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VCs like to think that they are marketing geniuses. We really do. We meddle more in the marketing of our portfolio companies than any other area. If you have a chance to sit in on a startup board meeting, you can see this in action. The CFO gives a finance update and a few cursory questions are asked. The VP of Engineering talks about development and board members sit around the table nodding appreciatively. Then the VP of Marketing gets up and suddenly everyone around the table has a point of view. Poor VPs of Marketing. Their role at board meetings is to be diplomats and pretend that we investors are marketing geniuses. Frankly, the reason investors have so many opinions about marketing is that we can fake it far more convincingly than in other areas of the operations -- faking it when it comes to scalability issues, or which technical standard to endorse, or revenue recognition for term licenses, etc. is a lot harder. But show us a proposed product name, web page layout or advertising slogan and we are full of suggestions.

What has become clear to me over the years is that great marketing is not purely about science. It is not purely about art. It is not purely about intuition. It is a powerful combination of art, science and a little bit of luck (perhaps driven by intuition). I have incredible respect for marketers who can combine both disciplines with a little bit of intuition to deliver results. Despite my natural VC tendencies to meddle in marketing's affairs, I will do (...read more...)

Angel headcounts were up as well, with 130,000 investors making bets, up 3 percent from the year-ago period. Despite those increases, more dollars chased fewer deals than the prior year: A total of 24,500 ventures received angel funding in the first half of 2006, down 6 percent from the first half of 2005.

The vast majority of Canada's private companies are forecasting growth and expansion. However, according to the latest PricewaterhouseCoopers (PwC) Survey of Canadian Private Companies, as organizations crest the wave of a buoyant economy and grapple with labour shortages they are failing to address their challenges or measure key performance indicators. At the same time they are placing increasing demand on existing workers and have few plans for future management or ownership succession. This overall lack of preparedness is threatening their growth and expansion prospects.

Seventy-nine percent of the 534 Canadian business leaders who participated in this year's survey are expecting their business to improve over the next 12 months. The main reasons cited for their optimism include an increase in sales (61%), entry into new markets (42%), development of new products (33%) and the buoyant economy (32%). However, there are signs of regional differences with more companies in Western Canada (particularly Alberta) expecting business to improve a lot.

OCRIRadio.com is kicking off its 2006/07 season with "The Big Money Show". Co-hosts Jeffrey Dale and Nathan Rudyk interview Andrew Waitman from Celtic House and Ted Anderson from Ventures West for both an Ottawa and national perspective on the state of both high tech companies and capital formation.

Produced by market2world communications in cooperation with OCRI, the podcast's RSS feed is feed://www.ocriradio.com/podcast/ocri_radio.xml, or you can direct your browser over to http://www.ocriradio.com for blogs as well as the podcast.

So far in 2006 venture capital (VC) financings are down in high tech Ottawa, but employment is up. What gives? Join co-hosts Jeffrey Dale, President and CEO of OCRI, and Nathan Rudyk, President of market2world communications inc. as they talk to two of Canada's top venture capital leaders and one of the city's most revered entrepreneurs to find out where the big money's going, and how Ottawa must position itself to attract more of it.

Dale and Rudyk interview Andrew Waitman, Managing Partner of Celtic House, Ottawa's largest venture capital company with offices in Toronto and Gloucester, England; and Ted Anderson, President of Ventures West, one of the largest and most successful VC companies in the country with offices in Vancouver, Toronto, Montreal, and now in Ottawa. The two men control more than a half billion dollars in their latest funds.

The hour-long September podcast of OCRIRadio.com also features an interview with Dr. Michael Caughey, OCRI's founding President in the 80s, creator of the Technology Venture Dinners in the 90s, a renowned entrepreneur, and now board member on several Ottawa tech companies. Rounding out the podcast's guest list is Stephen Daze, Executive Director of OCRI's Entrepreneurship Centre and organizer of the Oct. 10th-12th Ottawa Venture and Technology Summit.

Past guests on (...read more...)

Success begat success in the venture business. Since venture investments have had payoff characteristics like options, i.e. limited downside and infinite upside, the key to the business has been "deal flow." Deal flow is about seeing as much of the total distribution of deals, to generate a larger set of 'long tail outcome' candidates. Success made IT venture capital business a first-order Markov process, where the probability of the getting the next hit was enhanced by having a previous hit, precisely because of the desire of all entrepreneurs to affiliate with "known winners."

Limited partners (LPs) are investors in venture capital funds. We raise money from them, just as companies raise money from us. We tell them our credentials and, to a lesser extent, our business plan. LPs usually have to make stronger commitments than VCs with even less data. A VC who loses confidence or interest in a company can choose to cease new investments in that company. The result is often that their investment gets diluted, perhaps massively, but it still remains. A LP who loses confidence in a VC fund technically still faces a legal obligation to continue meeting their capital calls. At best, they face losing all their capital. At worst, they have no choice but to throw good money after (perceived) bad.

Historical performance can only take you so far. One needs a theory of future drivers of returns to select among venture capital managers. Being yet-another-top-half-IT fund (...read more...)