Toronto Entrepreneur

I’ve recently researched the rules and resources of looking for funding for a startup in Toronto and Canada. I haven’t yet raised any funding, but I thought I’d share my findings with you.

There are a few rules you should know about. There are always exceptions though. Raising capital is usually broken down to 4 different categories. 1) Raising from the 3 Fs; Friends, Family and Fools. 2) Raising from Angel investors. 3) Raising from Venture Capitals (VC). The 4th source is usually neglected most of the times; Government grants and loans.

If your startup can go without funding, then don’t spend time on it, because it can take a while. Also when you look for funding you should look for “smart money”. Smart money is when the investor not only brings their money, but they also bring 2 more things; their expertise and more importantly their connections.

Which of the above sources you go to, really depends at what stage of your startup you are at and sometimes on how much money you need. I’ll try to break each source down blow:

1. The 3 Fs: At the very early stages. This is also referred to as “love money”, which comes from people who know you and care about you and your success. You cannot really put a number on how much such people would invest but it could be anywhere from $500 - $15,000 or more if you’re from a wealthier family. Here’s a list of some private investors across Canada if you’re not surrounded by rich people
https://strategis.ic.gc.ca/app/scr/srcsFncng/instRgstrtn/Srch?lang=eng&stg=1&type=F&instTyp=P

2. Angel investors: These are generally wealthy individuals who most of the times acquired their wealth through their own startups. They are full-time investors, which means their job is to read business plans all day and decide whom they’d like to invest in. Angels usually come into play during or pre revenue generation. They usually come in when you have a product or you are very close to having one. You should approach angel investors if you’re looking for $100,000 - $500,000 of investment.

Angels are usually invested in 5-10 startups at a time. They don’t usually work alone and are part of an “Angel Group”, where maybe 30-50 angels work together. So if your startup’s application gets approved, you would have to give a 20-30 minute presentation to all those investors in one sitting. Let’s say out of 40 investors in one angel group, 5-10 of them are interested in your idea. Then you’ll get a second meeting which is about 3 hours long. You go through more details of your business with those interested investors and see if they’d like to take on your project. If everything goes well, then those investors will collectively invest in your startup. Each investor usually invests around $50,000 and expects a 10x return over 5-7 years. The most important thing to angels about your startup is your team. You need people who can cover many aspects of the business if not all.

3. VCs: From my research, you’d usually like to avoid them. They’re known to be very harsh. I’ve spoken to founders and some said “I’d rather work twice as hard, and not have a VC on my ass”. Others have said, when such and such guy (the VC) is not in the office, it means everything is good :). You usually go to VCs at a much later stage of your startup, where you’re looking for an investment of $1 million or more. If you raised fundings from angels, they usually help you find VCs and raise money from them.

4. The Government: From my research apparently many people underestimate this source (at least in Canada). I have some really interesting tips on how you should go about approaching these government departments that I can share with whomever is interested. I’m not putting them here because this post is already too long :). But here’s a great database of many government programs for startups: https://strategis.ic.gc.ca/app/scr/srcsFncng/instRgstrtn/Srch?lang=eng&stg=1&type=F&instTyp=G

Please make sure you do two things. If you have any other tips, leave them as comments and also if any of the above tips works for you, please let everyone know. Thanks.

Rokham Fard

So when should you start your startup and why?

I recently met with a few friends back from school because two of my friends work outside of Canada. One works in the Valley and the other works in London, England. After I chatted with them for an hour or so, this is what they told me. One said “We’ve had two batches of layoffs so far and I’m worried that I’ll be in the next batch.” Now this guys is really smart and really good at what he does. He’s responsible and he’s got great inter personal skills. He’s a fresh graduate (so his salary is probably lower than some of the more seniors in the company and he’s still worried).

The other guy told me that they’ve had some layoffs lately and the company had warned their team that they’re next if the order comes in. Now these guys wouldn’t be layed off, it was worse. They were to be relocated to another department under the same company to a different city. Now each one of these cities were in a different country (New York, Toronto, some place in Singapore).

Another thing I did 3 days ago was post a job posting to craigslist looking for a PHP developer. I received 10-12 replies in less than 24 hours. 3 were spams. 2 or 3 hadn’t read the post properly and were applying to work from a different country. We picked 3 to interview from the rest. One thing I noticed as I was going through the resumes, I realized some people had finished their last job in the last 1-2 months or they had started a part time gig 2-3 months ago. Now that’s a sign that the wave of recession has started hitting the tech industry too and perhaps there are more layoffs to come. Plus it’s January and many companies freeze their hires for another 2-3 months, because 4th quarter of 2008 wasn’t so gloomy for them.

So to answer the first question, if you are thinking of starting a startup, START NOW. To answer the second question, read the above 3 paragraphs. You don’t have to dedicate all your time to it at this stage. Start small and go forward. If you have an idea that you believe in, start researching it. Then start building a really really simple version of it. Something that I would look at for 30 seconds and know exactly what it did. If you don’t have any ideas, look around you. See what your former companies were missing. Try to be creative and change the way things are done. Look at your friends and see what bothers them a lot at work, or in their life. There are a lot of niche markets that you can find a technical solution or improvement to. If you need motivation, read Netscape time. If you need fuel for creativity follow Tim Ferris’ blog. This man is really creative and thinks outside the box. When you’re trying to be creative, don’t think money or cool. Think what are some problems and how you can solve it.

Start small and you will be surprised how the wheels of motivation start rolling in you

Rokham Fard

If you are a programmer and are or will be buying a new laptop, you’re probably wondering what you should buy. It’s a tough decision because it’s one of those things that if you make a mistake you’re stuck with it for years. Kind of like having an ugly kid. Well not that bad. The good news is that if you really seeking quality in your next laptop, your choices boil down to 2. Do you want an IBM thinkpad (or a Lenovo) or do you want an Apple. Well I’ve had the privilege of being provided with a free laptop through my employers in the past 4.5 years. Yeah working has some perks

5.5 years ago I bought an iBook G3 on eBay and used it for 1 year. That was my first mac and I really enjoyed it. Then I went to IBM and was given a thinkpad T23. I was really excited about the new laptop and enjoyed that one for a year until I realized it was a really ugly, slow machine. Then they changed my thinkpad to a T43, which was a lot faster but it still was ugly and it wasn’t as fast as I wanted it to be. I am not complaining about specs, I mean when I switched applications, my brain had already done the context switch where the machine hadn’t. That makes a computer slow. Then I started working at UofT.

I was given a MacBook pro and I’ve been using that for 1.5 years. It’s absolutely awesome. Here is my comparison between the two machines I’ve used very extensively.

Mac qualities:
- Extremely beautiful and bright screen. You will learn that a bright screen is fundamental in a healthy, developer, machine relationship. Thinkpad’s screen, not so bright.
- Great feel on the keyboard and the nice back-light beneath it. Thinkpad’s keyboard was great and I particularly loved the little knob that acted as the mouse inside the keyboard.
- It’s fast. yeah it’s really fast.
- Great wireless card. Thinkpad’s card was great but the software was freaking dumb in finding available networks.
- The basic softwares come with the OS.
- The speakers suck I admit; but so did the thinkpad’s.
- I used to hate iTunes, but once you find some friends who are mac users, you’ll learn to love iTunes. I have access to about 60 gigs of music on my partner’s macBook every day at work. I’m so glad I convinced him to buy the mac. You have access to all sorts of radio stations and a huge library of podcasts.
- It looks fabulous. Yes aesthetics are very crucial in a longterm relationship.
- The battery is amazing, amazing, amazing.
- You always have access to the terminal (that includes ssh, sftp, grep, ps … and all those useful commands)
- The OS is amazing. I restart the machine once a week.

So overall I think the MacBook pro is the best laptop out there by far. I know it’s slightly expensive but you can get great discounts from the UofT bookstore and you can get them even cheaper if you can buy a used one from one of the profs. Believe me if you use your laptop a lot (I use it 10-12 hours/day) you should buy a MacBook Pro.

One little note for Java developers though. If you are going to compile java 6 code on the machine, make sure you buy a Core 2 duo. The “2″ indicates that the OS is a 64 bit OS and Java 6 only runs on a 64 bit Mac OS. Happy coding.

Rokham Fard