Too Many “Little Startups” Getting Funded?

By Mark Evans in Startups 1 Comment Tags: , ,

“Little startups are ridiculously overfunded. The market is ridiculously overcrowded with early stage investors. This results in a talent drain, where the best talent gets diffused and work for their own startups.”
- Sean Parker speaking at the Techonomy conference (quoted by TechCrunch)

The question whether Parker is Chicken Little afraid the sky is falling, or whether he’s thrust an issue into the spotlight that no one wants to talk about because the financing marketplace for start-ups is so robust and exciting these days.

Parker’s comments play into the growing discussion about whether there’s a start-up bubble happening, which is likely more pronounced in Silicon Valley. As much everyone is stoked that start-ups being financed, IPOs are happening and investors are getting returns, there is talk about whether the market is over-heated.

The question that has to be asked is whether a hot market is a bad thing. Can there be a downside to startups and entrepreneurs attracting growth capital, other than disappointed investors down the road?

In Canada, the growing amount of start-up financing can only be seen as a positive development for lots of reasons. Even if some or many of these start-ups fail, the experience gained by entrepreneurs and start-ups will be a major boost to help the Canadian start-up landscape evolve and grow.

Without capital to nurture an idea or a business, there is no way entrepreneurs can gain experience to be successful. At the same time, the only way VCs can make returns is by actively investing, even though many of their picks won’t pan out.

Can the market get overly frothy and over-heated? Absolutely. Should investors do their homework so reduce the risk of making a mistake? Definitely. Are these “little start-ups” over-funded? That’s difficult to say because it’s a sweeping statement that covers everyone start-up with the same brush.

My take is the more start-ups that get funded, the better – even if they are little ones. The onus is on investors to make smart decisions rather than jumping on the bandwagon. By investing in lots of little start-ups, the better the prospects of having one of them turn into a major success.

(For startups looking for marketing, content and communications service, my company, ME Consulting, offers cost-effective strategic and tactical services.)

Good Times Ahead for Canadian VCs and Startups?

By Mark Evans in Startups 1 Comment Tags: , , ,

Is the Canadian venture capital roaring back to health? Are the waters getting warmer for Canadian startups seeking capital?

If you’re a glass half-full person, there’s reason to be optimistic about venture capital activity in Canada. According to the Canadian Venture Capital & Private Equity Association there was $388 million invested in Q3, a 51% jump from the same period a year go. The number of companies that attracted venture capital climbed 27% to 137. So far this year, $1.1 billion of venture capital has been invested, a 30% jump from 2010.

“It is encouraging to see healthier levels of venture capital investment in Canada at this point”, said CVCA president Gregory Smith. “And it is gratifying that the year-over-year growth in dollars invested has been spread across entrepreneurial firms in key innovative sectors – communications and information technology, life sciences, and clean technology.

So let’s pop the champagne because the good times are back again within the Canadian venture capital community. If you’re a startup, get that business plan ready ’cause the VCs have some money for you.

That would be a panacea but no one should get carried away. Sure, there was a flurry of VC deals in Q3, particularly by high-tech startups such as WattPad, Paymentus, Achievers.com, ScribbleLive, Keek and Wave Account, but there are still major gaps in the VC landscape.

The biggest is the glaring absence of institutional investors and pension funds, which can provide Canadian start-ups with money beyond seed rounds. While OMERS recently launched a $180-million fund, they’re an exception to the rule.

Without multiple sources of post-seed capital, many companies will have to go to the U.S. or not be able to get the capital they need to grow and expand. As much as the start-up financing ecosystem is getting healthier, no one should consider it vibrant and sustainable until the gaps are filled in.

Don’t get me wrong, I think the Q3 numbers are encouraging and positive. It is just important for people not to get carried away.



	
	

	
		
	


					
				
									
	



	
						
	

	
						
Has Bootstrapping Become Under-appreciated?

		 
	    
	

	
	
 
					
		
						By Mark Evans
				in Startups
				2 Comments
				 Tags: , , 		    
	

	
	
		
	
	


				





		
		
As a growing number of start-ups attract financing, it is difficult not to get the impression it represents a major accomplishment or victory. When a start-up announces that it has completed a deal, it is cause for celebration and congratulations from friends, colleagues and the community.


It’s great to see a more fertile financing landscape for start-ups but all the fuss has, in some respects, overshadowed the importance of entrepreneurs being able to successfully bootstrap a business with little or no venture capital.


In a recent blog post, Brad Feld provided a good reminder about bootstrapping in talking about a friend/entrepreneur who was “much more focused on ramping up his customers than raising money”. Feld, co-founder of TechStars, which provides financing to start-ups, was trying to remind everyone about the value of bootstrapping to grow a business.


I have come across some entrepreneurs who appear to have forgotten this reality because they have pinned their hopes on launching and growing a business on getting financing. The advice I offered to one entrepreneur with financing aspirations was simple: “Get your product launched and start selling”. I was trying impress upon him that having sales and customers who wanted his service was valuable because it would get the business off the ground and, as important, make it easier to raise financing when and if needed.


As much as venture capital is great, valuable and sexy, it is difficult not to be impressed with entrepreneurs who can establish and grow a business without it. Not having financing forces you to be creative, agile and flexible, and forces an entrepreneur to make smart decisions because a strategic or tactical mistake can be lethal. For entrepreneurs who succeed while bootstrapping a business, there is a different sense of accomplishment.


There are, of course, many situations in which bootstrapping can only get a business so far. At some point, a business needs financing to take things to the next level. But I think bootstrapping should get as much as attention and be seen as just as much of an accomplishment as raising venture capital.


 


 


	
	

	
		
	


					
				
									
	



	
						
	

	
						
Why Zite Has Rocked My Content World

		 
	    
	

	
	
 
					
		
						By Mark Evans
				in Apple/iPod, Blogs, Social Media
				1 Comment
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First a confession: I was late to the tablet game. With several laptops at home and a job that requires a lot of mobile working, there just wasn’t much of a use case for a tablet. Time passed, a friend of mine at Carbon Computing got me a great deal on an iPad, and now I’m part of the tablet world.


While I haven’t spent much time pimping my iPad, one of the first apps add was Zite because there had been so much buzz about it, particularly after the Vancouver-based startup was acquired by CNN for a reported $25-million.


This may sound dramatic but Zite has dramatically changed how I consume content. As someone who sucks in a lot of content every day for market intelligence and information, and ideas for columns and blog posts, any way that improves efficiency and productivity is a wonderful thing.


With Zite, I can create categories that are interesting or relevant to my interests and needs. Then, Zite generates stories in a magazine format that can be quickly scanned and read. It’s also easy to save an article or blog post to read for later, or share it via social media or email.


Zite also lets you “thumbs up” or “thumbs down” a story to adjust your preferences, although it would be great if you could add a particular Web site or blog into the editorial mix.


Zite has been a productivity-booster because I can cover the content landscape in 10 minutes for ideas and information. At the same time, it has cut down on the amount of time on Twitter, which I use as a quasi-RSS reader.


More important, it has dramatically changed how much content I can consume and read and, in the process, saved me a lot of time, which is one of the most important considerations.


	
	

	
		
	


					
				
									
	



	
						
	

	
						
Content Rules, Social Drools

		 
	    
	

	
	
 
					
		
						By Mark Evans
				in Content Marketing
				No Comments
						    
	

	
	
		
	
	


				





		
		
As someone who spent 15 years as a newspaper journalist, I’ve always believed in the adage “content is king”.


When blogging appeared on the scene, it was only a digital reaffirmation about the importance of content and how the barriers to create it for a global and local audience had disappeared.


As social media services such as Facebook and Twitter emerged, blogs were shuffled to the sidelines because they weren’t as sexy or easy. Almost overnight, everyone was obsessed with updates and tweets that could be spit out in seconds without much thought.


But that didn’t dissuade my belief that content is king. Nor did it convince me blogs weren’t an important part of the social and digital ecosystem. For a while, it seemed like a Don Quixote quest to not only wave the blog flag but continue to write a blog.


So it seems like poetic justice to see content marketing become one of the hottest digital and social media trends. Increasingly, people are talking about content such as blogs, videos, whitepapers, case studies, Webinars and podcasts as the fuel brands need so they can consistently engage with consumers.


Otherwise known as content marketing, there is a growing belief that one of the ways to drive relationships with consumers, and keep them part of your ecosystem is by delivering relevant and value-added content that engages, entertains and educates.


Surprise, surprise! 


The value of content is something I’ve advocated as social media became all the rage. In some respects, social media services are simply delivery channels for content. The value of having subscribers, followers and “Likes” is they create an audience that can consume the content a brand is creating to achieve their goals – be it sales, lead, customer service, brand awareness, etc.


For all the talk about engagement, conversations and outreach, social media is a multi-faceted pipeline that lets content flow to people who are willing and interested in connecting with a brand, provided there is something in it for them.


This isn’t to suggest content delivery is the major reason to use social media but I believe brands that can deliver content via social media have a huge opportunity to differentiate themselves at a time when most brands are using Facebook, Twitter, etc.


Given the value of content, a conference I should have attended was Content Marketing World in Cleveland because it featured people talking about all the things I fundamentally believe about content.


The upside is Content Marketing World gave me lots of food for thought, including the belief the meshmarketing conference (which I co-organize and which happens on Nov. 15 in Toronto) should include content marketing.


As a result, we’ve got two sessions focused on content marketing. IdeaPaint’s Marcus Wilson and Marcus Sheridan (aka The Sales Lion) will be doing a conversation in the morning, while Marcus Sheridan is doing a workshop in the afternoon.


While meshmarketing has lots of great speakers and sessions, the most interesting me are obviously content marketing due the growing importance of content and how it has thrust itself back into the spotlight.


 


 




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