The opportunities in Montreal are looking even hotter than the Canadiens (6-3-1 last 10 games), and a lot of the excitement is due to companies emerging from a new group of accelerators. While the idea of new business incubators is hardly a new one, the last 5 years have seen an explosion of activity. As I mentioned in my post on the MassChallenge, last time I looked more than 100 accelerators had sprung up in the U.S.
The startup scene in Montreal appears to me to be growing at least as fast. I’ve visited there twice in the last two weeks, and things were hopping. First was a kick-off party by Capital Innovation, headed by Martin Duchaine, which brings together angels (primarily from Anges Quebec), VCs (including RealVentures, Inovia Capital, BDC Capital, and healthcare investor GO Capital, ), accelerators (including YearOneLabs, Bolidea, MontrealStartup, and Tandem Launch Technologies), regional development authorities, entrepreneurs, service providers—in short, the whole entrepreneurial community. There was considerable press attention at the party, but particularly I’d like to mention NextMontreal, edited by YearOne Labs co-founder Ben Yoskovitz, as THE source for all startup-related news. Capital Innovation is in its 4th year, with 6 larger events taking place throughout Quebec, ending with several of the best companies winning cash prizes and exposure.
I returned to poke around some of the more interesting opportunities at the incubators. Raymond Luk, one of the co-founders at YearOneLabs, introduced me to some of his portfolio companies who are based at RPM Montreal, a giant co-working space, well equipped with high-speed net, and high-speed espresso (I guess that’s redundant), and super high-speed entrepreneurs. YearOneLabs, like Project11, which I wrote about here, is EXACTLY where I want to go to find cool companies. The founders recently sponsored a Google Hack-a-thon at their offices, bringing in ambitious nerds from all over. And Raymond’s initiation of StartupDrinks undoubtedly brings even more talent to their door. Unlike large VCs who can make a cushy living from their 2.5% management fees on big bucks, YearOne’s managers’ interests are totally aligned with investors. They don’t make a penny from management fees, their compensation is 100% dependent upon performance.
My favorite company at YearOne was Localmind, which is described as “what would happen if you crossed Quora and Foursquare”. It’s a modest, 2- about to become 3-person shop, with a decidedly audacious vision of “Knowing what’s happening. Anywhere. Anytime.” And the buzz is out that this is worth following. The headline in GigaOm says it all: “Localmind iPhone App is the Future of Local Crowdsourcing”, with the article picked up by the New York Times, and expanded upon by The Next Web. This is definitely a company to watch, but would-be investors can relax a bit–they’ll be building out the system for awhile before looking for additional funding. Localmind is debuting at SXSW, and you should soon be able to download an invite for their beta here. One interesting item for trend followers: Localmind’s founder, Lenny Rachitsky, is an American who moved to Montreal to take part in the tech startup scene there. Among other things, the government gives major tax credits and other subsidies to software companies. But rather than tell you how that works, I’ll dig up some articles that might explain this better. (Readers, feel free to add links in comments section.) That, along with changes that make it friendlier for American angels to invest in Canada, make it clear that on the tech front, Montreal is decidedly open for business.
On the other side of the development spectrum from Localmind is Wajam, one of the Bolidea companies with serial entrepreneur Martin-Luc Archambault in charge. Martin-Luc has already had a few successful launches and sales, and to date he has personally assembled (and financed) a large team of developers working on social search. Social search is hot now, and Wajam is a friendlier version of Greplin, which I use instead of Google Desktop to search for correspondence that comes in from, say, LinkedIn. Like Greplin, it incorporates streams from your friends from various social sites such as Twitter, Facebook, etc., but has the added important convenience that it can be laid over any search engine. Hence, Googlers can access through Google, Bingers via Bing, without having to go to a separate website. (I corresponded with one VC who prefers dedicated websites to plug-ins, but as a user I disagree) and ultimately there is no reason Wajam can’t be overlaid on Amazon, BestBuy, etc. Thanks to Alexandra Dao at Wajam for the terrific tour of the private beta version. Alex was one of three separate hackers I met from Guelph, Ontario, all of whom I moved to Montreal for the flourishing tech scene.
Martin-Luc has a clear vision of how he is going to acquire users and monetize the site. Interestingly, he consciously is not going the “get as many users as possible right away with a minimum viable product”, preferring to do his testing within a smaller testing group, and only then launching publicly. Here’s a video of Martin-Luc talking about Wajam. When it raises funds, it will be well above the normal angel valuation range. Nonetheless, this is one of those big upside possibilities where an experienced, successful team takes on a big market and big problem—the fact that search now become less usable as content farms screw up the credibility of search results. In my opinion, that makes it VC material.
And there are plenty of more companies out there. As I get more involved with Montreal via CapitalInnovation, I’ll blog more. Right now, as a newbie to the Quebec investing scene, I’m still unsure who to seek out besides Michel Brûlé (winner of Canada’ angel association “Angel of the Year” award in 2010, Vice-Chair of Anges Quebec, and a massively successful entrepreneur on his own) and a few young guns like Daniel Robichaud and Martin-Luc Archambault (who, like Raymond Luk and Martin Duchaine, is on the Board of Anges Quebec in addition to his role as an entrepreneur and super-angel.) I like some of the VCs I’ve met, but due to a variety of factors, venture funds have yet to bring in meaningful returns in Canada. Nonethless, the majority of US Venture Funds have had a sorry decade as well. I’ve heard in the Canadian instance the industry had the misfortune of most of the institutional money coming in all at the 2000 top of the market, followed by a long drought which was only cured by the re-infusion of government funds into the system. But I have no way to verify that yet–I’m still mostly in the dark on the context and history here, and thus still a bit cautious. As Warren Buffet says, “If after 10 minutes into the poker game, you don’t know who the patsy is—YOU are the patsy.” More on this as I figure it all out. Unfortunately, it’s taken me more than 10 minutes so far…but I’m still feeling very solid about the possibilities.