Although we send out quarterly newsletters, we like to get Montreal Start Up’s (MSU) Limited Partners (LP) together once a year for an update on the fund’s performance. In addition to hearing about the fund, the LP’s come to network with their fellow investors and meet the entrepreneurs’ we’ve invested in.  This year we decided to open it up a bit more. In addition to all our LPs and founders, we invited many local investors, both angels and VCs, as well as other people active in the local startup ecosystem. It was an opportunity to share with the community what we’ve been up to as well as a great networking event.

Most people who read this blog and follow me on Twitter probably already know about the 15 investments MSU has made to date, Real Ventures our new seed fund that should be up and running this autumn, as well as Notman House. Those who were not at the event however, might not be as aware of the economic impact of the fund, so here are a few numbers:

$5M total size of first fund.

15: number of companies, all Montreal-based Web and mobile start-ups, we have invested in.

$24M invested by other investors into those same 15 companies, most of it as follow-on funding, but some of it as part of the initial round.

$20M of the $24M came from outside of Canada (Europe and the United States).

These numbers  become even more interesting when you look at them from a government policy perspective. Some of you may remember that there was some controversy last year surrounding the FIER-Regions program. What you might not know is that $2M of MSU’s $5M comes from a related FIER program (Fonds-soutien). So for every $1 that MSU invested, another $8 was invested into new Quebec businesses, $6.6 of which was new money flowing into the province. Put another way, every FIER dollar we invested attracted another $16.6 into Quebec! That’s serious leverage. Compared to many other economic development initiatives, government money applied to the Web and mobile sectors can provide tremendous bang for the (public) buck.

Related articles:

• Fonds d’intervention économique régional (FIER)
• 12 recommandations sur la gouvernance des FIER-Régions (radio-canada.ca)
• Gestion des FIER Le vérificateur général note des irrégularités (radio-canada.ca)
• Never Mind the Valley: Here’s Montreal (readwriteweb.com)
• Our Annual General Meeting (montrealstartup.com)

(cross-posted from danieldrouet.ca)

Snap update – Montreal Start Up has recently:

Made 3 new investments (that’s 15 in total)

Had follow-on investment rounds into 2 of our portfolio companies

Had 1 of our portfolio companies acquired (that’s the 2nd acquisition)

And launched a new logo !

NEW MSU LOGO

All that activity and the only thing we can announce publicly is the logo (!), but more news on all the above will follow soon.

Ben Yoskovitz announced on his blog recently that Standout Jobs had been acquired by another company in the recruitment space.

This is Montreal Start Up’s first exit since the fund was officially launched in Feb 2008 !

Congratulations to Ben, Fred Ngo and the rest of the Standout Jobs team who showed an incredible amount of tenacity and endurance in making this happen.

Congratulations to Evan and the team at Status.net for closing a new round of financing and getting on the Techcrunch home page on the same day.

It’s also great to have iNovia as an investor alongside us, as well as my friend Oleg Tscheltzoff , co-founder of Fotolia.com.

(Given that Oleg is investing in Canada and that Fotolia has recently appointed Calgary based, Patrick Lor as it’s North American President, perhaps any Canadian’s reading this post could give Fotolia a try instead of iStock Photo next time you need some stock photography !)

Anyway – here is the official press release.

StatusNet Closes $875K Seed Financing Round

Delivers first open-source micro-blogging platform

Montreal, Canada, October 27, 2009 – StatusNet, the company that develops an Open Source micro-blogging platform, has completed an $875,000 financing round. Investors include local venture capital groups Montreal Start Up and iNovia Capital as well as European angel investor Oleg Tscheltzoff of Fotolia.com.

“We’re excited by the opportunity for growth this investment brings,” says Evan Prodromou, CEO of StatusNet Inc. “We plan to use this capital to build the sales, support and marketing power needed to take our software and services to the marketplace.”

Founded in 2008, StatusNet develops the software that runs hundreds of micro-blogging sites across the Web, including the popular Identi.ca community. The StatusNet engine allows companies and communities to set up their own Twitter-like Web site, so that employees, customers or friends can share quick status updates, links, and files. The engine includes APIs and tools to receive and send updates through IM and SMS as well as through Twitter and Facebook.

“StatusNet is ready to take its place in the market as the WordPress of microblogging,” says John Stokes, lead partner at Montreal Start Up. “The growth of the Twitter platform has proven the importance of this medium, and we believe that StatusNet can play an important role in bringing this capability to broader audiences.”

The company has commercialized the Open Source offering with support, customization services, and a hosting platform at status.net. The hosted service, currently in private beta, is scheduled to launch publicly before the year end. Customers can choose between private sites, similar to yammer.com, and public sites for publishing or community engagement.

“iNovia team recognizes the opportunity to bring micro-blogging to corporate users, media outlets and brands among others,” says Joško Bobanović, principal at iNovia Capital. “Evan and his team have demonstrated they can provide a valuable service while being supported by a strong business model. We look forward to helping this dynamic team further its growth in the ever-changing business market.”

For further information see http://status.net or contact Kristine Matulis (kristine@status.net)

About StatusNet

Founded in 2008 by CEO Evan Prodromou, StatusNet Inc. develops the Open Source microblogging tool by the same name. Based in Montreal, the nine-person team provides service and support as well as the hosting platform status.net

About Montreal Start Up:

People, ideas, finance, and luck: these four factors are necessary to create any successful company; Montreal Start Up provides start-up finance to people with ideas. For more information, visit www.montrealstartup.com.

About iNovia Capital

iNovia provides venture capital to entrepreneurs who transform innovations into successful companies.   The team is comprised of sector experts in information technology, life sciences, and clean tech.  In addition, iNovia’s extensive network of industry and academic partners provides portfolio companies with unique access to intellectual property.  iNovia has $165M under management across two seed and early stage funds. For more information, visit www.inoviacapital.com or follow iNovia on Twitter at http://twitter.com/iNovia

About Oleg Tscheltzoff

Oleg Tscheltzoff co-founded fotolia.com, the first global online social marketplace for creative digital stock images in 11 languages, where photographers and designers of all levels can store, share and monetize their photographs and illustrations. As CEO, he led the company from inception to its rapid rise to one of the world’s largest microstock photography site. On May 21, 2009, Fotolia launched photoxpress.com, the world’s largest free stock images web site.

Continuing with the shout-outs to the entrepreneurs in whom we’ve invested recently ……

Marc Lefrancois and Marek Krepec at Oneeko have recently (beta) launched the upgraded version of their software solution that enables "click-to-collaborate" screen sharing with the utmost simplicity.

We also have two previously unannounced investments.

Whatsnexx (no website yet) is building it’s business from some technology and talent that has been spun out of TSX listed Komunik. The software is still in development and more info will follow as the company comes out of development.

Yona Shtern and Robert Gold are the Founders of Beyond the Rack, Canada’s answer to Gilt or Vente Privée. The company offers its online members luxury brand clothing and accessories, via limited time "flash sale" events. This business model has proven to be extremly successful in Europe – to the point that we were able to attract european co-investors to invest "across the ditch".

With all this activity we had better spend some time putting our own pitch together so that we have some more money to invest in these "opportunity" filled times !

We’ve been pretty quiet on the blogging front recently. Whilst I can assure you that doesn’t mean we haven’t been doing anything – perception is reality !

The truth is that we’ve already made two more investments this year – giving us a total of 10 companies in our portfolio – and if we keep this rate up we will have invested our first fund in about six more months !

Most of our companies are still in development or beta so we aren’t trying to raise their profile yet but but over the next few days I’m going to give a quick shout-out to the companies we have backed so far.

To get the ball rolling i’ll start with the companies that we have announced:

Standout Jobs has developed a Saas platform that powers and centralizes companies’ online recruiting efforts. The company is being driven by Montreal tech community activists (Instigators) Ben Yoskovitz and Fred Ngo.

Akoha is a developer of online and real-world social games designed to make the world a better place. Alex Eberts and Austin Hill (the quiet guy in the background ) are Akoha’s Founders.

We quietly announced our investment in Evan Prodromou’s latest startup Identi.ca. Having started both Wikitravel and Vinisimo, Evan has proven his abilities to build communities and execute open source/collaborative projects.

And here are a couple more of our yet to launch investments:

Keenkong is currently in private beta so why don’t you sign up to keep posted of developments. The company’s CEO, Olivier Berger, is bringing his six sigma training to the startup world – watch this space.

The Book Oven is also in private beta but it wouldn’t take a genius to work out that Stephanie Troeth and Hugh McGuire’s latest startup has something to do with books – it looks like they are working on something very appetizing!

Whilst doom and gloom may be all around us, we continue to be excited by the entrepreneurs we meet and by the strength of their ideas – and we are happy to keep funding the best of them ! 

There will be more shout-outs next week.

It has been a busy few months behind the scenes at MSU and we’re really pleased that we are able to make the following announcement:

Montreal Start Up, a venture investor dedicated to supporting Montreal based entrepreneurs in their quest to create and build successful companies, today announced the closing of a $2 million investment in its venture capital fund by the Solidarity Fund QFL, bringing to $5M the amount of assets under management.

This extra $2,000,000 GUARANTEES that more Montreal entrepreneurs are going to get funded ! We would really like to thank Janie Béïque, Luc Couture at the Solidarity Fund QFL, as well as Jacques Bernier, for their support in making this happen.

Nous avons été très occupés ces derniers mois et en voici une des raisons:

Démarrage Montréal, un spécialiste du capital d’amorçage, dont la mission est d’appuyer les entrepreneurs montréalais qui bâtissent les succès de demain, a aujourd’hui annoncé avoir reçu du Fonds de solidarité FTQ un investissement de 2 millions $ dans son fonds de capital de risque, ce qui porte à 5 millions $ les actifs gérés par l’entreprise.

Ces 2,000,000$ de plus, garantissent que plus d’entrepreneurs montréalais vont recevoir des fonds! Nous aimerions remercier Janie Béïque et Luc Couture du Fonds de solidarité FTQ, ainsi que Jacques Bernier, pour leur aide à réaliser cet investissement.

Last night, Akoha gave a sneak preview of their product offering to a number of their friends, family and investors in Montreal (disclosure -  MSU is an investor).

The founders, Austin Hill & Alex Eberts (along with PR guru Dov) are no strangers to creating buzz and excitement about their projects and once again they made a splash – albeit the type of precision splash that you would see from a Chinese Olympic diver and not that of Shamu the whale !

A reasonable amount of money would have been spent on the event and as an investor in the company I can’t but help consider wether this was actually a good use of money. My conclusion is that it was; and that it achieved a few  things that any start-up entrepreneurs could consider as they launch their businesses.

1) When you’re sprinting the marathon – don’t forget the feeding stations.

When your legs, lungs and brain are fatigued but you realise you’ve only just started the marathon it’s great to see the 10km feeding station. A feeding station is designed to give you renewed energy, but it also marks another milestone on the race. The lungs, legs and brains of any start-up are of course its founders and employees and its essential to provide feeding stations along the way to motivate and re-invigorate the team.

The sneak peak event created an opportunity for the founders to put the whole team in the spotlight. Akoha hasn’t even launched yet but their sneak peak event felt like a celebration of success; as an investor I don’t see Akoha as a success (yet), but I can fully appreciate that as a team, coming together to deliver a product, they have successfully reached a major milestone.

I don’t think that Akoha is actually creating any real marathon runners, but last night a few probably felt like junior (tech) rock-stars.

2) Practice your pitch

I assume (obviously) Akoha intends on taking its pitch to the "world" at some point. That would probably involve presenting the company at a much larger event than the one last night. So their sneak peak event gave them a chance to practice their pitch in a realistic environment -  in-front of an audience with all the adrenaline flowing and nerves jangling (or in Alex’s case "Jango"ing).

Anyone at the event (including myself) would say that the presentation went really well, but the guys at Akoha know that to be the best you can’t be satisfied with "really well". You need to be outstanding – and as practice makes perfect, I think that a real-life test run is a valid investment of time and money. Its all about raising the bar.

3) You get out what you put in

By inviting the community to become "insiders" the sneak peak event has placed Akoha as one of the companies that everyone in Montreal will want to help. This help is invaluable to any start-up and I would encourage ALL start-up’s, early stage and venture backed companies to open up more to the Montreal community. It’s through the community that you will probably find your next employees, your next investors and perhaps even some of your most innovative ideas.

So to the Akoha team – thanks for a great night and good luck with the next 10km !

In my last post I mentioned that MSU looked at 94 potential investments in the last few months but only five got us excited. So, what was wrong with the other 89?

While we don’t expect any company to be perfect, we do expect it to have at least two things going for it. First, the founding team must be smart, passionate and capable. Ideas are a dime a dozen, it’s execution that builds a successful company. Note that I didn’t include experienced as a pre-requisite. It’s a great asset if you have it, but its lack is not usually a showstopper.

Second, we look for an interesting core idea around which the company is to be built: an original, ambitious and potentially lucrative idea. Usually, the opportunity is reasonably well defined. We are also, however, interested in people who can passionately argue that some area, that they know well, is long overdue for some creative disruption. Even if they haven’t quite figured out what form that disruption should take, given a strong enough team, we might be willing to provide support so that they can explore the opportunity further.

Probably half of the 89 clearly failed at one or both of the above. Passing on these deals is an easy call. The others however, were much tougher calls. Several might have made the cut if only they had done a little bit more work on X or had a better understanding of Y. Although we provide feedback on why we won’t invest, I’m sure most entrepreneurs would prefer to learn those lessons prior to pitching investors! This is where I think a Startup School could help the local community. I’m still working on it and hope to have more details soon.

So, to sum up what we’ve seen in the last six months:

• There is no shortage of bright and creative people in Montreal.
• We need to be more ambitious. Accept that the Quebec market is small and start thinking in terms of North American or, better still, global markets. As Elvis Gratton would say: “Think big Sti!”
• In terms of talent, good entrepreneurs –people who can pull together all of the pieces and get things done– are the limiting factor in the local startup ecosystem, not developers.
• There are still many people who aren’t aware of the local startup scene. We need to do a better job of getting our friends, colleagues and classmates out to networking events and reading the relevant blogs. I’m particularly concerned about how few students are involved.