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

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.

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 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!

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!

The 2011 CIX Top 20 are:

Digital Media:
Massive Damage, Toronto ON www.pleasestaycalm.com
Arcestra, Toronto ON www.arcestra.com
Wattpad, Toronto ON www.wattpad.com
Recoset, Montreal QC www.recoset.com
Achievers, Toronto ON www.achievers.com
Vanilla Forums, Montreal QC www.vanillaforums.com
Woozworld Inc, Montreal QC www.woozworld.com
Infersystems, Toronto ON www.infersystems.com
ClearRisk, St. John’s NL www.clearrisk.com
bitHeads Inc., Ottawa ON www.bitheads.com

ICT:

Shoplogix, Mississauga ON www.shoplogix.com
TribeHR, Waterloo ON www.tribehr.com
Wave Accounting, Toronto ON www.waveaccounting.com
Evoco Inc., Calgary AB www.evoco.com
QuickMobile, Vancouver BC www.quickmobile.com
Nexalogy Environics, Montreal QC www.nexalogy.com
ResponseTek Networks, Vancouver BC www.responsetek.com
NexJ Systems, Toronto ON www.nexj.com
True Voice Technologies, Burlington ON www.truevoicetech.com
Polar Mobile, Toronto ON www.polarmobile.com

Here’s more information from the CIX press release:

Unique to CIX, the CIX Top 20 is a fast-paced, expertly-curated series of presentations offering an up-to-the-minute glimpse of the most innovative Canadian technology-based companies in Information and Communications Technologies (ICT), and Digital Media.

The CIX Top 20 competition received hundreds of applications from major cities all over Canada, and can boast finalists from Toronto, Montreal, Vancouver, Ottawa and Calgary. Companies selected were chosen by a committee made up of leading experts from major corporations, entrepreneurs, and investors. Companies were judged on a number of key factors including: product/service offering, depth of management, market opportunity and business model.

“Once again, we are excited to see the very high quality of companies applying to CIX and presenting on our stage this year,” said Rick Nathan, Managing Director of Kensington Capital Partners and CIX Co-Chair, “there is clearly no shortage of innovative ideas and entrepreneurs in Canada today.”

“The CIX Top 20 is all about highlighting some of Canada’s most innovative tech Companies” said Chris Arsenault, Managing Partner at iNovia Capital and CIX Co-Chair, “showcasing our leaders of tomorrow.”

In addition to connecting with potential partners and investors, companies honoured as part of the CIX Top 20 will go on to showcase their innovative ideas in front of the CIX audience and to Canadian and international VCs and corporate investors, live at this year’s Canadian Innovation Exchange.

A winner from each category will be chosen through the CIX virtual stock exchange, where attendees can – in real-time – buy, sell and trade virtual shares of companies on the Top 20.

Alongside the Canada’s Hottest Innovative Companies showcases, the Canadian Innovation Exchange is set to host hundreds of meetings between innovation leaders, as well as host an action-packed day of compelling panels, sessions and keynotes. To register for the event or for more information on CIX, visit http://www.canadianinnovationexchange.com

About CIX
Taking place December 1st, 2011 at MaRS Discovery District in Toronto, the Canadian Innovation Exchange (CIX) is the foremost destination for key leaders in the innovation economy to learn from one another, explore new relationships and accelerate the development of the ground-breaking technologies, products and services propelling the Canadian economy into the future.

This one day forum attracts the people behind innovative new technologies – entrepreneurs, investors, corporations, service providers, government, and media – for an unparalleled program of visionary keynotes and panel discussions, facilitated networking opportunities, and the CIX Top 20 – a showcase of Canada\’s hottest innovative companies working in Digital Media and Information and Communication Technology. For more information, visit www.canadianinnovationexchange.com

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.

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 obstacles/advancements.

The corresponding SR&ED eligible costs pertaining to that project need to be calculated and put into the form as well. The T661 gets submitted along with the annual tax return and the CRA will process the return and issue the tax credit if applicable, however they may choose to audit the SR&ED application.

The process for applying for the OIDMTC is as follows:

1. Prepare all required documentation as outlined in the OIDMTC guidelines (http://www.omdc.on.ca/Page3400.aspx)

2. Calculate expenditures relating to the development of the product

3. Submit the application to the Ontario Media Development Corporation (OMDC) through the Online Application Portal

4. Await the issuance of a Certificate of Eligibility

5. Attach the Certificate of Eligibility to the applicable tax return and complete schedule 560

6. The CRA may choose to audit the OIDMTC submission

7. Receive the refundable tax credit

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?

Matt Golden: I started in mobile in 2000 at Canada’s Brightspark Ventures. I co-founded Tira Wireless in 2001, which was one of the first companies to work with downloadable mobile content on phones. We became a leading mobile games publisher and one of the key vendors of mobile deployment technology until 2008. Then I joined BlackBerry Partners Fund as a partner and spent two years focused on mobile investing where I led three investments: SocialDeck, which was acquired by Google, Transpera, which was sold to Tremor Media, and Nexage, which is a leading mobile mediation solution. After leaving the Blackberry Partners Fund I became an advisor to Five Mobile, (the principals of which were my very talented former colleagues from Tira). Five Mobile was recently acquired by Zinga.

DP: How you decided to start Golden?
Matt Golden: I have always been an early stage guy at heart. I love working with entrepreneurs and love the company creation process. After two years with the great group at Blackberry Partners Fund I decided I wanted to focus on early-stage seed investing. I witnessed firsthand at a larger venture capital fund that there are so few true venture-worthy deals and exits in Toronto and yet a tremendous amount of raw entrepreneurial and engineering talent. I decided there was a real gap in the marketplace that could be filled by both capital and mentorship to nurture local talent and companies. Couple this trend gap with some other trends such as: 1. Toronto/KW is increasingly distinguishing itself as a world-class mobile ecosystem. 2. The big acquirers are buying earlier and more frequently; and 3. the cost of creating valuable technology have significantly declined over the past number of years. I felt it was a perfect storm for a fund like Golden Venture Partners.

DP: What’s the deal flow like in Toronto?
Matt Golden: The deal flow is reasonably good. There’s a tremendous amount of engineering and raw talent. There’s a nice pipeline of early-stage companies, but it needs to be developed. The introduction of an increasing amount of incubators and accelerators being run by some really solid entrepreneurs is helping, but it’s equally important to ensure there are more institutional seed investors to carry the mantle after the incubation cohorts graduate or else these companies just become what has been referred to as “the walking dead.” Luckily there are some extremely high-quality potential seed co-investors like Extreme and Mantella, but there are still not enough groups like these.

DP: Where do you find your deals?

Matt Golden: So far I have predominantly relied on my industry networks for deals and I like to work with entrepreneurs or co-investors I have known for a long time whenever possible. This has brought me to focus on deals in Toronto and Waterloo, but also Boston and California. I also continue to develop relationships with local incubators and accelerators like Communitech and other university and government funded groups like IAF and MARS, who are all running terrific programs.

DP: What do you look for before you fund a company?

Matt Golden: That hasn’t changed. What I am looking for is breakthrough mobile products and services that leverage the massive potential of the mobile market. We have to revisit value chains based on the power of Smartphones and tablets. In the book publishing industry with Wattpad (Golden’s portfolio company) you see how you can engage millions of people who want to read millions of stories from aspiring authors across all different devices. Guardly (another portfolio company) is reinventing the whole personal safety value chain.

DP: What lessons have you learned as an entrepreneur?
Matt Golden: Put terrific teams together. Don’t compromise on who you bring into your company. Make sure the talent is incredible. Go after a very big market and bring something unique to the equation. Copy cats don’t scare me as much as not doing something extraordinary. Worry about how you can create something huge and, if you are able to focus on that market, swing for the fences.

DP: Any other advice for a new CEO?

Matt Golden: Wherever possible control your own destiny. Don’t rely on channels to market when you can go to market yourself. Focus on businesses that, if executed properly, can scale. You don’t have to hire tons of people. If you grow as you execute you can maintain the same number of employees.