof points validating the product

The first and most important threshold is product.  If a company does not have a massively disruptive product that attacks a huge global market, you are most likely not venture fundable.  That does not mean the company is not fundable.  “Friends and family”, angels and even debt financing are the typical instruments for good companies selling to good markets.

Okay, you have passed the first gate with a big idea for a massive market.  What’s next? 

People make or break the success of technology companies.  The technology ecosystem in North America does not suffer a shortage of great ideas from entrepreneurs.  The lower barriers to entry and a new-found spike in entrepreneurship globally has spawned thousand of startups.  The reality, however, is that it is far harder to scale a company than it is to start a company.  Entrepreneurs who have had one or more prior outcomes have a higher propensity to be funded by venture than first timers. 

How does a first timer overcome this bias?  Progress. A second time entrepreneur can sometimes get funded with a great idea with “proof points pending”.  A first timer does not have this luxury, even if the founding team has great “domain” expertise.  The “hockey stick slide”, which shows momentum and velocity for a first time team, needs to be extremely compelling when viewed “outside in”.  Whether the metric is revenue, client adoption, client proliferation, “uniques” or whatever it is that marks success, the hockey stick needs to be “at the blade” heading up fast. 

Competition for young companies looking to scale is not only the team in the Valley trying to do the same thing, although that is certainly a key focus.  The real competition for young companies seeking growth capital is another company, not in your space, with either a second time entrepreneur who has cache, or a hockey stick slide that is “off the charts”.  When the venture firm prioritizes their pipelines and their capacity to engage, the best progress story will likely get the dollars. 

First timers can and do get funded in technology (just ask the guys at Wave Accounting).  Almost all of these success stories had incredible momentum on a key metric. 

My suggestion for entrepreneurs seeking venture growth capital is to wait.  Wait until you have proof points and a traction story that is damn near breathtaking.  Wait until you have the slide you know will blow your audience away.  Create relationships and seed your story with venture, but wait for the ask until you know the answer to the question. 

Submitted by Howard Gwin

CES 2012: Theme Recap

We attended CES this past week and had the opportunity to peruse through the thousands of booths at the show, taking in everything from the practical to the practically nuts. While CES is generally known to showcase more than its fair share of demo products that will never see the light of day, there were at least three themes that resonated and are worth commenting on.

One of the pervasive themes at CES this year was the proliferation of 3D. While 3D was definitely popular at CES 2011, CES 2012 took it up a notch and went so far as to hand out 3D glasses as you walked into one of the largest conference rooms at the show. LG had a booth that was predominately 3D as did a number of the console manufacturers. Unfortunately, despite the focus and improvement in 3D technology, the hurdle with mass use of this new technology remains content and the delivery of that content into homes. One thing made very clear by TV manufacturers is that regardless of content, if you plan on purchasing a TV in the coming years, it will most likely be of the 3D variety. By far the highlight product of the show this year was Samsung and LG’s 55’ OLED TV, which were a miniscule 4mm thick!

CES also unveiled another interesting development – the shift of the leadership in the home energy management (“HEM”) space from the software and hardware developers to the home appliance manufacturers. While it was generally thought that the leaders in the HEM space would be IT companies such as Cisco, Microsoft or Apple, which already control a lot of the IT infrastructure in the home, this has proved to be a greater challenge than most had originally thought. With companies like Cisco and Microsoft either putting such efforts on hold, or at the very least, reducing the strategic focus in this sector, the home appliance companies have stepped into the fold in a big way. 

LG’s booth had a large focus on connected appliances and while this may be a way for appliance companies like LG to obtain increased margins, the thought of consumers paying more money for an interconnected appliance or paying a monthly service charge to an appliance manufacturer for the ability to control every appliance in their house, may be a stretch. The reality, at least here in Canada, is that very few of us have the time or inclination to significantly alter our lifestyles to realize a savings of a few dollars a year under the time of use system. Until electricity prices increase significantly, home owners will likely only make moderate changes, which would have likely been done irrespective of any HEM system.  

The last theme worth mentioning should come as no surprise to anyone – this is the year of portable control. The smart device – phone or tablet – is going to rule everything even remotely connected to consumer electronics. The ability to control everything electronic in the home from one device is upon us and manufacturers that can enable this control should see a quick upturn in sales.

More than anything else, CES serves as a great pulse on the worldwide electronics and technology community. Based on the 153,000 people that attended this year (a new record), we are happy to report that the technology community is alive and well!

Contributed by Sid Paquette and Damien Steel of OMERS Ventures.

Mentor Monday registration

Registration for the Toronto Mentor Monday is now open. 

Date:        February 6, 2012

Location:  KPMG Offices, 333 Bay Street, 46th Floor, Toronto

Time:       3:00 to 6:00 pm

Click here to register.  Please use the password “Innovation”.  Registration is limited.

Digital Puck is back!

Digital Puck is back in 2012 with an additional sponsor, more regional events and more content!

Digital Puck was started in 2010 to create a forum for senior Canadian technology executives to connect with each other, and connect with the Silicon Valley eco-system.  In 2012, OMERS Ventures joins Bridgescale Partners, BDC, KPMG, Northleaf, and Bennett Jones LLP in bringing Digital Puck events and content to Digital Puck members (now numbering >700). 

There are two ways to stay in the loop: subscribe to email on www.digitalpuck.ca and/or join the group “Digital Puck” on Linkedin.  Events like Mentor Monday, the Silicon Valley CEO Conference and ad hoc presentations with senior technology executives will be announced on Digital Puck with event registration on www.digitalpuck.ca. 

Kick-starting 2012, please watch for an announcement about our February Mentor Monday event in Toronto.  We will be taking Mentor Monday on the road in 2012 with events being planned for Vancouver (after a very good turnout last year), Ottawa and Montreal.

2011 was a great year for technology outcomes in Canada and 2012 promises to be even better!

Check out the Canadian Startup Award finalists and vote for your favourite

With so many talented entrepreneurs and innovative startups right here in Canada, Techvibes deemed it a necessity to recognize, honour, and celebrate these people and their companies. Presented by KPMG, The First Annual Canadian Startup Awards will do that.

Techvibes received well over 1,000 nominations across the six categories via comment, email and tweet. So the finalists were determined by you, our readers. In the case of the overall startup category we weren’t able to narrow if down to three finalists which demonstrates the high quality of the current crop of Canadian startups.

Voting is open until 11:59pm PST on Tuesday, January 17th and the winners will be announced on Friday, January 20th. One vote per person.

Read more and vote!

CIX announces Canada’s most innovative tech companies

The Canadian Innovation Exchange (CIX) today announced this year’s Top 20 most innovative Canadian companies in information and communications technology and digital media. The finalists will present live at CIX on Dec. 1, at the MaRS Discovery District in Toronto.

The 2011 CIX Top 20 are: Continue reading »

KPMG and DigitalPuck.ca partner for AlwaysOn Venture Summit

DigitalPuck.ca and KPMG are teaming up for the AlwaysOn Venture Summit Silicon Valley 2011, to be held at the Ritz Carlton in Half Moon Bay from Dec. 12-14th.We have negotiated a special $595 show ticket discount for DigitalPuck.ca members. Click on http://www.aonetwork.com/cart/add/p68771?destination=cart to take advantage of this great deal

The Venture Summit kicks off with an AlwaysOn golf outing Dec. 12th at the Half Moon Bay resort’s Ocean Golf Course. The tee off time is at 11 am and is restricted to Venture Summit Silicon Valley attendees.

Continue reading »

What is the process for filing for the Scientific Research and Experimental Development program (SR&ED) and The Ontario Interactive Digital Media Tax Credit (OIDMTC)?

Joseph Mauceri, Manager, R&D Tax Incentives Practice, KPMG

A. In order to make a claim for the Scientific Research and Experimental Development program (SR&ED), a company must prepare schedule T661 on its annual tax return.

For each project identified as SR&ED eligible, a technical report must be prepared describing the technological advancements you were trying to achieve, the technological obstacles/uncertainties you had to overcome and the work that was performed to overcome the technological Continue reading »

Network at Vancouver’s “Buzz Event” Nov. 24

Toronto’s Matt Golden on early-stage investing and his new fund

Matt Golden invests in early-stage mobile startups. Before starting Toronto-based Golden Venture Partners last June, he was an advisor to Five Mobile, which was acquired by Zynga in July 2011. For two years, he was a partner with the BlackBerry Partners Fund.

He also co-founded Tira Wireless and was an associate with Brightspark Ventures. Golden Venture Partners has made investments in Guardly, Wattpad and Yesware, with additional deals to be announced over the coming months.

Here’s our interview with Matt:

DigitalPuck.ca: You’ve always worked in the mobile space as an advisor, entrepreneur or investor. Can you discuss your history and some of your successes? Continue reading »