The first day of the CIX in Toronto, which concluded just a few hours ago, was jam-packed with various discussions on venture capital funding. Some special highlights of the day included:
The opening panel discussion on “What do VCs and Angels want” touched topics like what drives VCs and angels in their investment decisions. It was noted that VCs primarily look for businesses that can go to the next level and are “in it to make money”, since they have a responsibility to their investing funds, while angels might have other additional motivations like giving back to the community and mentoring. Couple of new seed / angel funds were mentioned (Maple Leaf Angels in Toronto and a new Montreal Startup fund). David Rose, a partner of a New York-based angel group mentioned that most entrepreneurs don’t pitch their ideas properly, and as a result sometimes good ideas get overlooked.
Later on in the day, Rick Segal of JLA Ventures and Suzie Dingwall Williams of Venture Law Associates went over some basics of terms sheets. A term sheet is basically a commitment between an entrepreneur and a VC to continue negotiations in good faith. They typically have a “no shop” period of around 45 days. Clarity on price and who pays the costs if the deal does not close are quite important things and something entrepreneurs should be careful about.
The keynote speaker of the day was Gary Lynn, a principal at a New York-based venture capital firm called Spencer Trask. He was selected by Business 2.0 magazine as one of the nine leading management gurus in the US. Gary talked about creating blockbuster products and companies. He said that it is essential for companies to have a clear and stable vision and a having a concise tagline helps in that. And as part of their process, companies who are interested in creating blockbuster products need to continuously improvise. He gave the example of Microsoft, a very fast learning company, which failed with Windows 1, 2 and 3 but finally persisted with Windows 3.1.
Another panel discussion focused on some Canadian innovation success stories and featured Leila Boujnane (Idee), Jeremy Wright (b5media), Justin Belobaba (Healthscreen Solutions) and Ron Neumann. The key advice which the panelists had for entrepreneurs was to not fall in love with your first idea and to continuously improvise and not be afraid of failure. Failing quickly is infact ok. Leila mentioned that software startups should ‘release early and often’. Her self-funded startup, Idee, is now 9 years old and recently launched its image search engine in private beta (which enables users to search for related images by providing an image as the input instead of text). This is something which even Google has not been able to do as yet.
The final discussion of the day was on the opportunities and challenges in raising venture capital funding in 2008. It featured various US-based VCs, including Andreas Stavropoulos, a partner at Draper Fisher Jurvetson (DFJ), one of the largest VC firms in the world with under $2 billion in management. He urged entrepreneurs to “Think Big” – on a massive global scale, and not constrain their thinking to small, incremental/local ideas. Really big ideas and opportunities is what VCs are interested in. Most VCs at the event said that a good way of getting them to hear about your idea is to just contact them directly or get introduced to them by people who know them (most often lawyers, etc). The moderator, Stephen Hurwitz, a partner at a law firm, noted that there is a severe shortage of VC investment in Canada, which contrasted somewhat with what Rick Segal said at the beginning that Canada is a good place for business and funding is available.
Overall, a great day of info sessions and networking between entrepreneurs, investors and various service providers. Highlights of tomorrow include pitches by the selected 20 startups and we will be bringing that to you as it happens.