Summify applied to the Bootup Labs January 2010 cohort under the name ReadFu. I remember it clearly. Boris was skypeing with the shortlisted applicants in November 2009, and after speaking with Cristian and Mircea, I could tell by the look on his face that he found a winner. Having not talked to them myself, I admit, I was a bit more skeptical. I wasn’t a fan of the idea that they were presenting, but then Boris reminded me of our own rule.  “We don’t back ideas, we back PEOPLE”

After a few more conversations with Cristian and Mircea, I was sold. By January 2010, Mircea and Cristian moved to Vancouver and got started. In that time, they developed their first product, ReadFu, which was similar to Snap.com, but after not being satisfied with their initial traction, they decided to pivot.  Summify was born.  I’ve been a user of Summify ever since and look forward getting my emails every morning.  I can hardly wait to see what they come up with next.

From everyone at Bootup Labs, we wish you success at Twitter.

What this means for Bootup Labs

When Boris Mann and I started Bootup Labs about 2 years ago, we had big dreams of helping Vancouver be a great place to start internet companies. We thought that if we focused on the entrepreneur, everything else would work out, and we were right.  I am extremely proud of what we have created in that time. We did our best to make a positive difference in the fates of the entrepreneurs. We had the honor of working with 8 crazy-awesome groups of founders building 8 crazy-awesome companies. Since we brought in our first group of companies in January 2009, there has been one acquisition, one that didn’t work out so well, one is generating positive cash flow, and five others have attracted additional financing in one form or another and are continuing on their quest to change the world for the better.

Bootup Labs Portfolio

I’ll always be available to the founders of those companies, but for at least the next 2 years, my primary focus will be to build BC’s technology eco-system from my new desk at BCIC. Bootup Labs continues to get inquiries and applications from local and International entrepreneurs who want to be considered for the acceleration program, but for now, Bootup Labs will not be considering any new applications.  There is most definitely a need for a strong acceleration program in the Internet sector in BC and my hope is that someone will pick up where Bootup Labs left off.  If you’re that person, or know someone who is, please get in touch.

Bootup Entreprenuerial Society

I have been very careful to ensure that my decision to leave Bootup Labs does not affect the good work that the Bootup Entrepreneurial Society is doing.  Last week I resigned from the Board of Directors in order to remove any conflicts between BCIC and BES.  I’m truly honored that Boris Wertz of W Media Ventures has agreed to step up and take the Chairman role.  Maura has written about this on the BES Blog. In fact, there has been some confusion about the difference between the for-profit ‘Labs’ and the non-profit ‘BES’.  Hopefully this helps to simplify things: From now on, anytime you see Bootup, it will be only be referring to the non-profit.

Thanks

I would like to thank all of the people who believed in Bootup Labs and supported us over the past two years. We couldn’t have done it without you. And a special thanks to those who founded, funded and mentored 8 new companies into existence.

Finally, we endeavor to be being open and transparent.  If you have any unanswered questions, please leave a comment and let me know.  I’ll do my best to answer you as quickly as I am able.

What worked at Bootup

The absolute number one thing that made Bootup Labs work was picking great founders. We never picked teams based on their idea, because in virtually every case, ideas change and become something else by the time they leave anyway.

Earn respect from founders. These people earned the “entrepreneur” title for a reason: They chose not to listen to people telling them why something can’t be done, or needs to be done a certain way, and are just doing it.  In fact, I would guess that if you’re a mentor or investor and and entreprenuer *is* listening to you, they’re probabaly just humoring you to get something else they want.  Usually more money from an investor, or an strategic introduction by a mentor.  As a mentor or investor, the best thing you can do for a founder is get out of their way.  They’ll call you when they need you.

That said, our mentor program had the most effect on the success of the companies.  Looking back, I feel that we could have probably done even more in this area.

Accepting teams as cohorts and having them work out of a common space created an automatic support group that reminds founders that they’re not alone.  Most of the Bootup Labs founders are friends now and will probably be friends for life.

Funding the teams and taking equity in return really made it feel like we were all on the same team.  It’s the difference between playing poker for money and playing poker for fun.

Highly technical teams worked the best, especially ones that had a co-founders.

What didn’t work

Popular seed accelerators in other cities have a big angel or two bankrolling the entire program. At Bootup Labs, our program depended on raising money from angels. The BC VCC program helped, but it wasn’t enough for me to convince enough angels to invest in such a radical structure for two main reasons.  1) There are very few local angels who generated their wealth by starting an Internet company. It was hard for many of them to believe that starting an Internet company required so little capital.  The model just didn’t seem feasible to non-Internet veterans. 2) We took the fun out of it for them.  Many angels *are* angels because it’s fun to pick a few founders they like, invest in them, and help them where they can.  Asking an angel to invest in a fund kind of defeats the purpose of being an angel. The consensus was that they’re more comfortable investing in companies as they emerge from the Accelerator.

HootSuite is opening up an API to allow add-ons to popular social media dashboard. This is a chance to create mash-ups and add extensions which users can add-in to customize their dashboard and so buying like is effective.

Date/Time
Saturday, Nov. 13, 11AM – 5PM
HootSuite HQ = 37 Dunlevy St., Vancouver, BC
Map: http://ow.ly/36mz1

Facilitators

HootSuite crew will be on-hand including Developer David Chan, CEO Ryan Holmes, CTO Simon Stanlake and Community Wrangler Dave Olson

Questions: apps@hootsuite.com

Register: http://ow.ly/36muN

Vancouver

This Friday October 22nd, we’re kicking off Bootup Labs Investors Days here in Vancouver.  If you’re an investor and want to attend, please contact us for an invite code.

Silicon Valley

Next week, October 26th-29th, we are all headed to Silicon Valley to pitch some of the worlds top VC firms and Super Angels. If you’re an investor in the valley and would like to meet the teams, please contact us.  On top of that, they are participating in the C100’s 48 Hours in the Valley program, and we will all finish the week off by teaming up with our friends at Metabridge to throw a reception at Kick Labs in San Francisco.  If you’re in San Francisco, feel free register here if you would like to join us for a drink on us next Thursday. We would love to see you.

A special thanks to all our mentors for all the support you have given to us over the past year.

Write a speech first. DO NOT TOUCH POWERPOINT yet.  A speech is just a story that is well thought out, prepared, and mostly memorized. Do not even think about what would be displayed on the screen behind you until you feel like you could stand up and tell your story from beginning to end and get your point across without any slides at all.

In general cover the following areas in your speech, all weaved into a cohesive story:

1. First, tell a customer story. Personify one of your customers, and walk through, from their point of view, how they use your product.
2. Now that you explained how one customer uses your product, explain how many of them you think there are, and how you arrived at that number. For god sake, DO NOT quote Forrester or some other research company. just say “based on our research from multiple sources…”.
3. Next discuss how you will get to those other customers. Describe current user acquisition channels, including which ones worked, and which didn’t. Also mention how much competition there is for those customers, and the sources of that competition.
4. After you get your customers to the site, explain your funnel ie. percent of visitors who convert to registered users, and percent that convert to paying customers.  Describe your acquisition costs, churn rates, and calculated life-time-value.  Describe how the billing model works. ie freemium, recurring, ads, etc.  ONLY in the case of massive user growth, it’s perfectly acceptable to say “I don’t know how we will make money”.
5. Now explain why you are the perfect team to make this happen, including advisors.  Do not read bios, but tell the story about how their past is relevant to your venture.
6. And finally, how much money are you asking for.  Who else has invested.  When and how much they invested. Don’t forget your email address and cell phone number.

After the speech is written create a set of slides to support the more complex parts of what you’re saying.  Each slide should only have one thought on it, and not much text.  Graphs, screenshots, photos that reinforce the point you’re trying to make are all good examples of what a slides should have on them.  Sometimes, a demo is appropriate.  If you need to have text, one line in the center of the screen will make the right impact.

If you can help it, do not operate the computer. Before you deliver the pitch, give your co-founder a version of the speech, and highlight the keywords where your co-founder should change to the next slide. When you start your pitch begin talking and don’t look back at the screen. If you’re interrupted, by the investor, that’s usually a good sign.  Engage in the dialog, and if you’re lucky, you get to dump the pitch all together and just have a conversation.

I attached some slides I put together for a presentation I gave back in 2009, which might help give some perspective on the different types of pitches.

Fusion 09 Slides Danny Robinson

You should also make sure to have the following documents handy:

1. Deck – Make sure you create a second set of slides that is for emailing around.  It should be much more text heavy, so it can be read as a PDF.
2. A one-pager with the following sections, (Thanks to AngelList for these):
   • High level, one-liner description: The Facebook for the Dog Community
   • Product description, including links to a demo
   • Social Proof – What other notable investors or advisors are involved?
   • Traction – Describe customer or revenue growth
   • Team – Bios of each founder, and key team members
   • Market/Competition – two sentences on size and why you’re better
   • How much are you raising?
   • How much have you raised previously? from who?
   • If you referred to the specific investor, by who?
3. Proforma – 18 month growth projections based on historical data.
4. CapTable – a spreadsheet of who owns the shares of the company.

Hope this helps founders as they begin to raise a Series A round.  Good luck!

If you’re a startup you have no excuses. Just use it. (And no I don’t have stock in the company or even know the founders.). Its just that good.

Here are some tests that I apply before using data to make any decisions in business (or probably any other area of life) Hopefully they can help you too.

1. Instincts are smart. Reconcile the conclusions you make against your them. If it doesn’t feel quite right, don’t just accept it, find out why.  Obviously, the reverse argument can be made, and is probably made more often for good reason.  Entreprenuers often trust their gut too much. The point is that either your gut or the data should calibrated before you should feel comfortable making any decisions.
2. By definition, data is a view of the past, and usually you’re trying to use it to make a decision about what to do in the future.  Past behaviour doesn’t always predict future results. This is especially true in areas of fast paced change — like the Internet industry.  It’s easy to fall into this trap, since we use this system in all aspects of society, from using grades to get into university, your credit rating to get a loan, or choosing where to invest money.  The problem is that it’s not enough data to make an informed decision.  You need to add up anecdotal evidence and do your best to predict where you think the future will be and then compare that against your results.
3. The third test is to question how was the data interpreted? Trusting someone’s analysis of data is easy.  It’s usually logical, and packed with facts that are impossible for anyone to refute.  I’m not suggesting that you become a contrarian, just stay objective and look for ways to poke holes in the logic. Looking at the same raw data and concluding something entirely different is one thing that separates followers from the leaders.

The next time your faced with a big decision, or are presented with compelling data from a research firm, or your VP of marketing, try to challenge the information you’re getting using the three tests above.  Doing so should catch some mistakes before they happen.  Good luck!

Within the past 5 years, the cost of starting an internet company hit a floor. There is no cyclical effect here. It will not go back up.  Today, all founders need to get a company off the ground is a roof over their head, food, internet access, a laptop and a whole lot of passion. That massive drop in costs has caused a tsunami, which has been ripping its way through the VC industry ever since.  In it’s wake, Seed Accelerators, Super-Angels, and a new crop of Series A VCs, operated by former entrepreneurs, have emerged as the benefactors. Seed Accelerators like YCombinator, TechStars, and us at Bootup Labs are investing between $10k-$100k per startup. Super Angels invest between $10k-$250k, and reinvented Series A VCs invest as low as $250k-$2M per startup. Most are making healthy returns with more frequent exits in the range of $10M-100M in less than 5 years.

From my observations, regions with a higher concentration of super angels and/or seed accelerators, such as Boulder, New York and San Francisco have completed this transformation, While other areas including Boston, Seattle, LA and Austin are next, and Vancouver will get there in about 9 more months.

This wave took about 5 years to subside, and has changed some of the definitions of the words we use to communicate. So, before we talk about the next wave, we have to reconcile our nomenclature. For the sake of this post, let’s assume that $250k-$2m is no longer called a “Seed” round, and is the new “Series A.”

Wave 2 – Take it to the Bank!

The ripple effects are continuing to run it’s way through the VC eco-system, and are now challenging the economics of series Series B VCs.  If Seed money is used to test if the market wants something, and Series A is to identify and mature user acquisition channels, then all we need Series B investment for is to grow an already proven business, right?

Take this for example: If I prove that google adwords produces 1,000,000 clicks of a certain keyword, and those clicks convert at 2% at a cost of $1.25 per click, and the lifetime value of those conversions is $113 each, with a churn rate of 5% per month, then the company should net about $2.2M over 20 months, and you can take that to the bank — quite literally. (here’s the model) It’s conceivable that banks (yes, banks) will get confortable that acquiring users has the same level of risk as collecting receivables.  These banks will loan money (or factor) against individual acquisition channels, which have shown statistical significance.  If you’ve been in the Internet industry as long as I have, you know that acquiring users becomes as predictable in terms of revenue generation as a signed PO from an enterprise customer.

What does this mean for the Series B/C/D investors?  A lot.  There is already a lot of competition for Series B investments, which makes sense; Risks are low, quality deals are scarce, and great upside potential.  On top of that, when the first wave hit, the risk tolerance and economics for the incumbent Sereis A VCs forced them to higher ground, aka Series B.  Over the next few years, I predict that specialty lenders or venture debt, and some progressive banks will provide some interesting options for founders of Internet companies.  I’m just glad I’m not managing a VC fund over $50M.  If I’m right, life is going to get tougher than it already is, and, as far as Internet investing is concerned, it’s never coming back.  In fact, if I was in that position, I’d stick to biotech, cleantech, or any other capital intensive tech industry.

Wave 3 – Lights, Laptops, Launch

I don’t believe anyone can predict the future more than 3 years out but it doesn’t stop me from thinking about it.  I’ll describe my admittedly “out-there” vision for what will happen when the 3rd, and final wave hits in another post.

I would be grateful for any comments and of course, criticism and counter-arguments are welcome.

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