THE BLOG

27
Jul

Don’t Forget Startup Drinks in Montreal and Toronto!

This Wednesday, July 29 is the date when Toronto and Montreal Startup Drinks sync up!  If you’re in either city, there’s no reason to stay in.

For Toronto:

Venue: Pogue Mahone, 777 Bay St (Cnr College St)

When: Wednesday, July 29, 2009 from 7pm

Sign up: Startup Drinks Toronto Facebook Event

For Montreal:

Venue: Brutopia, 1219 Crescent St (Sth of St-Catherine)

When: Wednesday, July 29, 2009 from 5:30pm

Sign up:at TechEntreprise

AND if you’re a developer looking for a new opportunity, find me or my comrade Peter Bailey!

Robin

P.S. Startup Soccer was super fun!  The bruise on my toe is my new Startup Badge of Courage.  Thanks Daniel and John for organizing!  I’m up for another game before the winter is upon us.

27
Jul

Investors: What Have You Done For Your Startups Lately?

Over the last two weeks I’ve spent over 24 hours driving to various client meetings for one of our startups. Yes, the ratio of driving time to meeting time (6:1) is pretty high, but these were crucial meetings that were significant milestones for the startup. During these long drives I had a lot of time to think about the crazy things we investors do to help our startups.

At the same time, behind closed doors I hear a lot of entrepreneurs quietly complaining about how little hands-on help or “value add” their investors bring after closing a deal. So I thought I would put out a challenge to Angels and VCs: What Have You Done For Your Startups Lately?

If you’re wondering what more you can do, here are some suggestions:

  • Work your Rolodex – Remember all those times you bragged about your fabulous network? Besides the week after closing, when is the last time you systematically went through your contacts and opened those doors?
  • Make sales calls – Don’t just shoot off intro emails. Pick up the phone and call in favors. In the early days most sales will be through personal persuasion/coercion.
  • Have a good elevator pitch – I’ve met a lot of investors who can’t give a convincing elevator pitch for their startups. Your elevator pitch should be as good as the CEO’s.
  • Know the details – Knowing the size of the market is great for evaluating a business plan, but do you know the crucial details of the business? What specific segments are they targeting? Who are their customers or prospects? What are the features and technology. What’s the price? Knowing the details makes you a knowledgeable ambassador for your startup rather than someone who can just put someone in touch with the CEO.
  • Give feedback – Investors have a habit of dropping out of sight then giving harsh feedback at board meetings. I always tell entrepreneurs to manage upwards, i.e. manage your Board. But the same applies for investors. Be a hands-on mentor to your entrepreneurs. And don’t forget that praise is feedback too.
  • Get your hands dirty – Besides providing sagely advice from the “high level” think about giving day to day help once in awhile. You can be sure your startup needs it. If you’re financially minded (which you are because you’re an investor right?) get into Excel and help the CEO develop projections and budgets. Sit in on practice pitches and help build their next sales deck. Look over their legal documents and fire up your MacBook to test the latest deployment on Safari. Getting tactical means saving the management team precious time.

At Flow we take hands-on to the extreme because that’s our model. Not many investors are writing code, closing sales, executing marketing plans and recruiting employees. But no matter what your model is you can be sure that your startup needs you.

22
Jul

Startup Drinks, Montreal and Toronto: Wednesday, July 29!

This Wednesday, July 29, Startup Drinks will be held simultaneously in two different locations! We’ve been working behind the scenes with Canadian startup agitator David Crow to get our Toronto brethren into the Startup Drinks act.  Startup Drinks Toronto makes its debut in the wake of DemoCamp and at last count there are over 180 (!) people slated to be there.

Speaking for Montreal, this drinking and networking event has become a touchstone for the tech community because of the regulars who keep the open spirit of the startup culture alive.  With David’s help, I hope we can achieve this modest end in Toronto with the same “no frills” philosophy and conviviality.

I asked David – who has no lack of projects on the go, mind you – why he was getting behind yet another community building effort and he said it’s because “Startup Drinks embodies the culture needed to build strong connections between entrepreneurs. Montreal has such a fantastic startup culture, and sometimes imitation is the finest form of flattery. This is a great social event for entrepreneurs and startups to gather over a pint and share what we’ve been working on.”

If you’re a Montrealer in Toronto for DemoCamp, check it out just as our own Raymond Luk will be doing.  You know the drill!

Without further ado, these are your need-to-know details:

For Toronto:

Venue: Pogue Mahone, 777 Bay St (Cnr College St)

When: Wednesday, July 29, 2009 from 7pm

Sign up: Startup Drinks Toronto Facebook Event


For Montreal:

Venue: Brutopia, 1219 Crescent St (Sth of St-Catherine)

When: Wednesday, July 29, 2009 from 5:30pm

Sign up: Coming soon!

You can come by yourself, with a friend or with a posse.  Everyone is welcome!

See you there,

Robin

20
Jul

The Thinking Behind Starting Up: 10 Posts

The Flow Ventures blog has been up and running for over six months and during that time it’s naturally gravitated towards topics for early-stage startups. Partly because that’s our focus at Flow and partly because people still overlook all the difficult work that happens right at the start of a startup. Things like idea screening, brainstorming, finding strategy, and finding competitors are all things entrepreneurs should be doing for themselves, not just when requested by outsiders.

I often tell people that the very first step in a startup is relatively risk free. You haven’t committed your time and money yet and you haven’t made promises to others that obligate you to a certain path. You have time to noodle around finding great ideas and discarding bad ones. This is the time to spend at whiteboards, in cafes debating your ideas, and doing research on the Web and in the real world. This is the time to assume your idea stinks and try to convince yourself that it doesn’t (not the other way around).

We’re going to keep focusing on the early stages of startups but here are 10 blog posts we’ve written so far that provide some practical ways to think about idea and business creation:

Writing this list makes it obvious that there are lots of gaps in our coverage. Hopefully, we’ll fill in some of those gaps over the rest of the year.

15
Jul

Flow Ventures Announces Investment in ArtAnywhere

We’re very happy to announce our second investment of 2009, in Montreal-based ArtAnywhere (www.artanywhere.com

). This online art rental business combines a social purpose with a solid business case. The idea is simple. There are artists in cities around the world creating artwork which is rarely seen. There are empty walls in businesses and homes in need of inspiration. ArtAnywhere brings the two together to create new galleries in non-traditional spaces, perhaps the one you’re sitting in right now. The option to rent makes art affordable and accessible for everyone.

© Julian Haber Photography - Ship 4

© Julian Haber Photography - Ship 4

This is the first startup created and spun-out of Flow Ventures itself. Leading ArtAnywhere is CEO and co-founder Christine Renaud. She’s an experienced educator and social entrepreneur who is already well-known in local startup circles. You can learn more about Christine and ArtAnywhere on our blog (or Twitter @artanywr) which will be packed with content leading up to our launch.

(c) Mark Dixon (www.markdixon.ca) - Trees on a hill, 90 x 120 cm, acrylic on board, 2006

(c) Mark Dixon (www.markdixon.ca) - Trees on a hill, 90 x 120 cm, acrylic on board, 2006

ArtAnywhere is currently in private beta and has already rallied hundreds of artists in our launch cities of Montreal, Toronto and New York. Spread the word if you know an under-appreciated artist who wants to participate in our beta program by providing artwork. If you’re a business interested in being one of our “beta renters” you can sign up on the site.

As investors, we’re thrilled to continue finding and funding great new startups under Flow’s unique funding + acceleration model.

Raymond

06
Jul

The Value Net as a Tool for Competitive Analysis

Having talked about the goal of competitive analysis

and being better, not just different, it’s time to talk about a framework for doing competitive analysis. The Value Net, developed by Adam Brandenburger and Barry Nalebuff, is inspired by Porter’s Five Forces. It’s easy to understand but includes a lot of depth that will allow you to more fully understand the competitive forces surrounding your startup.

Let’s take a look at the graphic above. It shows 4 sources of potential competition surrounding you: Partners (whose products and services complement yours), Rivals (who compete with you), Suppliers (whose “raw materials” you require), and Customers (and distributors) who are the destination for your products. The horizontal items are the players in your industry and the vertical items are your supply chain.

Rivals: More than direct competitors

Most new companies do everything they can to say “there is no competition”. I’ve already covered why this is tantamount to saying “I do not know what I am doing.” Just because there isn’t a company that looks exactly like you doesn’t mean you don’t have competition.

Rivals are all the people or forces competing against you for the dollars and attention of your customers. They include:

  • Direct competitors – if you’re a best-of-breed product, look for integrated solutions and vice versa
  • Indirect competitors – if you’re a product company, watch out for service companies
  • Alternatives – like doing nothing, in-house solutions
  • Changing standards and regulation – when standards change, everyone in your industry might suffer

Think of it from the customer’s perspective. If you want to improve employee communication you might build an employee portal, buy one, hire a consultant or put it off until next year. There are many alternatives competing for your time and money.

Partners: Wolves in sheep’s clothing?

Partners are your “friends” in the marketplace whose products or services complement your own. This could be someone who integrates your product into theirs or provides a value-add service, like consulting, that makes it easier for people to adopt your product. Why even consider partners in a competitive analysis?

The reason is because partners, like rivals, are also fighting for customers’ attention. Sure, in the beginning you may specifically go into a partnership to reach markets outside your immediate target. That may be your partner’s strategy too. But the more successful you are, the more your partner might realize that your market (or your business) is something worth emulating. They could become a direct competitor. This is especially true in the type of partnerships startups tend to enter into, i.e. David (you) vs. Goliath (them).

Here’s an example. You build the next great mobile enterprise app. You license a “lite” version to a major portal so they can market it to individuals and SMEs. It becomes a success and the portal decides not only to replace you with something they developed on their own, but to release an enterprise version that competes directly with you in your other markets. For them, you were just free R&D.

Yes, you can do things legally to protect yourself. The point is don’t forget how easily partners can turn into rivals.

Suppliers

How can a supplier be a threat to you? When they decide to work with a rival instead of you. This isn’t as rare as you might think. Exclusivity agreements could lock you out of a key technology. Or a bigger rival could simply eat up so much bandwidth that your supplier can’t pay any attention to you. Employees are “suppliers” too and competitors would like nothing more than robbing you of your stock of talent.

Don’t overlook the fact that the more volume you drive to a supplier the more they might think about competing with you. This is called forward integration and it’s especially acute when your supplier has leverage over you in the form of an exclusive resource, the best price, or some other unique advantage. Here’s an example: you build the next great mobile enterprise app that relies on you licensing a patented mobile synch technology from another firm. This is great for them because you drive sales and they don’t have to do any work. But, the more successful you are the more it’s tempting for them to move forward in the supply chain with their own branded product. Worse, if they cut you off from your supply of technology it will put you at a competitive disadvantage.

Customers (and distributors)

The area of the Value Net above you includes your customers as well as any resellers or distributors you use. Like with partners and suppliers, be aware when these people have power over you in some way. E.g. customers (and distributors) have power when there are a lot of rivals in any industry. Or there may be other industry practices that favor resellers: e.g. brokers in real estate and insurance.

Understanding how your customers buy (from you or from your resellers) is an important aspect to understanding competition. Again, look at it from their point of view. The customer might value on-site installation and customization. Your Web 2.0 SaaS model might be feature-rich and inexpensive but your competitor’s product is sold through local VARs who can provide consulting, installation and after-sales support on the customer’s premises. The point is that competition can occur between different types of sales channels, not only between firms.

Putting it all together

To summarize, here’s how you can use Value Net to do competitive analysis:

  1. Identify your key Rivals, Partners, Suppliers and Customers/Distributors – Be paranoid and build a long list that you pare down later
  2. Look at the red arrows to understand behind-the-scenes competitive dynamics
  3. Look at the grey lines to understand your power relative to your rivals, suppliers, partners and customers – any area where you have less power is a potential competitive threat

The nice thing about the Value Net is that it’s easy to fit onto one Powerpoint slide. Showing this level of depth for your Competition slide will be a huge improvement over what I normally see in startup pitch decks. I’ll post some examples of completed Value Nets in a later post.