Archive for the ‘Funding’ Category

The Millennial-Startup Equation That’s Drawing Investors In

Wednesday, December 21st, 2016

The undeniable business case for startups delivering products and services that speak to the millennial consumer segment is getting stronger by the year. As Sue McGill, MaRS Discovery District’s Head of Consumer & Commerce, points out:

“Investors place bets on companies that have the potential to become big exits and create significant returns on their capital… By 2020, millennials will form 50% of the global workforce and will be a major driving force in the global economy.”

When we investigated millennial-targeting startup success stories, our insight-rich discussion with Sue McGill provided crucial context:

Millennial-focused startups that attract major financial votes of confidence from funders aren’t confined to one sector. Our roundup of 3 startups achieving major success took us from fintech through to cosmetics:

Three Startups That Raised Millions by Targeting Millennials

The social media conversation fuels both the startup sphere and millennial spending: to cap our investigation, we looked at MutualMind, a company whose Bluemix-fueled social listening product led to acquisition by top marketing firm Shapiro & Raj.

Bluemix and Millennial-Targeting Ingenuity Kickstarted This Startup


Not a Myth: Why Startups That Zero In On Millennials Attract Investment

Friday, December 16th, 2016

The digital natives and early adopters of the millennial generation are a central focus for many startups that are attracting major interest — and major funding.

Mentor and innovation advocate Sue McGill has been a central driver in the startup space for years, and can point to one of the many reasons why this is the case: “Given their impact – socially, culturally and economically – ventures that are specifically catering to (millennials) stand a good chance of enjoying huge wins and outperforming the market in the long run. As a result, this category of startup is attractive to investors.”

TechPORTFOLIO: Are startups focused on millennials seeing an upswing in funder interest?

Sue McGill: Investors place bets on companies that have the potential to become big exits and create significant returns on their capital. Having said that, there is a powerful generational shift happening in the market. By 2020, millennials will form 50% of the global workforce and will be a major driving force in the global economy.

TechPORTFOLIO: What should founders seeking to cater to millennials focus on?

Sue McGill: Tapping into millennials has become a growing focus for startups and many other enterprises. It’s important to note that the largest (and fastest growing) millennial populations are located in emerging markets like India, China, Brazil and Indonesia.

Reaching millennials in these regions requires founders to rethink every aspect of their go-to market strategy – this includes product, marketing, communications, supply chain and talent. It also demands a deep understanding of cultural trends and regulatory frameworks. Building ‘local context’ into a startup’s strategy is critical and often overlooked.

Another key variable is timing. Driving growth in these emerging millennial markets is rarely linear, so timing matters as much as having a great product or service.

TechPORTFOLIO: At MaRS, you work with many millennial founders. What sets them apart as drivers of new companies and ideas?

Sue McGill: We work with founders that span all ages and backgrounds at MaRS. There’s a relentless, ever-ambitious force that underpins them all. However, our millennial founders do share a few unique characteristics that are worth highlighting.

Millennials want to make a difference. They consider themselves to be global citizens, but also supporters of locally-driven solutions. They have huge expectations around the consumer experience, thanks to their inherently digital DNA. Plus, they think more broadly about sustainability. It is the convergence of these forces that is inspiring our millennial founders to create and unlock exciting and new sources in the market.

TechPORTFOLIO: Is it a mistake to look at the millennial demographic as different from Gen X or Boomers when it comes to how they engage with new products and ideas?

Sue McGill: No, not at all. Each consumer segment has unique needs and consequently creates unique product and market opportunities. With life expectancy increasing and birth rates falling in many parts of the world, there’s a very large and growing concentration of people aged 65 and over, in addition to millennials at the other end of the spectrum.

Startups that are capitalizing on this demographic trend and innovating across areas such as digital health, targeted pharmaceuticals, assistive technologies and more stand to benefit greatly.


Three Startups That Raised Millions by Targeting Millennials

Tuesday, December 13th, 2016

As millennials continue to grow and mature, so does their bank accounts. The generational cohort — which now outnumbers baby boomers in the U.S. — will collectively spend more than $200 billion each year starting in 2017.

Savvy startups targeting this group have recently achieved highly successful funding rounds, thanks to their early success.

These three next-gen companies have attracted major VC interest by helping millennials save, invest, or simply spend their cash.

Startup: Acorns

Who’s investing: PayPal, Rakuten

What they do: A mobile micro-investment platform

What they do differently: A simple app that makes it easy to invest

Acorns connects to users’ bank accounts, automatically investing “spare change” into a growth fund every time they make a purchase. Millennials are a cost-conscious generation, opting for thrifty purchases compared to Gen Xers and boomers.

The app is huge among millennials making their first foray into investing. It uses simple and jargon-free language, rewards referrals with cash and, most importantly, is free for students or anyone between 18 and 23 years old.

Startup: Glossier

Who’s investing: IVP, Index Ventures

What they do: Cosmetics and skincare products

What they do differently: Built a beauty brand for, and by, connected women

When a company in an established category like cosmetics is reporting 600 percent sales growth in a year, they must be doing something right.

Glossier, an online-only makeup company, established its empire in the world of beauty blogging, Instagram selfies, and whimsical hashtags.

Glossier began as a fashion blog that featured interviews with models, celebs and occasional entrepreneurs as they spilled their beauty secrets.

The company frequently crowdsources ideas for new products, engages customers on platforms like Slack, and has a horde of volunteer brand ambassadors.

Startup: Loot

Who’s investing: SpeedInvest, Global Founders Capital

What they do: A money management app

What they do differently: Targets young people by not letting them spend more than they have

Fintech startups for students and millennials are becoming a crowded space, but now backed by several millions of dollars in seed funding, Loot seems poised to capture a good chunk of that crowd.

Loot’s website promises “A new banking experience,” and the CEO and founder is just 23 years old.

The startup — which saved itself millions by opting not to apply for a banking license — is able to do things traditional banks can’t do. Using a prepaid credit card, users are shown exactly how much they spend, how much they can spend, and how much they should spend to meet their goals. The interface is intuitively designed and updates instantly.

The next step for Loot is to offer targeted discounts to help its cost-conscious consumers save even more dough, making it less a strictly fintech app than an e-commerce one.

Postmates, On-Demand Delivery App, Now Worth $600M

Friday, December 2nd, 2016

San Francisco-based Postmates, an on-demand delivery app that competes with UberEats and DoorDash, has just secured $140 million in funding led by Founders Fund, valuing it at $600 million.

It wasn’t an easy process for Postmates CEO Bastian Lehmann, who told TechCrunch that the “fundraising environment…has cooled, specifically in the on-demand space.” Nevertheless, Postmates succeeded, likely thanks to its proven track record.

While many other on-demand companies have struggled to grow revenues beyond a delivery-fee-based model, Postmates has been able to bring in extra money by selling premium placements to some 6,000 merchants.

The company plans to use the new funding to improve engineering and expand to new markets.

Postmates currently completes over 1.5 million deliveries a month and claims it’s on track to hit profitability at some point in 2017. Lehmann says an IPO is one option he’s considering for the future, but not in the next 12 months.

Platitudes and PowerPoint Make VCs say “No”

Wednesday, November 23rd, 2016

Scott Stanford, co-founder of Sherpa Capital, has some advice for founders pitching to VCs: Don’t try to sell.

A pitch that tries to sell is weak, and seeds doubt in a VC’s mind. “We look for founders who are not trying to sell us,” he told attendees at Lisbon’s Web Summit. “You want to be bought.”

Some other reasons you might be hearing “No”:

  • You haven’t built anything. “If you come to us with a great idea, you are dead on arrival. Ideas are free. Ideas are basically worthless.”
  • You’re desperate. “We smell desperation right away.” Meet investors casually … before you run out of money.
  • You’re using buzzwords. Once you get into the pitch, “You have to break through the noise,” says Stanford. “Break out of platitudes. If we hear one more time, ‘We are the Uber of …’”
  • You have a PowerPoint deck. Just bring data, Stanford recommends. If you do not have data, get other people’s data.

As founders themselves, Stanford and his partners appreciate the work that goes into each startup — they read every email the company receives, encouraging founders to keep knocking on doors.

“In starting Sherpa Capital we have been told ‘No’ 400 times,” he added. “It is like kissing every frog. Kiss, kiss and kiss, eventually you find a prince.”

There’s a $30 Billion Opportunity in Indian Healthcare Tech

Thursday, September 22nd, 2016

Global management consultancy KPMG has identified a multi-billion dollar need for healthcare in India, which will be filled by tech firms.

Startups will be key to providing healthcare to underserved rural Indians, but there are significant funding barriers to overcome from perceived low returns and lack of glamour, according to a recently published KPMG report.

India only spends 4.7 percent of its GDP on healthcare, and 70 percent of India’s population – some 892 million people – live in rural areas with no or limited access to hospitals or clinicians.

In the next five years, India requires up to 700,000 beds to meet its growing healthcare needs: an investment opportunity of $25 billion to $30 billion.

Startups will be the main driver of increasing health access by reducing or eliminating travel times to receive care. However, “even though multiple advantages are provided by healthcare startups, they have not yet received a steady stream of funding to support their venture.”

Health tech startups tend to be service-based platforms – and these tend not to be unicorns. Other barriers that funders face include low returns and long lead times to get those returns.

The solution, the paper says, is two-pronged. Local and national governments should encourage funding by setting up startup hubs and a healthcare innovation fund. Meanwhile, the private sector has a “dual responsibility of a guide and investor for the development of healthcare startups in India.”

As well as offering funding, “it is essential that the major hospital chains, pharmaceutical companies, and diagnostic labs take charge as mentors to the healthcare startups.”

In 2015, private equity firms channeled $16.8 billion to India’s startup system. Some $1.6 billion of that was in the healthcare system. A total 300 Indian healthcare startups were created in 2015.

While the paper declined to specifically mention startups by name, KPMG said the most highly funded startups were in areas including online prescription ordering, home health care, and doctor referrals.

Vishal Bali, co-founder and chairman of Medwell Ventures, told the Economic Times: “Startups are already disrupting the way healthcare is delivered in India.

According to the NASSCOM Startup Ecosystem Report 2015, India serves as the fastest growing startup base worldwide and 6-8 percent of the recent B2C startups in India have been in the health-tech sector.”

India’s top health tech startup areas, by 2015 funding

  1. Appointment booking: $790 million
  2. Mobile health apps: $750 million
  3. Telemedicine: $439 million
  4. Wellness: $386 million
  5. Data analytics: $294 million

(all figures in US$)

VC Funding Doesn’t Reflect Talent in Toronto and KW: Minister

Friday, September 16th, 2016

Silicon Valley startups are eagerly snapping up engineering talent from the University of Toronto and University of Waterloo. But investors from California are not, in turn, boarding planes to Toronto with money in tow.

We should be beating VC investors off with a stick in Ontario,” Brad Duguid, the Ontario Minister of Economic Development, told the Venture North conference.

Duguid said Californian VCs who value Ontario tech grads should come to the Toronto and Kitchener-Waterloo “supercorridor” and “kick the tires.”

Engineering talent in southern Ontario is highly sought after in the Valley. “How do we get folks in the Valley to get out from behind their desks and come up here?” he said. “As soon as they discover this ecosystem, they’re going to want a presence here.”

Venture North, held at the MaRS Discovery District, aims to entice VCs outside of Ontario to fund local AI, fintech, retail and SaaS startups.

Some Silicon Valley investors, such as 8VC, have described Toronto and KW as having a density of “technical talent” and are making the area a priority. Companies across Canada raised $734 million USD ($881 million CAD) in Q1 2016, but this is dwarfed by the $3.04 billion USD raised by Silicon Valley alone in the same period.

“Too cold” and “too far” are initial resistances from foreign investors that Duguid hears. But more publicity is needed too — and that’s partially down to startups themselves.

Razor Suleman, CEO of Next 36 and founder of SF-based Achievers, said that natural Canadian humility was a major barrier to publicizing the work being done by startups in southern Ontario.

Suleman started the Spotlight Awards after returning from California to help people get over their reticence to boast: “Six months in Silicon Valley will beat that out of you.”


Where to After Peak Silicon Valley?

Friday, September 2nd, 2016

Exorbitant rents, poor living conditions, long commutes, market saturation, unaffordable competition for talent — there are myriad reasons to leave Silicon Valley.

And many are doing just that.

According to a report by the Silicon Valley Competitiveness and Innovation Project: “For the first time since 2011, net domestic migration in Silicon Valley was negative, meaning that more Silicon Valley residents left the region for other parts of the U.S. than arrived from other parts of the U.S.”

Some food for thought:

  • The energy of youth can propel a determined person to suffer inexplicable hardship in the quest for success. But programmers age, too. Years of long work hours are exhausting and can take a major toll on one’s physical and mental health. And what if they want to get married and have kids one day?
  • It can cost upwards of $1,000 a month to put a single child in daycare in Silicon Valley, and the average house costs between $1 million–$1.25 million.


The case for opting out of the Valley

It bears reminding that Silicon Valley isn’t the only place to get a good job and start a company.

In Canada, ecosystems in Montreal, Toronto, Vancouver, Waterloo and Ottawa have been prolific in their output of solid tech companies. There are hundreds of accelerators and incubators available and more money by way of government funding, venture capital, angel investing and otherwise is finally coming in, offering Canadians — and even foreign workers — the opportunity to build their companies on Canadian soil.

And let’s not forget other U.S. regions, particularly hotbeds of tech and startup activity in Austin, Boston, New York City, Chicago, Seattle, Denver and Los Angeles.

NYC and parts of LA aside, these places have access to many of the same venture capital funds as their Cupertino cousins.   


Tel Aviv

Beyond North America, Israel’s tech sector — nicknamed Silicon Wadi — has had a historical trajectory similar to that of Silicon Valley. However, costs are much more manageable, and there is ample financial support for startups.

More bonus: A one-bedroom apartment in downtown Tel Aviv costs an average of US$1,158 and there are currently lots of developer job listings.

The 2015 Global Startup Ecosystem Ranking report Compass identifies Tel Aviv as having the biggest startup ecosystem outside of the U.S. and fifth biggest globally. The report gave Tel Aviv high marks on financing and talent, and named it third in the world for total exit value.

And Tel Aviv startups travel well.

In 2014, Israeli driverless-car software maker Mobileye raised US$890 million in its initial public offering on the New York Stock Exchange.

The city is also home to Waze, PrimeSense, Moovit, and other tech standouts.


Sao Paulo

The Brazilian city of Sao Paulo ranks 12th overall in the Compass report. Sao Paulo is a bit of a renegade. It’s the only Latin American city to make the Top 20 in spite of a violent crime problem that makes international headlines, as well as Brazil’s economic and political turmoil.

Brazil is young in terms of ecosystem maturity, meaning it needs more experienced entrepreneurs. There’s also money there (both local investment and foreign investment focused on Brazilian companies)  — not to mention hundreds of societal, governmental, economic and other problems that technology may be able to solve.



The Compass report called Bangalore the startup capital of India, counting up to 5,000 startups in the city. It also says Bangalore had the second-highest growth rate among the Top 20 for VC funding and exit volume.

Known as “the world’s back office” for its prominent call-centre business, Bangalore is stepping out on its own. ”There are more start-ups here, more VC money here, that virtuous cycle is in full spate… These entrepreneurs are very young, very ambitious, changing the world kind of people,” Nandan Nilekani, a billionaire who made his fortune founding Infosys, told the Financial Times.


The wildcard: China

China could be dangerous for established markets if and when the country dismantles the Internet firewall created to stifle dissent. Online censorship makes it hard to tap into the pulse of China, but in a domestic market with 1.4 billion people, chances are they’re working on something big — very big.

The country has already created a “super app” in the form of WeChat, which makes even Facebook’s size and scope look small.

Other Chinese stand-outs include Didi Chuxing, a mobile transportation platform that recently took over Uber’s operations in China. Its total funding is $7.3 billion, of which $4.5 billion came from Apple private equity in June 2016.

Xiaomi, with $2.45 billion in angel funding, develops smart devices and software. Meituan Dianping is a new merger of two popular group-buying communities. In January 2016 it attracted $3.3 billion in investment.


IBM Partners with MaRS Fintech Hub

Wednesday, August 31st, 2016

IBM is deepening its cooperation with Canadian fintech startups through Toronto-based MaRS, following up on pledges to help promising startups develop and commercialize their innovations.

The tech giant will join a network of corporate partners including CIBC, Manulife and payment processor Moneris in the MaRS C Suite, MaRS’ “corporate innovation district.” Partners provide startups with product feedback, advisory services and other forms of support.

“What we’re doing is saying: you have a great idea,” Patrick Horgan, VP, Manufacturing, Development & Operations at IBM Canada, said in an interview with TechPORTFOLIO in June. “You’re missing some ingredients to be successful. Let’s help you through that because we have some history of being able to get through all of those cycles and to the world market.”

As part of IBM’s partnership with MaRS, the company will provide technology and services, including access to IBM Cloud and cognitive computing (Bluemix and Watson), support for demonstration projects, data analytics internships, and “soft-landing export development opportunities.”

Fintech startups will also get assistance in opening new markets, completing international sales transactions, and connecting with new parties for collaboration.

“As IBM transitions into the physical building in the space, we’ll continue to expand the programming elements of the partnership,” Adam Nanjee, head of the MaRS fintech division, said in an emailed response to questions. “This type of collaboration tears down silos to accelerate the rate of innovation and leads to tangible, meaningful results.”

MaRS’ fintech hub aims to connect the financial services sector with startups developing next generation technology in emerging payments, financial services, peer-to-peer transactions, alternative lending and crypto-currencies.

IBM Resources:

  • Click here for a free IBM Bluemix trial.


  • To apply to the IBM Global Entrepreneur program, click here.
  • To learn more about IBM Cloud, click here.

Related story:

Tech Sector Sidesteps “Great Reckoning” for Startups

Monday, August 29th, 2016

Startups in the tech sector have defied expectations of a “great reckoning.”

Citing Evernote, Zirx, and Bannerman as examples, The New York Times explains how tech startups have largely responded to alarm bells set off by investors, with the following results:

  • Many companies have narrowed their focus to the most profitable customers.
  • More new enterprises are leveraging artificial intelligence, robotics and virtual reality, “creating potential areas of growth for Silicon Valley technologists to build on next.”
  • Elimination of some employee perks. For example, Evernote ditched free housekeeping services.

“The startup world did heed the warnings,” Max Levchin, chief executive of lending startup Affirm, told the NYT. Levchin was a co-founder of PayPal.

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