Under-30 entrepreneurs fail to woo investors with startup pitches

It’s a nightmare for most of us: a big white screen, a PowerPoint presentation, and nowhere to hide.

But that age-old format recently gave some of Canada’s most ambitious young entrepreneurs an opportunity they had only dreamed about: five minutes to pitch their business ideas to a group of potential angel investors.

The pitch night was the final event of Founder2Founder (F2F), a 10-week program providing 10 teams of startups with information seminars, guest speakers and mentoring from 10 corporate veterans. Originally called Young Entrepreneurs’ Club, the program took place in Toronto but drew participating teams from as far as Kingston and Waterloo, Ont. All team members had to be under 30 years old.

Eight teams ended up pitching on the final night to about five potential investors at Toronto’s Yorkville Media Centre. There was no prize to be awarded, so teams vied solely for the feedback of their peers, and the interest (and money) of the investors in attendance. While the chances of any team walking out of the room with a cheque were slim, organizers said the program was more about mentoring than money.

“Everyone sort of developed a lot. (It’s been) very impressive when you look at (the startups) from day one to near the end of the 10 weeks. And I think a lot of people gained a lot of insight throughout the process as well,” says F2F co-founder Jeremy Einhorn.

“It’s about fostering the relationships, gaining insight and then moving forward as best they can with their businesses,” he adds.

Mentors included Buytopia co-founder Michelle Romanow and branding guru Jamie Salter, who’s credited with crafting Lady Gaga’s Polaroid Corp. endorsement deal, and pairing up actress Sarah Jessica Parker with fashion label Halston. The advice from those mentors proved priceless, says Einhorn, whether any of the startups ultimately get funding or not.

“It’s so unbelievable. We have (mentors) that come out and say ‘You have a great idea, drop out of school. Go do your idea, school’s for fools, look at me’ kind of thing. And you have other guys that say ‘No, no, no, stay in school,’” Einhorn says.
“We had one guy that came in and said ‘Focus on revenue and cash flow and that’s it.’ And another guy came in and said ‘You know you can’t just focus on revenue and cash flow, there’s a human aspect to your business as well,’” Einhorn says. “It’s just (about) what ideology resonates the best with you and then how to implement that into your own business and be successful.”

With various startup boot amps already out there, F2F tried to make its approach stand out with a 10-week ongoing process versus a one-off event, networking opportunities as intimate as dinner at one mentor’s mansion, and the inclusion of startups from outside of tech. The diversity of sectors was reflected in some of the startup concepts, as detailed here: 

RewardCard.mobi:a smartphone app for iPhone, Android and BlackBerry that combinesconsumer rewards cards with analytics to help businesses track andimprove user loyalty 
– Pro-Sourced: an online portal that helps link skilled jobhunters with employers 
TutorBright: a traditional educational tutoring company that is now expanding through franchises
Atendy.com:Web portal where conference attendees can complete various conferencefunctions online, such as register, obtain name badges and eventlanyards, attend meetings virtually and share event content andbusiness profile information including an online search tool matching sports activities with kids’ interests
Zaika Tiffin & Caterers, a daily delivery service for Halal Pakistani and Indian cuisine 

At the end of the night, all eight teams survived their pitches despite some rough patches: one duo’s short promotional video failed to play right off the top of their presentation, and at the end of one pitch an audience member’s first question was “So what does your business do?” No startups were offered investment after everyone went home that night.

That’s not entirely surprising given the latest startup investment statistics. Second-quarter venture capital funding for Canadian startups fell by seven per cent from the same quarter of 2010, according to the Canadian Venture Capital and Private Equity Association. IT startups suffered a particularly big drop, with VC falling off by 27 percent year-over-year.

Although VC money is not the same as earlier stage angel funding, the stats may point to a more cautious outlook towards tech startups specifically, since VC for green environmental tech firms shot up by 17 per cent YOY.

Angel investing is hard to track because it typically involves individual investors compared to VC funds pooled from various financing sources. According to a July report from the Toronto-based National Angel Capital Organization, however:

•    Canadian angel groups received about 1,850 business plans in 2010
•    14 per cent of those were considered in detail, and 32 per cent of those received funding
•    Angel groups invested $35.3 million in 88 Canadian deals
•    Canadian angels had strong interest in technology startups, with 43% of funding going to IT, 18 per cent to life sciences and 16 per cent to green technologies

Since the report is billed as the first of its kind on Canada’s angel sector, it does not provide statistical comparisons with past years or quarters.

Christine WongChristine Wong is a Staff Writer at ITBusiness.ca. Follow her on Twitter, and join in the conversation on the IT Business Facebook Page.

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