Startups

Snapshot of a VC Deal: TeamBuy.ca

group buying, startupWho: TeamBuy.ca, which offers group buying services in Canada.

How Much: $5-million from existing investors. Last July, the Toronto-based company raised $7-million last July from an institutional investor.

The Quote: “We’ve re-imagined the daily deal business model to fit a customer who is demanding more comprehensive and customized shopping,” said Ghassan Halazon, CEO, TeamBuy.ca. “Our current vertical offerings already account for nearly 35 per cent of our business and with the launch of the new Kids & Baby and Home sections on TeamBuy, we anticipate that this will rise to at least half of our overall product mix in the year ahead.”

Startups and the Value of Target Audiences

startups, target audiencesAs Eric Ries suggests in “The Lean Startup”, startups are a hypothesis that involve testing an idea to see if it resonates.

Using this approach, startups create a product they think will fill a need or make a customer’s life better, easier or more convenient. After the product is launched, they attempt to sell it. Sometimes, the sales pour in; sometimes, they don’t, which forces startups to pivot (which has become a sexy term these days as if it’s a positive thing).

What many startups are missing within the product development/sales process is in-depth details about their target audiences. In many respects, this explains why startups flounder even though they believe their product has a lot of potential.

The big problem is startups don’t have enough information or details about the target audiences they’ve identified. Instead, they’re guessing about what their customers want and/or they don’t have enough real-world data to really know and understand their potential customers. In other words, they are operating within an information void.

Now, you would think startups should know a lot about their potential customers, otherwise they’re working with blinkers on.

A good example of getting to know target audience is a former client that, while executing a startup, physically visited dozens of retailers to understand their needs and the thing about the proposed product that resonates with them. This exercise gave them excellent feedback and guidance, and the confidence to move ahead with a refreshed product with better prospects.

The simple lesson for startups is the need to know and understand the customers they’re targeting. Sure, it can take time and involve a lot of legwork but it’s an important pillar in establishing a foundation for success.

How Do Startups Hire Well?

hiring, startupsIn the lean world in which startups now operate, making good hires is more important than ever. In simple terms, startups can’t afford to make mistakes because the hiring process eats up a lot of valuable resources, particularly time.

For fast-moving startups that need people to drive growth, the ability to find and hire the right people is a strategic and tactical priority. This urgency, however, can be dangerous because it tempts a startup to hire for the sake of hiring. The need to move quickly means startups could hire the wrong person.

So how do startups hire smarter and better so they can avoid mistakes?

The most important consideration is making sure they have a clear idea of what job needs to be filled and the responsibilities of the position. If you’re going to be hiring a marketing person, be clear on why is it a priority and what exactly will they be doing to support growth.

As crucial is ensuring an employee is the right fit for the corporate culture. You want people who understand what it’s like to work for a startup, and who are excited about the opportunity to be part of a team building a new product. They need to get the idea startups are flexible, fast-moving and can be an all-consuming activity.

As much as startups want to hire quickly, they also need to be pragmatic about getting the right person. If a new potential hire doesn’t feel right, it probably isn’t. It’s better to wait than pulling the trigger on a new employee, only to discover they’re not it.

To find the right talent, startups should explore multiple avenues. This includes friends, their networks, investors, employees, job boards and headhunters. The more sources, the better chance of discovering the right person.

Note: Be careful about hiring friends. While they’re a convenient option, mixing the personal and professional can be a perilous combination unless they’re the right fit.

Then, there’s the interview process, which be challenging given most startups have likely not done much hiring. Rather than have someon come in for an interview, look at it as a discussion in which you’re trying to get a better handle on someone’s experience, attitude an experience.

In most cases, you should get a good idea fairly quickly about whether someone has potential to become an employee. For a small startup, potential hires should meet with several members of the senior team so there is collective sign off before an offer is made.

The bottom line is hiring is as much art than science but by approaching the process in the right way, it reduces your chance of making a mistake.

More: A couple of posts from Jeff Richards about hiring: “Always be Recruiting” and “Eight tips from founder turned VC”, which encourages people to hire the best, even if it means paying them more.

The Week in Startups (Edition #4)

Welcome to weekly recap of news from the Canadian startup landscape, as well as interesting blog posts and articles that caught my attention. If you have suggestions, tips or feedback, let me know by leaving a comment.

- Montreal-based Frank & Oak, which wants to help 20-to-35-year-old men shop for clothes, got some good coverage in TechCrunch. F&O, launched by clothing company Modasuite, is part of the Real Ventures’ portfolio

- The University of Waterloo’s Velocity blog had an interesting post on how startups should pitch, featuring a mock conversation between a pitcher and a mentor.

- The Canadian Venture Capital Association unveiled its 2011 annual report. The good news is the amount of venture capital invested and the number of deals were both up last year. The bad news fund-raising edged up just 2% to $1-billion amid rising demand. (Source: Mark Evans Tech)

- Pressly plans to roll out a new DIY service that gives Websites the same swipe-and-read feel as iPad applications. The Toronto-based startup’s clients include the Toronto Star and The Economist Group. (Source: TechCrunch)

- Engagio raised a $$540,000 seed round from a group of investors that includes Fred Wilson (aka @avc), Real Ventures and Roh Canada. Engagio, created by William Mougayar, wants to create a universal inbox for all your social media and blog comment conversations. (Source: Mark Evans Tech)

- TribeHR’s Jesse Rodgers has a lengthy blog post on StartupNorth looking at how there are two types of incubators.

- Montreal-based Uniiverse, which aims to create an online marketplace for off-line activities, launched last week, and announced it had raised $750,000 from angel investors. (Source: Globe & Mail)

- Dave Carroll, which became a YouTube sensation after a United Airlines ground crew tossed around his guitar in Chicago, is part of a new startup called Gripevine that lets consumers gripe about bad service, while giving companies a platform to respond. (Source: Globe & Mail)

- Canadian Private Equity takes a look at four Canadian incubators: GrowLab, Extreme Startups, FounderFuel and Launch36.

- Fortune had a story on Ron Conway (aka Silicon Valley startup’s best friend)

- Jason Cohen (A Smart Bear) writes about whether startups should embrace or flee trends to establish a viable business.

Engagio Raises $540K From Group Including Fred Wilson

Sometimes, startups percolate over a long period of time. Sometimes, they emerge in a creative burst.

Case in point is Engagio, a service that helps people manage conversation happening on various social networks and comment services. Engagio addresses the problem of digital fragmentation in which activity is happening on various platforms – Facebook, Twitter, blogs, LinkedIn, Google+, et al.

For many people, keeping up with these conversations means visiting the different services, which can be time-consuming.

This is where Engagio comes into play with a GMail-like interface that aggregates this activity. It provides users with an inbox, as well as ways to discover more about the people engaging with you to drive more and better connections.

Engagio was created after William Mougayar bounced the idea off Fred Wilson, a partner with Union Square Ventures and a popular blogger. Wilson loved the idea, encouraged Mougayar to do it, and eight weeks later Engagio was launched.

$540K Seed Round Raised

Today, Engagio’s whirlwind journey took another big step forward with the close of a $540,000 seed round. The investors include Wilson, Rho Canada, Real Ventures, Bullpen Capital, Michael Yavonditte, Paul Martino and Extreme Ventures. Mougayar said the original financing goal was $300,000 but there was so much interest, the size of the deal climbed.

For Mougayar, an enthusiastic blog commenter, the inspiration for Engagio materialized to solve a problem he faced on a regular basis.

“You can’t form relationships over commenting,” he said. “There was nothing to systemize it, visualize it and see it. I put two and two together and said we need software to manage all those interactions and conversations on Twitter, Google+, LinkedIn, etc. If you don’t have one place, you have to go all of the different places or depend on email notifications, which are hit and miss.”

As important, he said, is Engagio’s ability to identify the people with which you are interact. Engagio captures these people and puts them into a contact folder that becomes a relationship manager.

The seed round, he said, will be used hire more people and ramp up faster. A big chunk of the money will be spend to hire more people (development, marketing, UI and UX) and scale the infrastructure.

While Mougayar isn’t ready to talk about Engagio’s business model, he said it will depend on Engagio have lots of users. This will provide the company will options that will be revenue generation “clear, feasible and achievable”.

 

Snapshot of a VC Deal: Media Armor

Who: Media Armor, which “empowers organizations to invest in mobile display advertising with the same confidence as online”

How much: $1.5-million from a group led by Geoff Judge of iNovia Capital and Ian Sigalow of Greycroft Partners. Other investors include Neu Venture Capital’s Jerry Neumann, Brian Cohen, Chairman of New York Angels, John Taysom, Laconia Ventures’ Jeffrey SilvermanPhilip Grieshaber, Principal Scientist at Adobe, Mocospace CEO Justin Siegel, and Steve Tinlin.

The Quote: “Through our display, we enable Brands and Retailers to acquire new customers, keep existing ones loyal, and remarket to past site visitors.  All programs are run with a traditional test-and-control, isolating the view-based incremental-impact of our media.”

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