Troy Angrignon - Adventure Capitalist

RightNow: market research and bootstrapping led them to be capital efficient, cashflow positive from day one. Nice work Mr. Gianforte.

Troy Angrignon — Sun, 10 Aug 2008 11:29:00 -0700

Javier, thank you for recognizing businesses like Mr. Gianforte's that are "return leaders". It is too easy these days to continue to buy the "traffic first, monetization second" crap that continues to be perpetuated (and which is really only applicable to about 0.0001% of the businesses out there.)

Greg, I'm glad to see that you have been recognized for your efforts with Right Now. I'm building a company right now where we are following the exact same principles: strong market research, large market waves, cashflow is king, and we're going to use outside capital only for acceleration of the business, and preferably in as few rounds as possible. The fact that a programmer called 400 prospective customers is shocking. I also liked the "100% commission sales person" model which made sense given that Greg knew what the customers wanted at that point.

Great quote: "if you are starting a business, don't spend your time calling VCs; spend your time calling customers, figure out how to solve their problem and get them to pay for it."

And thanks also to the DealMaker team for hosting this excellent post on the art of bootstrapping.

Thanks to all of you for sharing this information. It's encouraging to other entrepreneurs such as myself that we're on the right path.

Guy Kawasaki and Glenn Kelman provide counter-points to the "serial entrepeneurs are the best entrepreneurs to back" theory

Troy Angrignon — Sun, 18 Nov 2007 12:09:00 -0800

Here are two interesting articles: one from Glenn Kelman, and a follow on from Guy Kawasaki on why serial entrepreneurs might not in fact be the best bet for funders. Interesting perspectives and I recognize some of Guy's cautions from my own experience.

Worth reading both articles.

Quotes from Sequoia's Don Valentine

Troy Angrignon — Sun, 18 Nov 2007 11:12:00 -0800

This post at VC Confidential contains some fantastic quotes. I have excerpted a few of my favourites.

"The trouble with the first time entrepreneur is that he doesn’t know what he doesn’t know. After a failure he does know what he doesn’t know and can beat the hell out of people who still have to learn."

“All companies that go out of business do so for the same reason - they run out of money.”

"Great markets make great companies."

"I like opportunities that are addressing markets so big that even the management team can't get in its way."

"I am 100% behind my CEOs right up till the day I fire them."

"The world of technology thrives best when individuals are left alone to be different, creative, and disobedient."

"One of my jobs as a board member has been to counsel management to avoid distraction and to execute with constructive paranoia."

All fantastic and useful quotes.

UPDATED: Seth Godin: The best time to start anything...is NOW

Troy Angrignon — Mon, 02 Apr 2007 12:05:00 -0700

I have to duplicate this entire post here. It's brilliant. Thanks Seth for the post. I filed this under Business AND Life Lessons.

The best time to start is when you've got enough money in the bank to support all contingencies.
The best time to start is when the competition is far behind in technology, sophistication and market acceptance.
The best time to start is when the competition isn't too far behind, because then you'll spend too long educating the market.
The best time to start is when everything at home is stable and you can really focus.
The best time to start is when you're out of debt.
The best time to start is when no one is already working on your idea.
The best time to start is when your patent comes through.
The best time to start is after you've got all your VC funding.
The best time to start is when the political environment is more friendly than it is now.
The best time to start is after you've got your degree.
The best time to start is after you've worked all the kinks out of your plan.
The best time to start is when you're sure it's going to work.
The best time to start is after you've hired the key marketing person for the new division.
The best time to start was last year. The best opportunities are already gone.
The best time to start is before some pundit declares your segment passe. Too late.
The best time to start is when the new generation of processors is shipping.
The best time to start is when the geopolitical environment settles down.

Actually, as you've probably guessed, the best time to start was last year. The second best time to start is right now.

Thanks Seth.

UPDATED: Under the Radar Relay Fri Mar 16, 2007

Troy Angrignon — Sat, 17 Mar 2007 12:47:00 -0700

Many of you know that I was on the selection committee for "Why Office 2.0 Matters" - a one day conference being organized by the Dealmaker Media team in SF. The one day session will look at 32 of the most promising companies emerging in the Office-productivity-on-the-web category.

As part of the run-up to the conference, the team decided to hold a blog relay - "The Radar Relay" - where different writers would summarize the week's Office 2.0 news at the end of the week. This is my week. But you might want to start here first if you haven't been keeping up to date until now.

Also, if you haven’t registered for Under the Radar yet, the readers of this blog can take advantage of a special price at this link. I’ll be there, to see what the judging panel think of the selections that our committee made, and also to give a brief talk about Office 2.0 and Enterprise 2.0.

On with the Radar Relay. Tthis week has been ripe with office 2.0 news. There is so much that I'm going to do it in point-form:

A web application designed to help people through their bankruptcies was cited for "practicing the law without a license" and its creator was charged and found guilty. The case is currently under appeal. (thanks to Kurzweilai.net for the link).
The Office 2.0 Database tipped the scales at over 450 Office 2.0 startups. 95% of those will be gone in 36 months but who cares? As Paul Kedrosky says, "It takes a lot of dead bodies to fill a swamp" when you want to get to the other side.
Gianpaolo gave us an 8-floor, 3-bullet point "Why SaaS for the Enteprise" pitch. I would add to his points the ability for users to pilot-test without IT involvement (which really rolls up to shorter time to value though). I think his 3 bullets are absolutely awesome. Concise, and to the point.
The world continues to twitter about Twitter. Millions of people pinging each other with little tidbits of information on what they are doing at the moment. I know that many of the things that take off seem to confound people but you have to realize that deep down in biological and spiritual cores, we are social creatures. We are designed to be social from the ground up. But as people leave organized religion, and as fewer people get married, and as fewer people have kids, and as fewer people live in multi-family homes, there becomes a vast social vaccuum waiting to be filled - hence the explosion of blogs (find your community), photo-sharing (meet people with an appreciation for art), SMS'ing silly messages to each other, or signing up for Twitter - these are all manifestations of a desire to find and stay connected to a community in an ever more disconnected world. I don't doubt that we will develop a bunch of these tools along the way and will eventually be in partially aware, partially connected states to our communities at all time - but will be actually be social or have any friends? It reminds me of the quote I read the other day, "I unsubscribed from all of my social networks so that I would have time to invite friends over for dinners!" Also, here is a shortcut to using Twitter.
Google's diabolical plan to plant people in Microsoft is paying off. Microsoft has managed to make Office 2007 and Outlook 2007 both slow and destructive to data at the same time as Google has launched their applications with a service level agreement (that they breached already.) Lots of notes here on Zoli's blog.
Anne Zelenka posted "Ten Things I Hate About You, Web 2.0". Funny list. Anne, how about Office 2.0? I'll start with my top four most annoying things about Office 2.0:

NOT ONE COMPANY has managed to make a text editor that doesn't completely suck.
Do we really need 50 spreadsheet apps? Are we really that lacking in creativity?
Web 2.0 was about wasting time. Office 2.0 is really about being productive with your time. We need more web 2.0 in office 2.0 or the conferences are going to be REALLY dull.
Just because you have an Office 2.0 company doesn't mean you have to forget about: customers, pain points, revenues, or long-term viability.

Phil Wainewright has a good post on the Saugatuck report showing that SaaS has hit the knee of the curve or as he writes: "SaaS hits the hockey stick." I'm sure he meant the curvy part near the bottom of the stick near the big flat part that hits the little round thing-a-ma-jig. Go, Beavers, Go. As you can see, I'm not a hockey fan so I prefer the knee of the curve story a bit more. He writes: "Most surprising of all was a huge jump from 18% last year to 49% this
year of companies planning to use SaaS for mission-critical
applications." I think it's instructive to look at internet banking. People didn't want t o use it either because they were afraid of the web - until seemingly overnight when everybody's Grandma joined web-banking.
Harry McCracken over at Slate wrote a decent review of the Zoho office tools suite. I agree with Harry that their suite seems pretty advanced. However, I have tried to use them for real work and have still found enough holes that I couldn't use them. Particularly Zoho show which was nearly useless. The other apps seemed somewhat better. But they have achieved a heck of a lot and I wish Raju Vegesna and his team the best.
AvenueA-Razorfish's new Digital Outlook Report 2007 was released (thanks Guy Kawasaki for the heads up). Some highlights:

"In retrospect, the massive digital disruption we’ve experienced over the last 12 months should have been anticipated. But it seems few were fully prepared for the speed and depth of the changes. Perhaps it’s because the changes weren’t just about what Web sites became popular or what new technologies were introduced. Rather, it was a broader cultural change. Consumers’ expectations of their media evolved. The places they trusted to provide information and entertainment changed. New outlets for consumers to express themselves emerged."
"“Great service. Creativity. Flexibility. A passion for their product and for finding ways to push innovation within their organization. A desire to understand clients’ objectives and not to retrofit them into their own. The hallmarks of great Web publishers are obvious, yet subjective and elusive. Those who are focused on delivering real solutions are best positioned to become partners to agencies and advertisers.” - Sarah Baehr, VP Media, New York.
"Information seeking equals entertainment: Once upon a time, play was more deeply integrated into our daily lives, but that changed with the introduction of industrialism. Then came the Internet, and with it, a reemergence of play in new ways. Information as entertainment was a core concept we heard from our study participants, and one that we can see around us as well....Any way you look at it, play is back, and it’s here to stay."
"Mobile phone use will grow—but not for talking, according to our participants. Phones calls are considered to be invasive in this hyper-culture, to be used only when necessary. For ordinary use, a quick text message will suffice, and many of our respondents didn’t see themselves reversing this trend in the future."
Overall, this is a fantastic report. Get it. Read it. Take action on it.

Dick Costolo wrote a great post titled Too Many Companies? where he addresses an entrepeneur's question about whetehr or not he/she should go out and try to capitalize on a maket opportunity. I agree with Dick. You can't know anything really when you start. It's all a best guess. Once you have done the basics of identifying whether you are entiering what could be a high-growth market, something that you are passionate about, and that you have (or can soon have) a great team to build something with, then get out there and do it and adjust on the fly. Not wait until you "have it figured out".
Cisco bought Webex. For 64x earnings or 8.4x revenues. ($3.2B for 2006's $50M earnings on $380M revenues). I agree with Michael Arrington who questions the value of such a deal when Webex is being disrupted SERIOUSLY by a lot of light, fast, cheap, and frankly much better competitors. Of course, Webex has real revenues that will accrue to Cisco's bottom line and can actually "move the needle" on Cisco's income statement. Hopefully they were buying the revenues and not the technology. I also agree with Paul Kedrosky who says "While this is not your father's Cisco, it's not clear just whose Cisco it is becoming either." When they bought Five Across, it could have been an aberration. Adding Webex to the mix means it is definitely a trend. For it to make any sense, there would need to be some follow-on acquisitions that signal a clear shift in corporate strategy and a redefinition of what and who Cisco intends to become in the next few years.
Darren Barefoot did a nice little review of three new-to-him Web apps: Harvest for simple time tracking, Buxfer for moving money easily, and WhosOff for tracking holidays in the office. Very fitting for the Office 2.0 Relay!

That's a heck of a week!! Lots of interesting things happening and I'm sure we'll have another crazy week next week as we get close to the actual Dealmaker event.

Have a great week ahead everybody!

Event: April 24, 2007: 21st Angel Forum, Vancouver, BC

Troy Angrignon — Sat, 24 Feb 2007 23:50:00 -0800

On Monday, March 26th, 2007, Bob Chaworth-Musters and his team will once again be offering their Investor Ready 101 course, a fantastic day of coaching for young companies to learn how to prepare their investor pitches. This is a lead-in to the Angel Forum that will be held on April 24th, 2007.

At the Angel forum, my friend Martin Bliemel and I have the good fortune of facilitating a day of investor pitches where 30+ companies will pitch 70-100 investors their idea for a new venture. The Angel Forum was founded in 1997 by Bob Chaworth-Musters and is now the oldest and largest angel group in Canada. To date, it has held 20 Angel Forums in Vancouver resulting in over $20M being raised for emerging companies..

About this site

Troy Angrignon — Sun, 31 Dec 2006 09:51:00 -0800

This site contains my general blogging, published articles, and information on speaking dates where I discuss how business, technology, and finance can be used to create an open, healthy, and environmentally and economically vibrant society. Please feel free to contact me at troy at troyangrignon dot com to rant, discuss, or have me speak at your organization.

Web 2.0 Summit 2006 - Day 3 / Disruption Opportunity: Venture Capital

Troy Angrignon — Mon, 20 Nov 2006 08:19:00 -0800

Here are the day 3 notes for the Web 2.0 Conference in San Francisco:

[My notes and analysis are in these square brackets.]

Disruption Opportunity: Venture Capital: Roger McNamee (private equity) and Ram Shiram (seed investing)

Shiram: I DO believe that it's cheap to start a company; it is hard to find talent though.
Content companies are very hard to build; both Roger and Battelle (MC) have built content companies and they take a long time and they're very difficult to build and grow.
Question: So let's pretend that Stikkit asks for (and gets) $5M. They only need $100K to build the company...but what do they do with the other $4.9M?

Answer: Yes, having too much money is a problem for startups - "indigestion is worse than starvation."

McNamee: "A lot of the most attractive ideas need less than $1M"

Shiram: the math doesn't work today putting out $5-10M per deal in a $500M fund. There will be a lot of companies purchased in the sub-100M range. Another problem is too much money floating around there. If you have a great idea and a great team, you can go to an auction model. But don't equate money with success. If your valuation keeps going up, your exit becomes expensive and then there are only 6 companies that can buy you out. So be careful of increasing your valuation too quickly and pricing yourself out of the market from an acquisition perspective.

Question: "We built an app for $75K and we're going to sell it for 20x. Why do we need you?"

Shiram: "You don't need me. Building your business and serving people is your primary job. Raising funds is secondary."

McNamee:

Ram is talking about getting people to your site and keeping them there. What about the people who don't have time to go to your site and will never go there?
User-generated content is an alternative to passive entertainment and will be huge.
The amount of cool stuff going on to service that market of content producers is lame. I would look at enabling forms of user generated content.
The second issue is time: We all have multiple inboxes. If you let it pile up for six months, 98% of it will go away and 2% will be important.
The two important things are: a) saving time and b) connecting people who don't and won't use the web to the web to allow them to generate content

[what does he mean, connect people who don't and won't use the web...to the web. HOW?]

Question: IPO route: is it closed and why?

Shiram: companies less than $1B don't get any notice from the analysts anymore. I suggest that if you are a smaller company, go for an M&A exit instead.
McNamee: "Fear is transitory and greed is permanent" - the IPO route will come back. But my approach is: "Build something great and the exit will take care of itself. I don't worry about pre-building to exit. "

Question: "I'm an entrepreneur. How do I ensure I won't get kicked out and how do I deal with valuation?"

Shiram: "Most good investors won't kick out a passionate founder. Don't worry about valuation. Just find smart money and work, work, work!"
McNamee: "Focus on the size of the pie, not on the size of the slice. If you're focusing on control, quit now!"
Battelle: "I disagree - keep >51%".
[Troy: Battelle's comment is misleading. One can own 99% of the company but there can be terms on the term sheet that are so onerous that you effectively have no control of your company. I know of one case where an entrepreneur had signed a term sheet that dictated that his VC had signing authority for everything over $5000 AND that the VC had all the controlling votes. Don't just focus on the ownership percentage! Battelle's comment is fear-based - was he burned in his content company that he mentioned?]

Question: "What is smart money?"

Shiram: "Try making judgements - you will make mistakes";
McNamee: "Don't focus on the fund - focus on the person. Find the person who you want to call at 2am with bad news and also with great news and who have the contextual expertise about your business."

Question: "We're looking for $5-15M and have been having a hard time finding it even though our technology is great. Where do we find that capital?"

Shiram: "You shouldn't have trouble raising money because there's so much of it out there."
McNamee: "Don't complain if it's hard to do. Entrepreneurship is not for lightweights. Life is hard."

Best business movie of the year: Kinky Boots

Troy Angrignon — Sun, 24 Sep 2006 08:04:00 -0700

This is without a doubt the best business movie of the year for its content. And it is probably one of my favourite movies of the year for its film quality as well. This movie is BRILLIANT.

It is the true story of a men's brogue shoe factory in Northamptonshire, England that in order to survive, stopped making men's brogues, the market for which had been swamped by cheap Eastern European knock-offs, and found their "niche market" - kinky boots for drag queens and transvestites.

It is: a story of commtment; advice on how to be open and flexible to changes in your business environment; a treatise on finding opportunities in the strangest of places; a tale about how to be true to oneself; a lesson on respecting others even if they are different than you; and finally a lesson on leadership.

The other thing that I love about this movie is that it has a strong story, a lot of heart, it used fantastic venues (a one hundred year old factory), and it employed a bunch of the shoe factory employees in the movie. The writing was great, the scenes that were awkward and tense were intentionally written that way and it was not played up for laughs. There are a lot of moments in the film that you really want to end because they're uncomfortable. But that's the magic. Those uncomfortable moments are there in life!

Go rent this movie. And if you are a business school leader, show this to your class. Here are some great lessons that I found. Which ones will you find?

A company is a collection of individuals who have committed their time and energy to the enterprise. Respect them and respect their commitment. Show them your loyalty - they deserve it.
If disaster strikes and you have to lay people off, don't make excuses. Do it quickly and cleanly. It will suck and that's life.
Before you lay them off though, ask them for their ideas. They are close to the work. They will surprise you and may even save the company.
Look at your business environment for big changes. When they come, change your business, change your product, change your service. Adapt or die.
Look for new opportunities every where you go. Do this by finding somebody who is in pain from an unfulfilled need. Don't try to create a market - find one that is underserved or not at all served.
If you and your life partner don't want the same things, you'll never really reconcile it. You're better to move on and live out your lives apart.
Also, if your life partner can't support your 100% commitment to your business, your partnership will fail. It's hard enough to run a business. It's impossible to do it when your partner isn't there to support you, or worse, is acting against your effort.
Work with your customer to build rapid prototypes and get rapid feedback. If they tell you it's wrong, then go back and do it again.
Forget your old business so that you can learn your new business. The old assumptions and beliefs and goals are probably not true. (In this case, the factory went from selling "life-long comfort" to selling "Two and a half feet of tubular delicious SEX!")
You can push your people hard but only if they know that it's for them and not for you.
Sometimes the tide of attitude can shift away from you or towards you on the suggestion of just one person in your team who holds a lot of sway. Earn that person's respect and you have earned the respect of the group.
Aim high. Choose big hairy scary goals that are way beyond your comfort zone. (I disagree with the "S.M.A.R.T." goals approach in life.)
You can run from your childhood but you can't hide. You don't need to "deal with it" all first, unless it's getting in the way of your life. In which case, go figure it out and then get on with things.
Life, relationships, business, sex, gender, psychology - they're all messy and uncomfortable. And that's the way they're supposed to be.
Find something you want to do. Pursue it with all your heart. And share that adventure with people you care about.

Telus New Ventures 2006 updates

Troy Angrignon — Fri, 28 Jul 2006 16:02:00 -0700

This was a fun week. I'm involved in the Telus New Ventures program which is a business plan competition sponsored by Telus each year. Up to 60 teams of entrepreneurs submit business plans and go through rounds of mentoring and judging, mentoring and judging, until one plan is chosen as the winner of $60,000 of cash and in-kind donations.

So I attended as a panel mentor on Wednesday July 26th which meant sitting in a room and watching five different companies present their "pitch" and then offering suggestions for improvement. The quality as always was variable. Some of the contestants were still missing the basics such as:

who is in pain?
how big is this market?
how fast is it growing?
who is your team and what makes you think you can pull it off?
what is your competitive analysis?
what is your go to market plan?
what is your financial plan?
what will you do with the capital raised?
what does your investor get in return

Obviously there is work to be done on just getting people to get through the competition with the basic checklist questions answered. But there was a lot of passion in those rooms!

And on Thursday July 27th, I had the pleasure of attending the Ernst & Young Bootcamp which was a session with Joe Timlin from Growthworks, Sean Wise from Wise Mentor Capital, and Lonny McLean of Layer7 Technologies.

I have seen a LOT of financing presentations. I started attending them back around 1999-2000. I would have to say that this was probably one of the simplest, clearest, and most frank venture finance presentations I have ever seen. It was dense, it was informative, it was funny, it was sad, it was personal, and despite the failed air-conditioning, everybody stuck it out because the material was just so damned good.

Sean and Lonny, thank you for sharing your horror stories alongside your successes. Unfortunately I didn't catch Joe's talk since I arrived at the session late.

I wish I had seen this presentation YEARS ago. It would have been a great shortcut in my learning.

UPDATE: Micro-venture fund

Troy Angrignon — Sun, 09 Jul 2006 22:14:00 -0700

There has been a lot of talk about how Web 2.0 doesn't need VCs. The general outline of the discussion is thus:

Web 2.0 companies are capital efficient and don't need a lot of money
they should start small and grow efficiently
VCs have certain size thresholds below which they won't fund because the overhead involved in managing 50 small investments doesn't make sense when they could instead manage 10 investments that are 5 times larger

So this leaves the Web 2.0 companies somewhat in the lurch (DabbleDB's recent funding round by Kedrosky/Ventures West aside - Kedrosky is an exception to the rule because he "gets it.")

I'm curious to know if there are any funds out there that are trying to place say 30 placments of $100-200K. This would only be a total fund size of $6M which is peanuts to a VC. But it would be interesting to see if the pay-off would be worth it.

Particularly in light of the recent posting about Vinod Khosla's successes having come from his smaller rounds. (No, I'm not suggesting that I can pick companies like Mr. Khosla! In fact, if you believe the numbers, firms such as his see the majority of the good deals and the rest of the world never gets to see them, which throws this argument off significantly.)

This came up again Day 2 of Gnomedex 2006 when Marc Canter and Dave Winer commented to a fellow from Intel that "any time Intel Capital funds a company - we assume that the company is going to fail" and they suggested that Intel Capital look at breaking their fund up into much smaller chunks and funding 1000 companies for a $100K each rather than 10 companies for $10M each. (I may have those numbers totally wrong - I didn't capture the full comment in my notes.)

Brad Feld disagrees with this approach.

Regardless of how it is done, for my company it would be interesting to do either a placement model or licensing model or even throwback to the days of artistic patronage and come up with some sort of "sponsorship" approach where we can, in a low-friction way, put funds into promising and interesting startups with as little contractual friction and impact on both companies as possible. I'm not sure if there is any other model other than the ones currently being employed.

What do you think?

Scott Adam's Dilbert does it again: Vijay the world's most desperate venture capitalist funds a floating city

Troy Angrignon — Thu, 27 Apr 2006 08:36:00 -0700

I LOVE this series. And it always kills me when Dogbert wags. Dilbert can be found here.

Boris Mann explains why Vancouver is such a great place to start or join a cool company (UPDATED)

Troy Angrignon — Sun, 09 Apr 2006 08:20:00 -0700

My friend Boris Mann had some great things to say about Vancouver being an excellent place to join or start a company here in this posting. However, I would add "capital efficiency", great education system, and an awesome talent pool to to the list of reasons that Vancouver is a great place to build a company.

Back in November 2005 at the IT Financing Forum, Anthony Lee from Altos Ventures talked about how he was particularly interested in "capital efficiency" and he found that Vancouver companies were, on average, 10x more capital efficient than Valley companies. At the time, they had a 75M fund open and had earmarked 4 of the 20 slots for Vancouver-based web 2.0 related companies. Anthony commented that more companies dies from too much money rather than too little and that capital efficiency = a higher Internal Rate of Return = the company is more appealing to venture capitalists.

John Berchers from Crescendo Ventures (Palo Alto, Minneapolis) whose fund had 1B under management and a currently open fund of 650M, commented that Vancouver had "great people".

And finally, Nicholas Darby from Dow Venture Capital Fund (a 400M fund inside the $48B Dow Chemical), talked about how there were only four countries that they invested in because of the great education system and good talent pool: Israel, USA, UK, and Canada.

Also, Boris was being modest and didn't include his own startup in the list. So I would add some more interesting companies to the list starting with his:

* Bryght - Boris Mann, Roland Tanglao, Kris Krug, Richard Eriksson, and Colin Brumelle's Drupal based startup that extends the Drupal platform and builds cool apps. This team works with Dries Buytaert, James Walker and Adrian Rossouw, the original Drupal team.
* DabbleDB - Avi Bryant and Andrew Catton's Access/Filemaker killer (easy database creation on the web)
* Raincity Studios - Robert Scales' Drupal/Bryght site web design firm
* Flourish Media - Karen Olsson's Web & TV production firm that produces among other things, "Universe Village" - a sustainability game/TV show for kids
* Ma.gnolia - Todd Sieling's social bookmarking application that looks nicer and does more than competitor del.icio.us.

Updates:

* EZ Systems - the open source CMS people are building a new office here with Zak Greant helping to set it up. (Thanks Ben!)

Know any other interesting companies you would add to the list? Drop me an email or add a comment!

New VC pattern: Pre-emptive financing: "Hey Joe, I hear you might be building a company soon. Need any cash?"

Troy Angrignon — Mon, 27 Mar 2006 06:47:00 -0800

Here is an interesting article on the Wall Street Journal about a new pattern in VC investing called "Pre-emptive financing."(hey WSJ, when did you finally get smart and open up your walled garden??)

In English, the definition of pre-emptive financing would be "get our money into the company before a fight breaks out over this ridiculous little company and sends the valuation into the upper atmosphere."

We may not have the public market exit route of the dot-com era to count on, but it seems that this has not dampened the venture capitalists' paranoia about being the least cool kid on the block.

I hear this phrase all the time: "I missed out on (some thing from 5 years ago.) I'm sure not missing out on (some current fad) this time around."

Heck, *I* have uttered the same words! (And still do!)

There is some sort of psychological fear that seems to be rooted in that game of Musical Chairs we all played as a kid. Everybody circles the chairs, the music is playing, the players are all eyeing each other warily and moving in short bursts, from chair to chair, jockeying for position. Then WHAM. It's time to invest in ..... blogs!! The pushing and shoving ensues and one unlucky soul finds himself standing up like a complete and total loser, having not been able to find a chair to sit on.

But now, with pre-emptive financing, you can sneak into the room before the game begins, find the comfiest chair and plop yourself down in that chair and just wait for the rest of the kids to discover that there's a game of Musical Chairs on.

In a time such as this where the capital is prevalent and the ideas and good entrepreneurs are in relatively short supply, this all makes good sense.

Entrepreneurs of the world....the time to go find capital is now.

19th Annual Angel Forum (Vancouver, Canada) comes to a close

Troy Angrignon — Mon, 27 Feb 2006 21:22:00 -0800

The 19th Annual Angel Forum came to a successful close this afternoon. Thirty-six companies in the software, manufacturing, communications, internet, and medical device sectors presented to 70+ investors over the course of a full day of sessions.

Each presenting company was given 10 minutes to pitch their company, market, team, market problem, solution, and investment needs to a group of prospective investors. Then the investors had a Q&A period with the entrepreneurs.

In addition, we had some excellent presentations:

* Bull Housser Tupper spoke on Intellectual property protection, employment issues, and term sheet negotiation;
* PriceWaterhouseCoopers spoke on Top 10 tax issues for startups
* The TSX Venture Exchange spoke on how to go public

Thanks everybody for a great day and we look forward to seeing you all back here in Fall!

Humour: Yahoo now buying companies before they are founded...to beat the rush

Troy Angrignon — Wed, 18 Jan 2006 04:41:00 -0800

In a stroke of brilliance, Yahoo is now buying companies before they are even founded. This definitely wins best parody of the month. Or is it even a parody?

Rocketbuilder's new Ready to Rocket 25 list has been released. This is the best of the best of the emerging technology companies from Vancouver and across B.C.

Troy Angrignon — Thu, 12 Jan 2006 06:00:00 -0800

I attended the Ready to Rocket 2006 session this morning, which was sponsored by Rocketbuilders , a Vancouver based market strategy and consulting firm that helps technology companies capitalize on market opportunities.

The presentation started with an overview of the successes from 2005. Next, Geoff Hansen presented an IT Outlook for 2006. This was followed by the Ready to Rocket 25 for 2006 and the "Ones to watch" - 40 emerging companies that might graduate to the full "Ready to Rocket" Top 25 in 2007. Along with those lists, Price-Waterhouse Coopers presented an overview of the M&A and IPO activity across North America for 2005, and Bill Koty, a professor from UBC presented a brief overview of a newly released Premier's Technology Council report titled "Ahead of the Future" which gives a series of scenarios and predictions for B.C.'s technology economy development from 2005-2020. The summary notes are below along with some of my opinion at the bottom.

NASA should be in BC - we launched a lot of rockets last year.

Some interesting notes came from this session:

2005 was a breakthrough year on the Rocketbuilders list.
These companies were successful because they had a laser focus on a niche market.
Key highlights of the 2005 list include:

PureEdge Solutions Inc. (Victoria, BC) was acquired by IBM
Over 45% of the 2005 Ready to Rocket companies received new investments
100% of the 2005 Ready to Rocket companies exceeded 30% revenue growth
Over 60% of 2005 Ready to Rocket companies exceeded 100% revenue growth
Over 35% of 2005 Ready to Rocket companies exceeded 200% revenue growth

2006 - the rise of the phoenix

Here were some of the highlights of the predictions for the year ahead;

general projections seem to predicting that companies will increase their IT spending 5-6% across the board this year
SMB spending is double that and includes factoring in old hardware replacement cycles for hardware purchased before the collapse.
there is a trend away from cost-cutting measures and back to the value creation side in terms of prioritizing projects.
Key Themes that have been identified for 2006:

Choice: give the user what they want, where they want, in the form they want (Tivo, xFM)
Make it easy: make it simple to learn and use
Safe & Secure: ensure that they can store their data safely and people will trust you with that data
Search is king: there is a lot of work to do here
Microsoft Office enablement: now that Microsoft has opened up the APIs, companies are succeeding by building things that integrate into Microsoft Office, even more than they were before.
Storage is still hot: Networked attached storage companies (for example) are growing at up to 300%/yr
Make it portable: give people the ability to stay mobile: Blackberries, iPods, xFM
Ensure compliance: people are going to spend 30% of their IT budgets on compliance

For more information on the 2006 IT Outlook, contact Geoff Hansen at Rocketbuilders at 866-824-8785 or at gchansen@rocketbuilders.com.

Ready to Rocket 25 2006 list

Some interesting notes came from this session:

For the 2006 list, the selection team had great difficulty keeping it DOWN to 25, which meant that the Ones to Watch list expanded to 40 companies.
There were so many interesting technologies coming up that Rocketbuilders considered launching an "Interesting Concepts" category...but didn't
Success factors. The Top 25 shared some key success factors:
they were heavily verticalized (we had 5 Financial service companies and 4 Healthcare companies on the list.)
they were well-funded to grow
Some of these companies are approaching $5 - 10M in revenues - a point at which they become a LOT more interesting as acquisition targets.

Here is the direct link to the Ready to Rocket 25 List. But they are here for review as well:

Abebooks
AirG Inc.
Axonwave Software Inc.
Bycast Inc.
Caelo Software Inc.
Colligo Networks Inc.
Convedia Corporation
Eyeball Networks Inc.
FinancialCAD Corporation
Flowfinity Wireless Inc

GaleForce Solutions Inc.
GenoLogics Life Science Software Inc.
IronPoint Technology Inc.
In Motion Technology Inc.
Layer 7 Technology inc.
MAKE Technologies Inc.
NewHeights Software Corp.
ResponseTek Networks Corp.
RewardStream Inc.
Sxip Identity Corporation

Tantalus Systems Corp.
TAP Solutions Inc.
TenDigits Software Inc.
Vision Critical Inc.
Vivonet Inc.

The Ones to Watch

This list was presented but the final list will not be out until January 13th, 2006.

Lane construction finally complete - traffic now moving slowly towards IPO exit lane

In this 2005 review of M&A and IPO activity across North America presented by Randy Garg of Price-Waterhouse Coopers , there were quite a few interesting tidbits:

The IPO market has finally been resurrected.
$100B of private equity was present in 2005.
Private equity funds are becoming more active in M&A (25% of $100B or 25B) which is a new development.
Local companies are going public...but not necessarily on the TSX. Some have gone to London or to the USA. This is a new development.
Debt and subordinated debt as financial instruments have started to appear and this is a new development which is being enabled by the fact that newer companies have (gasp) revenues that can support the debt and are more financially solid and lendable from a cash-flow perspective.
Public companies are going private again in order to lower their costs, and simplify their operations because the costs of compliance are huge (up to 30% of IT spending per above notes, not to mention other back-office charges.)
Rule of Thumb: if you're looking to get acquired, make sure that you have audited financials
BC and Canadian companies are now on the U.S. radar but our prices have gone up and our currency has gone up, leaving us as less of a bargain than before.
The major M&A deals are still predominantly cross-border - U.S. companies buying Canadian ones or vice versa. There was very little activity in Canada between Canadian entities.
M&A is still a revenue purchase decision for companies. They are buying revenues, not necessarily technologies. Once a company crosses the revenue barrier, there are a LOT more suitors.
$5M seems to be a baseline deal size.
2006 is poised to be the best year yet for M&A activity!
There is a ton of money out there - $100B raised in the U.S. in the Private equity markets in 2005
therefore money is not the problem
finding good deals and good teams are the problem
M&A is still the preferred route of exit when compared to IPO, but IPOs are now back as options.

I'd like a micro fuel-cell powered proteomics machine for gene therapy web research

William Koty of UBC presented some of the findings from the Premier's Technology Council report on Emerging Technologies titled "Ahead of the Future". It evaluated 39 emerging technologies, boiled those down to a short-short-list of 12 Emerging technologies and then presented two almost contradictory charts - one from the academics and one from the industry advisory board. It was long on research methodology and somewhat short on conclusions.

I am hoping that they will do a follow-on or that it will feed into a larger discussion where they do indeed flesh out the scenarios that they discuss very tentatively in the report.

At the end of the day, what did they really say?

If I had to summarize the session, I would say it like this:

The tech industry is ramping up again. A lot of people had that gut sense but the numbers now prove it.
We are building some really kick-ass companies here in B.C.
Those companies are growing again.
M&A activity will be at an all time high in 2006 and the IPO markets are opening up again as exit routes.

"Your playing small doesn't serve the world"

We build good companies here that are very capital efficient and that are still attractively priced for acquisition. And that's not necessarily a bad thing. It brings money into the economy, it gives local entrepreneurs access to global acquisitors' systems and training and talent, and spawns more entrepreneurial ventures. A year or two ago, one of the local entrepreneurs hosted a VEF event titled something like: "Why acquisitions are gutting B.C.'s economy." The resulting talk though had every one of the entrepreneurs on the panel saying that their acquisition was a good thing and that in fact it had had a net positive benefit across the board on a bunch of different things. I remember the host lamenting at the end that he should have talked to the panel BEFORE naming the talk.

Another key point was that we are finally starting to grow our companies again to a decent size We need to keep thinking bigger. Even the statement that they are growing to a decent size is deceiving since we are referring to companies approaching $10M/yr in revenues, which is laughable in the U.S. But it's a starting point. If you are an entrepreneur, don't say, "We're going to dominate the lower mainland", say "We're going to dominate the western world" or the whole world for that matter.

I am always reminded of the quote that was incorrectly attributed to Nelson Mandela but which was actually written by Marianne Williamson in her 1992 book, "Return to Love":

Our deepest fear is not that we are inadequate. Our deepest fear is that we are powerful beyond measure. It is our light, not our darkness that most frightens us. We ask ourselves, who am I to be brilliant, gorgeous, talented and fabulous? Actually, who are you not to be? You are a child of god - your playing small doesn't serve the world. There's nothing enlightened about shrinking so that other people will not feel insecure around you. We were born to make manifest the glory of god that is within us. It is not in just some of us. It is in everyone. And as we let our own light shine, we unconsciously give people permission to do the same. As we are liberated from our own fear, our presence automatically liberates others.

B.C. entrepreneurs would do well to think about that and learn from it. Our playing small doesn't serve the world. So get out there, think big, and serve the world.

Thanks to the good people at Rocketbuilders for the invitation and for all the hard work in putting this together!

19th Annual Angel Forum to be held on Mon, Feb 26, 2006 in Vancouver, BC. Perfect for angel investors or entrepreneurs looking for up to $1M in funding.

Troy Angrignon — Mon, 09 Jan 2006 15:34:00 -0800

It's that time of year again. If you are an investor willing to invest in startups, or an investor seeking between $100,000 and $1 million, registration is now open for the 19th Annual Angel Forum, hosted by Bob Chaworth-Musters. I'll let speak for himself:

Current Angel investor preferences are for both tech and non-tech companies at the "starting sales" stage with good investor demand for "in-development" stage or "established sales" stage. They are looking for:

an experienced management team (not necessarily complete) located a half day from the investor.
unique and innovative products/services with clear protectable and sustainable competitive advantages.
a compelling market need to allow the company to grow to a significant size with a leadership market share.
company has raised funds from family/friends, the NRC or similar agency and has a realistic business valuation.
a well prepared investor presentation (from attending preparation seminars such as Investor Ready 101

Open to all is the popular Investor Ready 101 "How to Raise Equity" boot-camp seminar on January 30 in Vancouver (Feb 1 on Vancouver Island).

I have attended and volunteered at the Angel Forum for a few sessions now. It is a great opportunity to mix with investors, meet like-minded entrepreneurs, and to look for potential business alliances with other startups. I would highly recommend attending this session if you are looking to invest or looking for capital.

Scott Adam's "Dilbert" examines venture capital

Troy Angrignon — Fri, 16 Dec 2005 06:41:00 -0800

The last time I remember Scott Adams doing VC comics was in the boom. This must mean we're there again.

Dilbert comics can be found here.

The 10th Annual IT Financing Forum was a huge success!

Troy Angrignon — Thu, 17 Nov 2005 08:09:00 -0800

I just spent two days at the IT Financing Forum and will likely be putting up some notes soon. But the quick summary is that it was a great two days with many wonderful conversations, a good overall mood, some fantastic learning, and I met quite a few new people from Vancouver as well as from Seattle and from the valley. There were some excellent companies presenting to two rooms of venture capitalists, as well as some informative and very entertaining panel discussions. More to come later...

VEF Event October 25/05 on Web 2.0 was a great success

Troy Angrignon — Wed, 26 Oct 2005 19:15:00 -0700

The Vancouver Enterprise Forum event on Web 2.0 was an evening of firsts, at least if I judged it by the number of people signing up on the spot for the event who were not regular VEF attendees, the number of people who stayed after the presentation to talk to the presenters at the front of the theater, and the fact that for the first time in my memory, 25 or so people then carried on to Subeez for beer and more conversation.

Dick Hardt spoke on Identity 2.0, Roland Tanglao told the story of the rise of blogs in 4 short Acts, Andre Charland blew the minds of the grey-hairs with his description of Ajax and why it matters, Paul Kedrosky from Ventures West explained why it's okay that the hype is causing lots of little companies to be born and to implode soon thereafter, Michael Ferguson discussed the meaning and promise of Web 2.0 change, and Geoff Hansen discussed why any of this matters at all to people who are trying to make money and build real businesses.

I would link this posting like crazy but instead I'll cheat and do say go here.

Business Idea: Mark Morford's "Porncasting" is the funniest and best business idea I have heard for quite a while

Troy Angrignon — Fri, 21 Oct 2005 06:00:00 -0700

Podcast + video iPod = Porncast. BRILLIANT.

Mark Morford strikes again with a brilliant and very likely insanely lucrative idea. Apple definitely won't take it on which means that somebody somewhere should.

Some choice quotes:

I am the first. At least, I am the first I know of to think of this idea at this very moment in time in this exact space which you are right now reading, given how I'm quite sure the very minute Apple announced their sexy delicious new video-capable iPod roughly five million people and most of them men simultaneously thought of it too.

No matter. I shall henceforth argue that I was one of the first to think of turning my genius iPod porn idea into an instant company, writing up a business plan and hiring a programmer and a team of lawyers and investing a wad of someone else's VC cash into renting out a stack of servers and outsourcing my tech support from Bangalore, India, because, oh my God, the idea is just right there, ripe and waiting and I could sure use the millions of dollars I would surely make in one single month.

IPod porn. The time has come. The idea is brilliantly, geniusly simple. [...] Porn is the answer. Porn will make it all happen. I only want my $50 mil finder's fee.

[...]

I know it will work. The precedents are all in place. You already know how sex and porn drove much of the innovation and evolution of the Internet itself, yes? The porn industry, more than Napster and more than online gaming and more than Amazon and more than AOL's gay NASCAR fan chat rooms, made the Internet what you lust after today.

[...]

Oh, do not mention screen size. Do not dare suggest men will balk at watching hot sex on such a tiny display. It has been proven over five million years of intensive study that men can become aroused at sexual images the size of a speck of dust from 50 feet away. You know it's true.

Men can produce lust for blurry black-and-white postage-stamp photos of seminaked females taken in 1966. Men can become aroused looking at a nipple-shaped amoeba through a microscope. Hell, we get turned on by cool hubcaps. Trust me when I say the iPod's screen will be more than sufficient. As for women, well, what the iPod screen lacks in scale, it makes up for in sensual, tactile design. After all, it's not size, it's how you use it. Right? Right?

So why am I telling you all this? Why share my Genius Idea with the world? Well, because I can't do it. I have not the means. What's more, despite my rampant and ongoing pro-sex attitude, I am not exactly eager to yoke my soul to the greasy lowbrow porn machine. What will my parents think? Who will save the children? What happens when I run for political office? Plus, I'm way too busy procrastinating on writing a novel.

So then, I am offering to give my Genius Idea away, to you, to anyone who wants it, as a boon to the world, as an offering to the pro-sex gods (I will, however, accept any sort of seven-figure finder's fee when you become a millionaire from my idea).

Porncasting is now. Porncasting is a must. After all, someone has to counter the scary prospect of all those video iPod religious sermons. Shudder.

Are you an entrepreneur looking for up to $3M of funding? Want to pitch your company to a group of qualified private equity investors? The Genesis Search wants you! (By this Friday!)

Troy Angrignon — Tue, 11 Oct 2005 23:42:00 -0700

Please forward as appropriate to your respective networks. Sorry for the late notice on this everyone, but I just found out today that a company my good friend Ean Jackson has just started with, Genesis Exchange, is looking for more good candidate companies to present their elevator pitches to a group of private equity investors.

Here is the blurb borrowed from CanadaIT.com:

Private Equity Network Genesis Exchange Corp. Conducts Search for Canada's Hottest Privately Held Companies

Vancouver, BC, October 3, 2005 - Vancouver-based private equity network Genesis Exchange Corp. today announced The Genesis Search, a search for Canada's hottest privately held companies.

"Our goal is simple - to identify Canada's hottest privately held companies and give them unparalleled access to a network of professional Canadian and American investors for the chance to develop strategic relationships, gain visibility and secure funding for their company." says CEO Glenn Ballman. "Whether your company is at concept stage, early growth or well established, we want to hear your pitch."

The Genesis Search gives Presenters 10 minutes to pitch their business to a panel of Genesis Search judges. Finalists from this round will advance to closed door, one-on-one meetings with the Genesis investor network. The Genesis Search is also being taped as a television pilot.
The Genesis Search will be held on October 17, 2005 in Vancouver.

Event requires pre-registration. To register, and for more details, please visit www.TheGenesisSearch.com or call Ean Jackson at (604) 904-6554 or <ejackson@analyticsmarketing.com>.

So there you have it:

Deadline for registration is THIS Friday, October 14th, 2005.

The pitch will be done on Monday, October 17th here in Vancouver.