Go global or go home, investors advise mobile tech firms

“First we take Toronto then we take the world” just doesn’t cut it anymore as a business strategy for startup mobile device companies, according to one of the heads of a leading Canadian venture fund with a focus on the mobile industry.

“Today, you need to think global first or you’ll be overrun by the competition,” said Kevin Talbot, co-managing partner of the BlackBerry Partners Fund, which recently announced its second round of $150 million funding aimed at application developers and companies related to mobile computing. The fund is expected to launch in June.

The BlackBerry Partners Fund was established in 2008 in collaboration with Research in Motion (RIM), Thomson Reuters, Royal Bank of Canada and a number of high profile investors. To date, the fund is invested in 10 mobile companies based abroad and three based in Canada.

In an interview with ITBusiness.ca, Talbot lamented that many tech startups in Canada still nurture a regional mentality despite the larger opportunities now afforded by mobile technologies and cloud-based computing.

“A lot of people still think that they first need to make it big in Canada and then go global later,” said Talbot.

“But you can’t do it that way anymore. The Internet now allows you to reach people outside our borders. If you don’t go to them, other businesses will and you’ll be left behind,” he said.

Global vision attracts funding

If you want to seek funding from the likes of the BlackBerry Partners Fund, you will need a global vision for your company.

To put things into perspective, he said, the fund has looked through several thousands of mobile companies from around the world. From that, the fund picked 250 companies which they investigated further, and from that picked 13 companies that they put money on for their first round. Only three firms came from Canada.

Talbot said the fund is not only looking for mobile companies that are the best in Canada but rather those that are out to be the best in the world. As far as the fund is concerned, he said “there is no Canadian mobile market anymore.”

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The BlackBerry Partners Fund’s Canadian portfolio includes Neuralitic Systems which helps mobile service operators understand the mobile data user behaviours that influence data service adoption. The Montreal-based company’s mobile business intelligence technology automatically uncovers new trends and habits.

Another company is Anomalous Networks which specializes in Real-Time Telecom Expense Management (“R-TEM”) systems for enterprises and consumers. The R-TEM system tracks voice and data usage on broadband solutions such as 3G air cards, BlackBerrys, iPhones, embedded modems, and other smartphones.
The global vision is one shared by other Canada-based tech startup experts.

Take Jeremy Laurin, president and CEO of the Innovation Synergy Centre in Markham (ISCM). The centre is a non-profit organization that serves as a support hub for Ontario’s tech startups and innovative SMBs and has been encouraging companies to seek out global markets.

“Don’t get me wrong, opportunities abound in Canada. But for a large number of companies realizing their full potential requires expanding beyond our borders,” Laurin said.
Laurin outlined three key reasons why local tech start-ups seek out global markets:

  • Larger revenues
  • Ability to attract more investors
  • Opportunity to expand and realize full potential

“With larger revenues companies are able to attract more investors. With more investors and partners, these companies are able to expand into new areas or further develop their expertise,” said Laurin.

Funding essential for mobile start-up

Funding is critical for the growth and survival or mobile start-ups, according to Andrew Osis, CEO of Poynt Corp., a Calgary-based developer of a free local search application for iPhone, BlackBerry, Windows Phone 7 and Android handsets.

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Poynt Corp. is one of the winners of the BlackBerry Partners Fund Developer Challenge. The contest is one of the funds activities aimed at encouraging growth in the mobile developer community. Its winners garner prizes of up to $85,000, but do not necessarily end up being funded by the group.

The application that Poynt developed enables smartphone users not only to do local searches for businesses and events, but also enable them to do mobile transactions such as event reservations and ticket purchases with their handsets. Poynt offers the app to users for free but earns money through display ads. While Poynt is based in Canada, the service is offered in the United States, Italy, the United Kingdom, Germany and Spain. The service will soon be launching in India as well.

“It was hard to get investors when we started back in 2008 because very few people knew about the mobile app market then, there wasn’t even an app store back then,” said Osis.

Osis, who had an investment and research analyst background, said he learned to “tighten” his company’s story and focus on selling the market growth potential when speaking with investors. “When the smartphone and mobile app market finally grew we were well-positioned,” he said.

Nestor is a Senior Writer at ITBUsiness.ca. Follow him on Twitter, read his blogs on ITBusiness.ca Blogs and join the ITBusiness.ca Facebook Page.

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