Rypple, Revenue and Canada’s Startup Ecosystem

Another day, another acquisition within the Canadian high-tech community as Rypple gets acquired for a reported $65-million by Salesforce.com.

It’s great news for Dan Debow and David Stein, the company’s venture investors Edgestone, Bridgescale and Extreme Ventures) and the Canada’s already buoyant startup community, which continues to hungry for seed and growth capital.

Revenue, Revenue, Revenue

As important, Rypple demonstrates what I see as an important theme within the Canadian startup landscape, which is creation of companies designed to be businesses that drive revenue by selling services, as opposed to simply being ideas with a business model that still needs to be created or fleshed out.

Starting a business that features sales as a key part of the model may seem like a straightforward proposition but you’d be surprised by how many startups have little or no clue about where the revenue is going to come from.

Rypple, on the other hand, was created from the get-go to deliver services that companies would buy as a way to evaluate the performance of their employees. In other words, revenue was always front and centre.

If you look at the startup landscape, there are lots of examples of startups who have embraced the same approach. So as they’re attracting customers, enhancing their technology and looking for growth capital, revenue is coming in the door. The list includes ScribbleLive, AtomicReach, Pressly, QuickMobile and TribeHR.

To me, this is exciting because startups are being hatched to create businesses that will succeed or fail based on whether their services fill a need and resonate with consumers.

Canadian Startup Landscape Maturing

This is not to suggest good ideas shouldn’t be nurtured and financed, or that startups that embrace the freemium model are taking the wrong approach, or that deciding to create a business model down the road makes little sense. But it does illustrate how the Canadian startup landscape as evolved and matured, driven by entrepreneurs focused on building viable businesses.

So hat’s off to Rypple, which went from startup to buy-out in three years. And congratulations to Salesforce.com, which dipped into the Canadian high-tech community last year with the acquisition of Radian6.

For more thoughts about Rypple’s purchase, Wellington Financial’s Mark McQueen puts the spotlight on what the deal means to the Canadian venture capital community. Another interesting destination is Techvibes “Acquisition Tracker”, which lists all the deals that have happened this year.