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30 considerations for getting tech to market: Part III

This is the 32nd article in a continuing series that examines the state of the ecosystem necessary to successfully bring technology to market. Based on dozens of interviews with entrepreneurs, venture capitalists, angel investors, business leaders, academics, tech-transfer experts and policy makers, this series looks at what is working and what can be improved in the go-to-market ecosystem in the United States, Canada and Britain. We invite your feedback.

FM Series banner headART 1 300x145 30 considerations for getting tech to market: Part IIIBy Francis Moran and Leo Valiquette

While there will no doubt be the occasional post that will still fall into the Commercialization Ecosystem category, today marks the official end of this series with which we launched our new blog back in February. Next week, we will introduce several new series, but first, let’s conclude our three-part recap of what we have learned about getting technology to market.

Two weeks ago, we began with insights and practical advice on securing investment capital and finding champions to help get your technology to market. Last week, we continued with commercializing university IP, the value of mentor capital and what it means to be lean. Today we conclude with the strategic role marketing must play from day one of a startup, engaging with your community and what role government should play.

21: Practise good IP hygiene

Consider having in your organization someone who educates themselves on all matters related to managing your intellectual property. This “IP coordinator” is not a replacement for outside legal professionals. Their job is to see that the things that need to be done do get done and done properly.

“Your IP coordinator can help maintain cost control over your IP expenses; is this technology really worth patenting? Do we really need to obtain trademark registrations in Australia? Your lawyer, when questioned, is likely to reply, ‘I’ll get you the best IP rights that you deserve wherever you require.’ But your lawyer is unlikely to tell you whether your product is a good business investment and whether having a patent on a feature of that product will be money well spent,” wrote guest blogger and senior Canadian patent attorney David French.

22. Have an MVP for your MVP

A Minimum Viable Product is an essential component of a lean approach to market which allows you to test the waters and solicit the feedback to iterate product development in the right direction. To solicit that market feedback, it must be combined with an effective Market Validation Plan.

“An MVP is simply the minimum set of features that provide the initial value to the user of your product. It is crucial that this first incarnation of your product show your value differentiation. In other words, not only must it provide that initial functionality for your first users, it also needs to show off why your product is different or unique in the marketplace,” wrote Peter Hanschke, one of our associates.

23. Engage early, engage often

Getting technology to market is all about engagement. Entrepreneurs need to get out and talk to people, lots of people. They must get involved with networking organizations and go to industry events where they can meet with veteran entrepreneurs, potential investors and partners. Most important of all is to seek out and listen to potential customers and the pains they express which you hope to solve.

“Your success is not based on your core ideas, it is based on how fast you can respond and reiterate the feedback coming back from your market.” Entrepreneurs must “get their heads out of the sand to see what competitors are doing, what is happening in the market, and where there are dead ends and emerging opportunities,” said John Stokes, partner with Real Ventures.

24. Don’t undervalue strategic marketing

“Companies that can’t clearly articulate their customer and market are not real serious companies, they are research projects … Engineering and marketing need to work together from the get go,” said Ronald Weissman, chair of the Software Special Industry Group at Band of Angels.

For Weissman, defining the market opportunity and ensuring a product is the right fit is so important from the outset that when he is building the management team for a startup, he will often hire a head of product marketing and head of business development before a CEO.

“More new ventures fail because of poor marketing than because of poor engineering or poor financial management,” Denzil Doyle, founder of Doyletech, wrote in his book, Making Technology Happen.

25. Have a clear sales and product migration strategy

A product migration strategy is crucial to keep the market engaged with compelling new products as older products mature.

“Any new venture which starts out with only one product in its portfolio is probably doomed … follow-on products should be clearly visible at the outset,” Doyle wrote.

Startups often “don’t think about the post sales support infrastructure sufficiently to scale the company. This is where growth is hindered or delayed … sprinters must hand off to the middle-distance runners,” said Phil Newman, CEO of Pergali and one of our U.K.-based associates.

26. Don’t be the biggest barrier to your success

“You have to be a well-centred individual. If I am a highly insecure individual and I need you to stroke my ego, then that’s likely going to cause all kinds of problems downstream. I’m not saying those people don’t become successful business people … but nine times out of 10, people who are not centred in their own personality create all sorts of wasted baggage,” said Andrew Fisher, executive VP at Wesley Clover.

“I would much rather work with someone with a good idea who is coachable, than someone with a great idea who is not,” said Iain Klugman, president and CEO of Waterloo’s Communitech.

27. Take advantage of whatever public programs are available to you

Jason Flick, co-founder and president of YOU i Labs and president and CEO of Flick Software, blogged about the importance of landing that initial customer and providing them with the first mover advantage as an incentive to take the risk on your venture. But what’s the next step once you have them?

“Once you have this first customer, it isn’t time to just buckle down and work hard on the deliverable. Rather, this is the best time to go in search of additional funding from government sources, angels, and friends and family. Don’t wait until the few dollars you’ve secured from the customer are running out to start this search. Government programs such as IRAP, the Investment Accelerator Fund managed by MaRS, and Ontario Centres of Excellence are amazing resources if you are based in Canada,” he said.

“Now the capitalization of a company can be a whole combination of different resources and sources of funding,” said Klugman.

28. But don’t become a taxpayer charity case

“Bad businesses learn how to do a really good job of sucking up a lion’s share of the available subsidies. Instead of working to generate strong sales channels and scalable businesses, they become quite good at wooing various funding mechanisms and taking advantage of various programs. They have to; it’s the only way they know to survive,” said Andrew Fisher of Wesley Clover.

“The good businesses, meanwhile, don’t really have the time to futz around with those government folks and operate at a bureaucratic pace. Instead, they go out and sell their product, raise capital, whatever it is they need to do to get the job done.”

29. Understand what government’s role should be

In his book, The Way Ahead: Meeting Canada’s Productivity Challenge, Tom Brzustowski, RBC professor for the commercialization of innovation at the University of Ottawa’s Telfer School of Management, wrote, “I believe that it is only the private sector that creates wealth.” The public sector, on the other hand, is a consumer of wealth in order to bankroll the two fundamental roles it plays.

First, it provides the “supportive and normative framework for wealth creation by the private sector” through laws, regulations, treaties, incentives and so forth. Second, it is a “concentrator of resources assembled through the tax system” to pay for things like education, healthcare and infrastructure.

“Government doesn’t start companies. Individuals do,” said Klugman.

30. And lastly, be nimble

Take advantage the fact that, as a small company, you can typically react and adapt faster to volatile market conditions than larger companies.

“As entrepreneurs we can redirect our efforts to wherever the opportunities lie. We can redefine our business model. We can create partnerships and alliances with a single phone call. If your plans called for new capital, look for other ways to grow; if your market is shrinking, change sectors; if your market is asking for concessions, add costless value; if your market has no CapEx budget, rent it to them,” wrote Andrew Penny, president of Kingsford Consulting and one of our associates.

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Posted by: Francis Moran and Leo Valiquette on September 6, 2011

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Posted in: Commercialization ecosystem, Financing and fundraising, Marketing strategy, Product marketing, Startups, Technology marketing — Leave a comment

30 considerations for getting tech to market: Part I

This is the 30th article in a continuing series that examines the state of the ecosystem necessary to successfully bring technology to market. Based on dozens of interviews with entrepreneurs, venture capitalists, angel investors, business leaders, academics, tech-transfer experts and policy makers, this series looks at what is working and what can be improved in the go-to-market ecosystem in the United States, Canada and Britain. We invite your feedback.

FM Series banner headART 1 300x145 30 considerations for getting tech to market: Part IBy Francis Moran and Leo Valiquette

Six months ago we launched this “12-part” series to put forth ideas, yield practical insights and provoke thoughtful discussion about what it takes to get technology to market. Thanks in no small part to the enthusiastic response of our readers, we let the series evolve and grow as it would.

More than 50 posts later, including 30 we wrote plus another score of contributed articles, it is reasonable to say that we have cast at least a passing spotlight on just about every issue pertinent to such a broad subject. Dozens of individuals have shared their time and expertise with us as interviewees, subject matter experts and guest bloggers, and we thank them all.

But all good things must come to an end. While there will no doubt be the occasional post that will still bear the header, The Commercialization Ecosystem, we will be moving on to new series in a few weeks. But first, what have we learned about what it takes to get technology to market? In a three-part wrap-up, we will recap what we have learned that every entrepreneur and tech executive needs to know.

We begin today with that watershed moment.

1. You must find a problem to solve

John Stokes, a partner at Real Ventures, defined a successful entrepreneur as someone who can put together both “convergent” and “divergent” thinking. The innovator is about convergence, having a problem to solve or premise to challenge. But to get the solution to market requires divergent thinking – the ability to identify and evaluate all of the possible ways to achieve that goal.

Mobile technologist, anthropologist and conservationist Ken Banks summed it up this way: “For me, an entrepreneur is a person who is good with the idea, who is good at formulating a solution and building a good team that can execute on it … you come across something that really switches you on and inspires you to create something and you don’t get that in a school.”

2. The market must be willing to pay for the solution

“Great companies constantly test the market, for validation and feedback. When I look at a new company, I ask, ‘Where did the product come from? Did it come as a result of a market demand?’” said Ronald Weissman, chair of the Software Special Industry Group at Band of Angels.

Ann Miura-Ko, co-founding partner with FLOODGATE said in a lecture last fall at Stanford University, ”A startup is ultimately … not just about whether an idea or a product works, it is about whether or not you can create a business around it. Whether or not the ecosystem will support it, the customers will buy it, if the channels will support it, and if the manufacturers will actually create it.”

3. The old investor normal is hard to find

The venture capital industry of 10, even five, years ago no longer exists. As many VCs have shied away from early stage investments, many angel investors have stepped up to fill the void. However, their support is coming with more strings attached and higher expectations than in the past.

“They want proof points and market validation. They want to see the strength of your management team and your pipeline,” said Weissman.

4. The new normal is there is no normal

In today’s marketplace, where old enterprise sales models have been collapsed by iterative product development driven by the power of Web 2.O, cloud computing, open source and commoditized development platforms, a company has many paths to market.

“Now the capitalization of a company can be a whole combination of different resources and sources of funding. A lot of people think the old normal still exists, but only for a small group of companies,” said Iain Klugman, president and CEO of Communitech.

Added Stokes, “Those companies that are founded today are often able to compete with the ones founded five years ago with a lot fewer dollars and a lot more agility. The tech market has evolved much more quickly than the venture market.”

5. It’s all about who you get to know

Finding investors is about doing your homework and creating opportunities that will allow you to put yourself in front of them. But don’t aggressively pursue them with your elevator pitch. Get to know them and let them get to know you.

“People and relationships are the most critical factors in investment. This is why investors consistently say that the team is the most important factor in a deal. It is also why when talking about an investment, investors will often start out by saying that the founder is a great person with lots of integrity,” wrote Martin Soorjoo, founder of The Investor Pitch Clinic.

6. And how well you can speak their language

It’s not about the bells and whistles of your technology. It is about the business case for your technology.

“Product- or engineering-driven CEOs new to the VC world beg, ‘Please let me demo my product! It will change the world. For $500,000 you will own a piece of the next Facebook.’ But the story that investors need to hear is different. ‘How does your business work? How will you scale to become a profitable market leader? Is this the kind of business that meets my investors’ financial objectives?’” wrote Weissman.

7. Commercialization needs champions

A “champion” could be someone with decision-making authority within an established organization, who sees the value in a new technology and will support it by either investing money and resources into it or adopting it within their own organization.

“To commercialize, we need companies with an innovation vision willing to share risk,” said Thomas Martinuzzo, manager for business development, sciences and engineering at Gestion Univalor.

8. Go out and find your champion

If you have an idea that solves a customer’s problem, preferably a large customer, then you should be able secure “funding” from them, provided you provide them with some form of added incentive to take the risk.

“This funding might come in the form of services, prepayment on the product or even as a strategic investment. While you are out doing your market research — the part where you actually talk to potential customers – seek out these types and arrange meetings by being open about the concept product you are working on and your interest in their feedback,” wrote Jason Flick, co-founder and president of YOU i Labs and president and CEO of Flick Software.

Go for “customers who are going to push you the hardest to develop a globally competitive product,” said Chris Albinson, managing partner with Panorama Capital.

9. Champions come in various forms

Champions can also be defined as successful entrepreneurs who volunteer their time as mentors or play the role of angel investor by reinvesting the proceeds from a profitable exit back into the community. For Scott Annan, founder of Mercury Grove and Network Hippo, his decision to create a new startup accelerator came from a firm belief that “a rising tide floats all ships.”

“For entrepreneurs and executives, being active in the community and supporting other entrepreneurs and programs that are happening is crucial. Really being able to develop that strong network and allocating time to share your thoughts and experience and expertise with other companies is critical. It helps not just the entrepreneurs, but creates an environment of collaboration,” he said.

10. Champions should also be incubators of technology

There is seldom a correlation between what an established company invests in R&D and its future success in terms of revenue, Flick wrote. “Startups are famous for having successful technology R&D because they can iterate and adapt so quickly and tend to be closer to the ground – e.g. the customer. Rather than invest billions in internal R&D, many of our large technology enterprises may find their money better spent if they put a percentage into incubating startups.”

The problem, however, is that the mindset this requires often runs counter to the typical corporate culture.

“Most companies are optimized to protect and keep things inside. The ideal of letting go something that has been invested in goes against the grain of a lot of companies. I think the best thing to encourage people to do it is to show success stories,” said Frank Rimalovski, co-founder and a former partner of New Venture Partners.

We will continue next week.

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Posted by: Francis Moran and Leo Valiquette on August 22, 2011

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Posted in: Commercialization ecosystem, Financing and fundraising, Marketing strategy, Startups — Leave a comment

Words of wisdom: Another look in the mirror

This is the 10th article in a continuing series that examines the state of the ecosystem necessary to successfully bring technology to market. Based on dozens of interviews with entrepreneurs, venture capitalists, angel investors, business leaders, academics, tech-transfer experts and policy makers, this series looks at what is working and what can be improved in the go-to-market ecosystem in the United States, Canada and Britain. We invite your feedback.

FM Series banner headART 1 300x145 Words of wisdom: Another look in the mirrorBy Francis Moran and Leo Valiquette

As we have said before, entrepreneurs must have a vision that will stretch the boundaries of what they know and challenge what they believe is attainable. They must be willing to seek the outside counsel and feedback that will reveal the weaknesses in themselves, their teams, their technology and their paths to market. It’s difficult to overcome a weakness if you haven’t recognized and acknowledged it.

We conclude our Words of Wisdom string today by looking once again at the human factor and the right stuff that individual entrepreneurs and management teams need to succeed. There is no denying that the greatness of an organization is defined by its people. But how do you ensure that you are making the right hires?

Hire good people

In his book, Making Technology Happen, Doyletech’s Denzil Doyle talks at length about proven practices and processes for getting technology to market. However, he also urges that thought be given to the people part of the equation.

Hiring people “is the mistake that virtually everyone makes (by) not taking the time to do it right,” he writes. On the other hand, “most presidents and managers make the hiring process too complex.”

In Doyle’s view, the “right hire,” in addition to obvious role-related skills and experience, has:

  • A high energy level
  • A high mental capacity
  • An abundance of common sense
  • An ability to communicate

What’s his advice to make the hiring process less painful and more streamlined? Draw up a list of the functions required for a given role. Then rate the candidate’s ability to perform each function against each of the four variables above, say, on a scale of one to 10.

“A candidate who does not rate a decent score in a very large percentage of the intersections between the job functions and the four essential ingredients is likely not the person for the job,” Doyle writes. “The same is true if scores are notably lower in one or more of the four columns even though one of them might have exceptional ratings.”

Here’s an exercise in devil’s advocacy for you: carry out this process on your existing team of company founders and executives. It might be painful, but it may reveal weaknesses that are best dealt with sooner rather than later.

How ‘round’ are you?

Andrew Fisher, executive VP at Wesley Clover, has worked with entrepreneurs of all stripes, including those who are trying to make the often-painful transition from simply developing technology to mastering the sales and marketing skills needed to commercialize it.

For him, it is a balance between basic skills, such as strong written and oral communications, and personality. He always looks for people who are well-rounded and possess those characteristics that have been collectively referred to by others, such as Daniel Goleman, as emotional intelligence. This is a measure of one’s self confidence, self-awareness and ability to navigate periods of stress and emotional turmoil, all of which has a direct bearing on one’s likelihood of achieving business success.

“You have to be a well-centred individual,” Fisher said. “If I am a highly insecure individual and I need you to stroke my ego, then that’s likely going to cause all kinds of problems downstream. I’m not saying those people don’t become successful business people … but nine times out of 10, people who are not centred in their own personality create all sorts of wasted baggage.”

This ability to communicate and present well is also important to Ronald Weissman, chair of the Software Special Industry Group at Band of Angels, when he is looking at a startup.

“In today’s climate, when companies actually try not to buy from startups, you have RISK painted on your forehead,” he said. “It’s tough to go it alone and establish credibility. A big part of my evaluation of a startup is if the management team is capable of establishing partnerships with larger companies who can achieve market penetration.”

At the coal face

It should come as no surprise that work ethic also ranked high on the list for Fisher and others.

“The harder I work, the luckier I get.” For Iain Klugman, CEO of Communitech, this marks the “let’s get it done” attitude that characterizes an entrepreneur with the right stuff. “I see a huge correlation between company’s success and how hard people work,” he said. “It’s a lot of hours for a long time, that’s the biggest determinant of success.”

Caroline Kealey, CEO of Ingenium Communications and one of our associates, has personally proven this point in spades.

Despite being a busy single mother with a full-time business, she set out to lever the insight and expertise developed over a 20-year career in strategic marketing communications into an educational resource for professional development and training. The Ingenium team, with a substantial amount of goodwill and in-kind support from friends and allies, set to work, determined to bootstrap their new venture, Results Map, without seeking a term sheet that would have diluted ownership. After six years of effort, the new venture launched last year.

“The sheer tenacity and the focus required was a major challenge since the project had to run alongside our regular work and business development,” Kealey said. “Stitching this together into something coherent with an end goal in mind was a very significant challenge.”

“Most of the development work I did on this was between 5 and 7 a.m. before I got my kids up to get ready for school; that’s obviously not everyone’s cup of tea.”

What’s your cup of tea? What kind of sacrifice and personal growth has it taken for you to get your technology to market?

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Posted by: Francis Moran and Leo Valiquette on April 4, 2011

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Posted in: Commercialization ecosystem, Marketing strategy, Startups, Technology marketing — 1 Comment

Is that person in the mirror standing between you and success?

This is the seventh article in a continuing series that examines the state of the ecosystem necessary to successfully bring technology to market. Based on dozens of interviews with entrepreneurs, venture capitalists, angel investors, business leaders, academics, tech-transfer experts and policy makers, this series looks at what is working and what can be improved in the go-to-market ecosystem in the United States, Canada and Britain. We invite your feedback.

FM Series banner headART 1 300x145 Is that person in the mirror standing between you and success?By Francis Moran and Leo Valiquette

“Nothing disheartens me more than meeting an entrepreneur in B.C. who says his ambition is to one day conquer the Ontario market,” Anthony Lee, general partner at Altos Ventures and co-founder of the C100, told us in an interview a few months back.

While building a globally competitive company may not be the right objective for everyone, Lee makes a key point. For any venture to succeed, its founders must have a vision that will stretch the boundaries of what they know and challenge what they believe is attainable.

Later in this series, we will test the stereotype that there are different “cultures of risk” from one country to another – for example, between Canada, the U.K. and the U.S. – that impact entrepreneurial success. But in this installment, we will focus on entrepreneurs themselves. It’s about who they see staring back when they look in the mirror each morning, rather than the environment in which they find themselves operating when they walk out the door.

In a past post, John Stokes, a partner at Montreal-based Real Ventures, talked about the difference between “convergent” and “divergent” thinking. Research often tends to be about convergence – having a problem to solve or premise to challenge. Divergence, on the other hand, is looking at all the avenues that could be taken to an objective. According to Stokes, a “good” entrepreneur needs a commercial mindset that is a balance of both to create innovative solutions to existing problems.

But there is more to this business of entrepreneurship than being able to see, and seize, opportunity. Once an innovation worthy of exploitation has been identified, an entrepreneur’s success or failure will depend largely on how ready they are to take counsel and challenge their own assumptions and deeply held beliefs. In other words, are they coachable?

“I would much rather work with someone with a good idea who is coachable, than someone with a great idea who is not,” said Iain Klugman, president and CEO of Waterloo’s Communitech.

Getting technology to market, after all, is an exercise in sweating blood. Even the most strategic thinker can become lost in the minutiae of the daily grind, caught up in stomping out one brush-fire or another. But from a marketing and product-development standpoint, successful entrepreneurs and nascent management teams must be able to step back on a regular basis and ask the hard questions to ensure they are still in tune with their target market and getting the timing right.

For Jeff Campbell, CEO of PerspecSys, timing is everything.

“It is always a good time to bring something to market if you time it right,” he said.

Levering mentor capital

Getting it right is a far less painful and pitfall-ridden process if one seeks out the sage advice and sound wisdom of those who have proven, through their own successes and failures, that what they have to say is worthy of consideration. While PerspecSys’s founders were already experienced in launching a new venture and getting technology to market, they still saw the merits of getting plugged in with organizations that could provide the access to additional expertise, insight and counsel, not to mention sources of potential funding, such as Communitech and the C100.

For Nicole Glaros, a general manager with Tech Stars, a mentor-driven seed-stage investment program that operates in various U.S. cities, this “mentor capital” is often a more valuable resource for a startup than cold hard cash and the best insurance against avoiding the missteps that typically cause a startup to stumble.

“When we see companies at an early stage work with mentors, all those problems end up cut off,” she said. “Talk to as many people as you can possibly humanly talk to … The more people you will talk to, the less pitfalls you will fall into.”

This, of course, also applies to what is happening around the water cooler and within the board room. Much has been written on the subject of how diversity, be it in terms of gender, ethnicity, industry experience or skillset, is crucial to building a strong, dynamic management team.

Having a good balance is very important,” said Campbell. “You need a healthy debate with a diverse team of people who are right and left of center.”

‘Get out there and fail fast’

Success is never guaranteed. Failure, in some measure, is inevitable. In a recent column published by TechCrunch, academic, writer, researcher and entrepreneur Vivek Wadhwa talked about what makes the culture of Silicon Valley so unique and so supportive of entrepreneurship. While his comments were not intended to define what it takes to be a successful entrepreneur, much of what he said could just as easily be used to describe some of the winning characteristics anyone engaged in bringing technology to market would be well advised to cultivate within themselves.

“In the Valley, techies are far less secretive and are generally helpful to one another,” he said. “Silicon Valley cherishes failure — because people understand that building a technology company requires experimentation; that it takes trial and error to perfect a technology and business model; and that you learn from failure.”

Entrepreneurs must be accepting of their own failures and have the courage to recognize when something has failed or is at risk of doing so. If being coachable is one of the most valuable characteristics of a “true” entrepreneur, then it goes to reason that the most important coach is sometimes your gut, which is often too easily ignored.

It takes grit to step back, take stock and admit that all your time and effort to date may be taking you and your company in the wrong direction, then to regroup and get back to the drawing board without getting discouraged. Failure should be seen as an opportunity for growth.

“Get out there and fail fast,” said Lee.

How has challenging yourself and learning from failure helped you to successfully bring technology to market?

In our next installment, we will collate some words of wisdom that have emerged from our interviews for this series.

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Posted by: Francis Moran and Leo Valiquette on March 14, 2011

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Posted in: Commercialization ecosystem, Financing and fundraising, Marketing strategy, Startups, Technology marketing — 3 Comments

Silicon Valley: A big bright heat lamp for startup incubation

This is the fifth article in a continuing series that examines the state of the ecosystem necessary to successfully bring technology to market. Based on dozens of interviews with entrepreneurs, venture capitalists, angel investors, business leaders, academics, tech-transfer experts and policy makers, this series looks at what is working and what can be improved in the go-to-market ecosystem in the United States, Canada and Britain. We invite your feedback.

FM Series banner headART 1 300x145 Silicon Valley: A big bright heat lamp for startup incubationBy Francis Moran and Leo Valiquette

In his book, The Way Ahead: Meeting Canada’s Productivity Challenge, Tom Brzustowski, RBC professor for the commercialization of innovation at the University of Ottawa’s Telfer School of Management, talks about the “social contract between science and society in the U.S.” that arose in the late 1940s and gave rise to that unique ecosystem we know today as Silicon Valley.

The basis of this contract is found in Science: The Endless Frontier, a 1945 report to U.S. President Harry Truman by visionary Vannevar Bush that outlined a U.S. post-war science and technology policy that would ultimately result in the creation of the National Science Foundation. In the years that followed, military-funded unclassified R&D in the private sector, driven by the pressures of the Cold War and the space race, laid the foundation for Silicon Valley and made Bush’s vision a reality.

The story of Silicon Valley’s evolution, which is obviously far beyond the confines of this series, continues to support the misconception that the U.S. is somehow better at producing successful entrepreneurs and multinational technology enterprises than other countries. As if the “right stuff” is somehow genetically encoded as result of being born on American soil.

But as Duke University adjunct professor Vivek Wadhwa observed in a column published in the March 2009 issue of BusinessWeek, the success of Silicon Valley in fact refutes this stereotype.

“Despite the fact that they constitute only 12 percent of the American population, immigrants have started 52 percent of Silicon Valley’s technology companies and contributed to more than 25 percent of our global patents. They make up 24 percent of the American science and engineering workforce holding bachelor’s degrees and 47 percent of science and engineering workers who have PhDs,” Wadhwa wrote.

A multinational ecosystem that is bigger than any one country

What has been created in Silicon Valley is an ecosystem with the critical mass to attract the top people from around the world and provide them with the varied resources they need to build success. There are also cultural elements here that bear noting; namely, an appetite for risk and an acceptance that failure is a fundamental building block of business success. But again, one can argue these characteristics define the multinational culture of Silicon Valley itself, as opposed to the U.S. in general.

“It is very easy to go down the road of confirming stereotype,” said Anthony Lee, general partner at Altos Ventures, co-founder of the C100 and an ex-pat Canadian who has been south of the border since 1988.

“What Silicon Valley has done is create an ecosystem and a brand, a model, that allows anyone from anywhere in the world to come and execute.”

Simply put, for startup entrepreneurs of whatever origin, Silicon Valley is where it’s at.

Chris Albinson, managing partner of Panorama Capital and co-founder of the C100, is another ex-pat Canadian immersed in the U.S. VC and startup scene. From his view, Silicon Valley offers the broad cluster innovation, professional services and veteran expertise needed to support risk-taking, along with “a level of global customer intimacy that one just doesn’t see anywhere else on the planet.”

The tens of thousands of talented individuals who have been drawn to Silicon Valley represent a rich resource for startups from almost any country in search of the counsel, capital and resources they need to bring technology to market. India and Israel are two outstanding examples of countries that have leveraged the large ex-pat communities they have in the Valley.

In Canada’s case, there are 300,000 ex-pats living in the orbit of California’s technology sector.

“We must find out how to tap into all these Canadians and ask their help,” said Iain Klugman, president and CEO of Waterloo’s Communitech.

Incubation from the grass roots: The C100

In March 2010, a number of Canadian ex-pats decided to make that task easier. They pooled their resources to create the C100.

C100 is a non-profit, member-driven organization dedicated to supporting Canadian technology entrepreneurship and investment, comprised of a select group of Canadians based primarily in the Valley, including executives of leading technology companies, experienced startup entrepreneurs and venture capital investors.

“We’re trying to give Canadians as much of an unfair advantage as we can,” said Lee. “We are trying to leverage the talent pool down here to provide that success path, to provide mentors, connections and access to funding.”

Within its first five months, the C100 earned the support and sponsorship of government, economic development agencies and technology incubators across Canada, from EDC and DFAIT, to OCRI, MaRS and Communitech. Seventy Canadian companies were introduced in the Valley and five secured VC investment — a total of US$45 million. And that was just the start.

“We’re still small and still growing,” said Lee.

And this is important to a new or growing tech venture because…

Jeff Campbell is CEO of PerspecSys, a Waterloo startup that is among the scores of companies to date that have been introduced in the Valley by the C100. To him, the C100 is a “business mentoring program on steroids” that can help a startup “go beyond becoming a company to becoming a globally competitive company that can scale.”

Achieving this global perspective it critical in two ways.

First, to bring technology to market, startup entrepreneurs must think globally in terms of which markets they should target. Second, they must also think globally in terms of how far afield they should look for the help and resources they need to reach those markets.

As the C100 demonstrates, there is an overwhelming array of resources out there for company incubation and growth. The only way for a startup to tap into this is to realize that the value chain for bringing technology to market transcends borders. Entrepreneurs must look beyond their own backyards and connect with as many people as possible.

What is your view on the value of “plugging into the Valley?” What do you consider to be the essential ingredients for, as Campbell put it, going “beyond becoming a company to becoming a globally competitive company that can scale?” Please share your thoughts through the comment section below.

In our next instalment, we will discuss startup incubation from the perspective of how economic development is best handled at the community and regional level.

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Posted by: Francis Moran and Leo Valiquette on March 2, 2011

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Posted in: Commercialization ecosystem, Financing and fundraising, Startups, Technology marketing — 3 Comments

The new risk capital reality: What now?

This is the third article in a continuing series that examines the state of the ecosystem necessary to successfully bring technology to market. Based on dozens of interviews with entrepreneurs, venture capitalists, angel investors, business leaders, academics, tech-transfer experts and policy makers, this series looks at what is working and what can be improved in the go-to-market ecosystem in the United States, Canada and Britain. We invite your feedback.

FM Series banner headART 1 300x145 The new risk capital reality: What now?By Francis Moran and Leo Valiquette

In our previous post, we explored the massive changes that have occurred in North America and Europe that have led to a contraction of traditional venture capital investment.

These long-term trends have left early-stage companies in a tight spot. They must become increasingly creative to shorten time to market, become more capital efficient and generally figure out how to do more with less. The cash-burn of years past is no longer an option, if it ever was.

Rise of the super angels

All is not bleak, however. While traditional VCs may have become easily spooked by the prospect of sinking cash into an unproven startup, many angel organizations have stepped up to fill the void. Ronald Weissman, chair of the Software Special Industry Group at one of Silicon Valley’s oldest angel organization, Band of Angels, said many angel organizations have come to act like early-stage VCs.

However, this also means that angel funding may come with more strings attached than in the past.

“They want proof points and market validation,” Weissman said. “They want to see the strength of your management team and your pipeline.”

What is interesting about this trend is that a robust angel industry has traditionally been the prerequisite of a sustainable VC industry, said Denzil Doyle, chairman of Ottawa’s Doyletech Corp. According to Doyle, supporting a strong angel community is fundamental to growing a healthy and sustainable VC industry in any country, a point that is particularly relevant to Canada.

But the importance of fostering a strong angel eco-system extends far beyond Canada. In its May 2010 report, “Government Involvement in the VC Industry, International Comparisons,” the CVCA cited studies in both the U.S. and the U.K. that emphasize the importance of angels, and not just as investors.

Because let’s make one point clear right now: If angels are banding together and stepping up to fill a VC gap, it is not due to a surplus of cash they are simply looking to shovel out the door. They are themselves investors who are struggling with low returns and uncertain outcomes. However, they recognize the importance of keeping the innovation pipeline full with new companies and new ideas. They just have the advantage of having their own money to invest, unlike VCs who must account for how they have invested other people’s money.

What angels provide to startup entrepreneurs in addition to capital is experience, credibility, contacts and connections that improve the flow of high-quality firms available to the VC sector.

However, as Jeff Campbell, serial entrepreneur and CEO of Waterloo’s PerspecSys, points out, the emergence of angels to fill the early-stage funding gap is not without risks.

Diamonds in the rough may not be afforded sufficient runway and resources to become polished gems, Campbell said, due to earlier exits at lower dollar values as angels look to recoup their investment. For Canadian firms in particular, this can often result in sales to U.S. acquirers and the loss of what could have been the country’s next Research in Motion or Cognos.

There is no ‘normal’

To what extent this is true is open to debate. (Please, debate it; the “Comment” section is just a little to the south of this post.) What’s important is that, when cash is tight and the runway is short, the onus is on startups to get their act together fast.

According to Iain Klugman, president and CEO of Communitech, “The new normal is there is no normal.” Startups must mitigate existing gaps in their go-to-market strategies by casting as wide a net as possible to identify the resources they need for success, from securing federal grants and tax credits to plugging into organizations that provide networking opportunities and mentorship.

“Now the capitalization of a company can be a whole combination of different resources and sources of funding,” Klugman said. “A lot of people think the old normal still exists, but only for a small group of companies.”

For Anthony Lee, a general partner at Altos Ventures and co-founder of the C100, the “new normal” is creating a new generation of quick and nimble startups.

“A lot of companies are coming to us for a ‘Series A’ financing with already a million users for a product,” he said.

However, the need for a startup to become more aggressive with early customer engagement and market validation to shorten its time to market is only half of the story. The other is that this process has also become easier for many startups in recent years.

The power of the new normal

Social and new media channels have collapsed traditional enterprise sales models. The rise of cloud computing, open source and commoditized development platforms have made it far easier to bring a software service or product to market compared to 10 or even five years ago.

“Those companies that are founded today are often able to compete with the ones founded five years ago with a lot fewer dollars and a lot more agility,” said John Stokes, managing partner of Montreal Start Up. “The tech market has evolved much more quickly than the venture market.”

Even for hardware plays, greater capital efficiencies can now be found thanks to fire sales of equipment and intellectual property by companies claimed by the downturn, the outsourcing of low-cost components, and the shifting partition between hardware and software that reduces development and manufacturing costs.

But all these advantages will  pay off only if the startup is focused on the right starting point – that potential customer it hopes will ultimately buy the product or service it wants to develop.

“Great companies constantly test the market, for validation and feedback,” said Weissman “When I look at a new company, I ask where did the product come from? Did it come as a result of a market demand?”

Early market engagement is vital and with the rise of Web 2.0 and new media channels, it has become easier than ever. It is vital to ensuring a product or service in development is responding to a clear market need with the features, functionality and price points that will drive market uptake and allow it to be competitive. And it is the best defense against a shortage of available risk capital.

In our next installment, we will explore how to find exploitable technology and the market engagement that is required to determine if it is in fact worth exploiting.

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Posted by: Francis Moran and Leo Valiquette on February 15, 2011

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Posted in: Commercialization ecosystem, Financing and fundraising, Marketing strategy, Startups, Technology marketing — 4 Comments