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Lots of discussion/blogging/articles over the past few weeks about entrepreneurs and innovation in Canada. Here’s where we weighed in: Tim Jackson: Entrepreneurship and the upside to a downturn
The consensus appears to be that yes, we do have great entrepreneurs and great innovation in this country. I for one believe this is true and have worked with a good number of entrepreneurs who have built (with their teams of course) very successful companies.
Lately, I’ve been spending a ton of time thinking about what we as a venture capital community and the broader technology industry can do to support these entrepreneurs. When I look around at the venture capital ecosystem in Canada (and elsewhere) most VCs are either out of cash or have very little cash left to invest (there are obviously exceptions and some VCs have raised funds in the last couple of years). I’m not sure that the majority of entrepreneurs have heard this message. When I look at the amount of time and effort that Canadian entrepreneurs invest in pitching their companies to VCs (here and elsewhere), it makes me want to scream. If we could harness this time and effort and direct it towards selling products and services to real customers, imagine how much revenue all of these companies could generate.
Looking at the funding process today, entrepreneurs pitch their companies to VCs who pitch to LPs. Wouldn’t it be great if entrepreneurs never had to pitch VCs? What if we turned the process on its head and built such great companies that entrepreneurs could choose whether or not to fund their companies with venture capital? And what if VCs had to demonstrate value beyond money for entrepreneurs to want them to invest in their companies…? And wouldn’t it be great if VCs never had to pitch LPs to raise new funds because of off the chart returns? 
So how can we help entrepreneurs beyond providing capital?
* By helping them generate revenue more quickly *
Here’s what I’m proposing:
1. Entrepreneurs/companies:
- Map out your industry ecosystem: a) Types of companies you sell to (e.g. carriers) b) Types of companies you would partner with in order to sell (e.g. network equipment vendors)
- Identify the specific companies that fall into this ecosystem: a) Potential customers b) Potential partners
- Identify the specific person/people at each of these companies that you need to get in front of in order to sell your products (great tools for this include LinkedIn and Jigsaw). Figure out where these people are located. Group by geography. Plan trips to visit these regions.
- Search on LinkedIn to identify “connectors” who can introduce you to these potential customers/partners so that you can set up initial calls and then face-to-face meetings with them.
- Commit to building out your LinkedIn rolodex and sharing the connections you make with other entrepreneurs.
Now, these first few steps can be difficult and will take a significant amount of time. If anyone can come up with a cost effective way to help entrepreneurs work through this process, please weigh in below in the comments…
Communitech is one organization that has been supportive in finding creative ways to help entrepreneurs work through this process.
2. VCs and other supporters of entrepreneurs:
- Spend some time building out our LinkedIn rolodexes (many of us know many more people than the ones we currently have listed in LinkedIn).
- Highlight the market sectors where we have experience on our LinkedIn profiles.
- Respond to entrepreneurs who reach out to us for introductions. Go for coffee to learn more about them and their businesses. Introduce them to potential customers/partners and others who can help them generate revenue more quickly.
I spoke with a group of entrepreneurs last week on this topic — “Leveraging Non-Existing Networks Into Guerrilla Revenue Generating Strategies”. Many were skeptical at the beginning of the discussion but by the end, there was a real energy in the room.
I understand why people might hesitate to open up their rolodexes and connect people.
My response:
1. I am not proposing that we destroy our reputations by spamming our rolodexes with Canadian content . I am proposing that we spend a bit of quality time, interacting with entrepreneurs in our sectors and connecting them with potential customers/partners when/where we feel comfortable doing so.
2. We would be connecting our contacts with entrepreneurs who have developed products and services that have real value propositions. Our contacts may well benefit from being introduced to these entrepreneurs.
3. What good are our relationships if we don’t leverage them? We become more powerful and influential by sharing and connecting.
“He who receives ideas from me, receives instruction himself without lessening mine; as he who lights his taper at mine receives light without darkening me” – Thomas Jefferson (tip of the hat to Michael Masnick)
Some ideas to get started:
1. I’ve been told that there are about 300,000 expat Canadians living in Silicon Valley (yes, 300,000). Have you reached out to a Canadian expat today?
2. There’s a small but mighty group called Canada Connects on LinkedIn. Same objective as this post. Please join to help get our Canadian entrepreneurs on steroids.
I’ll be the first to admit this plan is not perfect. Constructive criticism with suggestions for improvement are absolutely appreciated.
· trackback ·
April 14th, 2009 at 9:01 am
Jacqui,
All good ideas. You’ve inspired me to join Canada Connects.
ds
April 14th, 2009 at 9:09 am
As someone who’s dedicated himself to helping Canadian startups, I’m all over this. Just joined the Linkedin group.
April 14th, 2009 at 9:23 am
Amen,
Capital is only one piece of the puzzle. Starting to layout the pieces are key.
* Mentorship
* Networking/Connections
* Attention
* Training
* Goals and Timelines
I’ve started to think about what it takes to leverage resources locally (my thoughts http://www.startupnorth.ca/2009/04/13/incubators-accelerators-and-ignition/ ). And you are 100% correct that we need to help connect entrepreneurs and build successful companies. The connections are for business development, hiring, marketing, etc. We so often fall back on a consulting mentality, i.e., if you want access to my network you should pay me to have it. This is just wrong. A percentage of something worth zero is worth zero. We need to encourage and enable young entrepreneurs.
But this requires that they have a developed product and they need help getting to somewhere bigger.
April 14th, 2009 at 9:39 am
Great post Jacqui, I couldn’t agree with your comments more.
“I am proposing that we spend a bit of quality time, interacting with entrepreneurs in our sectors and connecting them with potential customers/partners when/where we feel comfortable doing so”
As somene that’s been on the other side of the table – every time I’ve chatted with a VC/Angel it’s been specifically looking for that. Yes money is nice, but most of the time an entrepreneur will quickly realize they aren’t ready for cash yet, and just need some insight, validation of their ideas, and some introductions.
Your comments about opening your networks apply to more than just the VC scene – most business owners (including the ones funded by VCs) would agree that by providing a lot of value to their target customer base, they improve their customers, their industry and their position in the industry. It’s a win-win-win.
Finally – regarding your question about identifying targets, this definitely can be automated. Social Networks + Quick & Dirty Semantic Dictionary + NAICS/SIC Code Business Listing + Sales Force API = Automated Lead Gen Solution. Just need someone to find the time to put the code together.
April 14th, 2009 at 10:26 am
[...] Re-post from Tech Capital blog [...]
April 14th, 2009 at 10:44 am
Great post! I have always been a proponent of building out an ecosystem strategy that ultimately informs your product strategy, go-to-market and revenue models.
In the online technology space this is a basic necessity, having worked on this for some of the world’s biggest technology brands. I have actually seen this drive from 20% to nearly 100% of a product’s revenue and profit. And, on a more personal note, quite recently I experienced first-hand the overwhelming value and power of an amazing network of smart business contacts, friends and associates.
@JosephFung – I might just tackle that little project. Very interesting idea and I find myself with a bit of time on my hands and some pent-up need (and ability) to add real value to an ecosystem. What about a version on Sugar or CRX that could be open sourced?
April 14th, 2009 at 11:46 am
[...] Capital Partners’ Jacqui Murphy is weighing in on the growing discussion on entrepreneurs and innovation in Canada over on their blog and I like what she has to [...]
April 14th, 2009 at 2:29 pm
Connect me in Jacqui! As stated on Startup North (David Crow) recent blog, I think this type of mobilization and leverage within our communities, supporting entrepreneurs by building out networks is the way we can be successful in building a stronger ecosystem across Canada.
We’ve been strong supporters of Funders & Founders get togethers, the Camps (Bar, Startup, Facebook, Demo), Montreal Tech Entrepreneur Breakfast Meetup, Blitzweekend, and we are now helping put together the Blitzweekend 2.0 (Montreal Startup Weekend and the Ottawa Startup weekend).
Taking action!
April 16th, 2009 at 7:31 pm
Excellent content Jacqui!
People, I believe, are naturally inclined to “want to help” but get stuck in the “busy trap”. For me personally, over the last year, I have become aware that I need to be intentional about creating more margin in my life so I have the space and time to both explore and “give back”, some of that in ways you outline here.
It’s amazing what can be discovered when there’s time to explore!
Glenn
April 17th, 2009 at 9:50 am
Nicely put Jacqui, and no doubt TechCapital and your crew there have always made time to help out Entrepreneurs regardless of whether they are in your portfolio or not. And your support goes beyond the tech walls, you are extremely active and effective in the general community. I wish the values of your organization were further spread throughout the more established tech companies in this area.
On one hand we have a sea of small businesses focused entirely on their own survival with very little capacity to even consider the needs of others. On the other hand we have a wealth of very successful companies that have grown so big and so distant that their founders and employees are really no longer a part of the community.
There are some gems in this ‘community’ that go way out of their way to help, but in the grand scheme of things, our tech members have a long way to go to becoming a true ‘community’. What we appear to lack is a committed social conscience where we put the needs of each other (tech and non tech) ahead of ourselves. It’s a cultural value that needs to be driven and reinforced.
I’m afraid that our tech community has demonstrated very little ability to do that lately. I have seen very few of our members do anything that was not self serving. I sit on many local charitable committees and there is a disgusting absense of tech people getting involved in either a volunteer basis or a financial basis.
What we need in our tech community is a cultural transformation. We need good leadership and extended management that will demonstrate, encourage and reinforce the value of giving. We need leadership that understands that in order to have a healthy future, we cannot forget to take care of the internal relationships. And most of all, we need leadership that will take action.
I want to thank you and the team at TechCaptital for continually being active in our physical community and our tech community. I hope by your example others will join in.
April 20th, 2009 at 12:06 pm
Our blog author has spawned great commentary that prompts me to point out how often past methods of support from investors have been ineffective in fostering investment in quality profitable innovation. It’s no wonder the will to keep funding is in the doldrums.
I’ve made a mid-life career as a chief executive seeking equity capital for Canadian start-ups in knowledge-based sectors like biotechnology and medical-and-assistive devices. These are established technology categories yet where we have still to prove that Canada has what it takes to create enduring world-class enterprises. With associates, I have recently begun sifting through our shared history of experiences with venture choice and financing to surface lessons that can be applied to promising newer categories where the verdict on how well we will do is still open – areas like nanotechnology, cleantech and Web 2.0.
Along with cash, venture capital has commonly promised counsel and ‘connectness’ to a community. But in our experience their return-on-equity model as traditionally practiced rarely delivers much beyond hard dollars. They leave unsaid that it’s too costly for Canadian VC firms and angel organizations to acquire the bandwidth to deliver true added value to their investees in ever more complex and diverse technology marketplaces. By global standards we too often innovate in a relatively small and depressingly thinly distributed expert community.
A consequence of this dearth of deep sector savviness is the way a slick business plan has become the sole entry point to the queue for equity investor attention. Getting that done too often gobbles up scarce time and resources that could be better spent on getting on with it – as Guy Kawasaki said so well in his great short book: Art of the Start. Worse, the growing trend to support business plan competitions, supported by universities and governments, can convince beginning entrepreneurs that the business plan lottery is THE route to making it, rather than getting out to hear about actual pain points and delivering solutions back in the garage, basement or lab!
Equity investors, start-up consultants and advisers all need to focus more on helping understand how to support inventors connect with whatever they need to succeed in today’s wired and online world. Clients will show up from that pool. How many of the great successes of the past came from guys who did the best Exels and PowerPoints?
Engineers and technology geeks are most often introverts – so why judge them on their ability to play the extrovert by dancing the best behind a podium? So let’s those of us with experience get out there more in person and online to seek out the shy and be simply helpful!
September 2nd, 2010 at 8:55 pm
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