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Canadian angel investments double in quantity but rise only 13 percent in value

Canada-invest-resizeBy Francis Moran

Angel investors, that group of high-net-worth individuals who are often the first source of external funding for new companies, were a great deal more active in Canada in 2012, making nearly twice as many investments as the year before. However, the total value of those investments rose by only 13 percent, suggesting that individual investments, while perhaps easier to secure, are getting smaller.

That was one conclusion to be drawn from the annual report on angel investing published earlier this week by Canada’s National Angel Capital Organization. The survey of 20 out of NACO’s 24 angel group members revealed that a total of 139 investments were made last year, up 96 percent from the year previous. Just over 100 of these were new investments, 30 were follow-on and the balance were not specifically categorised. However, the total amount invested in 2012 was $40.5-million (all values in Canadian dollars), up only 13 percent over the $35.7-million that angels put into young companies in 2011.

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Great articles roundup: Demo day, VCs, cost of content marketing and startup PR mistakes

linkBy Hailley Griffis

In this week’s roundup we rail against misconception, with articles from PandoDaily, Venture Beat, Business to Community and Washington Business Journal. The authors are clearly fed up with people thinking demo days are a good idea, becoming a venture capitalist is easy, content marketing is free and doing public relations for startups is simple.

Let’s kill the demo day and replace it with a one-year reunion

Erin Griffith makes a good point in stating that a three-month program with a demo day at the end may not  be the best for startups or their investors. Rather, she proposes something closer to a reunion where startups are forced to provide value and truly demonstrate their periodic growth. This eliminates all of the hype that demo days create, as well as a few other things.

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‘The definition of an entrepreneur is someone who is abnormal’

David Rose speaks at StartupGrind OttawaBy Francis Moran

Ottawa entrepreneurs were treated last night to a rare performance when seasoned entrepreneur and pioneering angel investor David Rose, founder or funder of more than 75 technology companies, spoke at the city’s monthly StartupGrind event. Describing himself as a third-generation entrepreneur, Rose spent fully 40 minutes answering StartupGrind organizer Cheryl Draper’s very first question about his early adventures in company creation and angel investing. As entertaining as his personal story was, it was the concrete advice he gave to entrepreneurs that made the evening valuable.

Like many other tech sector observers, Rose pointed out that it has never been easier to start a company. His first venture consumed $20-million of investors’ money to get to a revenue-producing product. His next venture cost $2-million to get to the same stage, and the third just $200,000. The costs have dropped by another order of magnitude — or maybe even two — to the point that today, he said, “almost anyone can start a web company at almost no cost.”

This low cost of entry means that too many people start companies to do easy things or to mimic things that have already been done, Rose said, a paradox that I don’t hear enough people emphasizing. The world doesn’t need another recruitment site or social shopping site, he said. Instead, “look around for real problems that haven’t been solved by anyone else…The first question (every entrepreneur needs to ask) is, ‘Does anyone want what I’m going to build?’”

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Investor pitching 101, with Communitech’s Frank Erschen

By Leo Valiquette

“It’s all about the content, it’s not about the sizzle. You have to give investors the content they need to make an investing decision.”

So says Frank Erschen, pitch coach, angel investor and executive in residence at Communitech. While in Kitchener-Waterloo last week, I had the opportunity to sit in on his session with Erisvaldo Gadelha Saraiva Junior, executive director of Brazil’s Yupi Studios.

Yupi Studios is a startup focused on developing apps, games and other creative content for smartphones, tablets, smart TVs and social networks. While it is paying the bills as an app factory for hire, its goal is to raise the $500,000 to $1.5 million it needs to devote itself entirely to developing its educational gaming platform, Yupi Play. Here is a recap of Erschen’s counsel on how Yupi Studios and any other startup in search of capital should structure their pitch to make the most of that eight to 12-minute opportunity to woo an investor.

For Erschen, an effective presentation should include the following slides, to tell a single compelling story with a natural progression: Read More

Soaking up that K-W vibe

 CommunitechBy Leo Valiquette

Even casual readers of this blog will likely know we are great fans of the good work done from the Kitchener-Waterloo region by Communitech. I am writing this post from the Communitech Hub and have to admit this week marks my first visit.

Our Francis Moran is of course a frequent visitor. While I have in the past had the opportunity to interview Communitech CEO Iain Klugman and Tim Jackson from the region’s Accelerator Centre, and work with the team at Communitech’s national arm, the Canadian Digital Media Network, I had not yet made the trek myself.

It also marks my first visit to a regional economic development agency outside Ottawa. Kitchener-Waterloo is not characterized by the shadow of big government as Ottawa is, but the linkages between industry, academia and government are obvious from the outset.

Walking down the street, I was struck by the profound significance of seeing on the side of the same building, alongside Communitech’s, the logos for Google, a multinational tech titan that needs no introduction, and local company Desire2Learn, which last year bagged the single largest first round of venture capital ever by a Canadian software play (largely from a U.S. investor). These two companies alone house upwards of 1,000 people in the complex.

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