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Why Wasn’t BackType Funded in Canada?

BacktypeFor those of us who work in the Canadian social media and startup circles, there was some celebrating earlier this week when BackType announced it had been sold to Twitter.

Lots of credits goes to founders Christopher Golda and Mike Montano, who have made BackType one of the leading services to track and analyze social media activity.

Without raining on the BackType parade, a question that begs to be asked is whether BackType should have been funded in Canada as opposed to the U.S.

To provide some background, Golda and Montano were electrical engineering graduates from the University of Toronto, who showed their entrepreneurial chops by starting a service called iPartee. While the business didn’t succeed, Golda and Montano proceeded to start BackType in 2008 as a way to search for blog comments.

To jump-start the business, they applied and were accepted into Paul Graham’s YCombinator startup program in Silicon Valley, which coughed up $15,000 for a 6% in BackType. This let Golda and Montano create a prototype they could pitch to investors. Over the next three years, BackType raised $1.3-million and expanded into Twitter search.

In hindsight, BackType is a big fish that got away from Canadian investors. I would hazard to guess that in 2008 getting seed capital from Canadian investors was a remote possibility for Golda and Montano, which is likely one of the reasons they applied for the YCombinator program.

The question is whether BackType would get funded today in Canada. It appears the seed and startup investment landscape has changed with the emergence of new funds such as Real Ventures. Meanwhile, there has been a growing number of startup acquisitions, which should bolster the confidence of investors and entrepreneurs.

Do Canadian investors now have the ability and willingness to finance smart entrepreneurs with ideas? Or do Canadian investors still need to see traction such as a finished product, customers or revenue?

For more on the BackType story, check out this TechVibes story.

About Mark Evans

I'm the principle with ME Consulting, which provides strategic and marketing services to startups and entrepreneurs. This includes strategic and tactics plans, core messaging, brand positioning and content planning and creation.
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  • http://Spidvid.com Jeremy Campbell

    I would guess that these guys pitched many Canadian investors but were turned down because at the time the company didn’t look like a clear cut winner for the future. Startups are supposed to be risky investments for investors but it seems like in Canada they will only invest in something if there’s a very clear sense that success will attained. US investors are better risk takers which is why they are rewarded with some huge hits! I doubt any Canadian investors would have invested into Twitter, or any of the big players that exist today. To our Canadian investors: Angel investments aren’t mutual funds, they are high risk/high reward!

    • http://www.montrealstartup.com John Stokes

      BIG NEWS: BackType wasn’t funded in Canada because Chris and Mike wanted to go to the Valley.

      I met them at YC graduation day in Boston at the end of August 2008. At that time we were investing from Montreal Start Up and so were more restricted on where we could invest than we are now with Real Ventures.

      We told the guys that we would like to fund them but that they would have to come to Montreal – but they were “under the influence” (;-)) of PG and wanted to go West.

      It was a different story with the guys from Vanilla who after graduating from Techstars decided to come to Montreal – and were funded by MSU, Eon (Denver) and Klein Venture Partners (Valley).

      A team like Chris and Mike could get funded in Canada without a problem !!! They are smart, hardworking and deserve their success and I hope that we get a chance to fund guys like them in the future (and in fact we are pretty sure that we already have ;-) …)

      • http://www.markevanstech.com Mark Evans

        John,

        Thanks for the insight about BackType – much appreciated. Good to know there’s a market for good ideas. cheers, Mark