National Post (National Edition)
CLEAR benefits
Chris Brooker quit his job on a Friday in February 2012. The next day he and his business partner, Michael Nussbacher, were driving from Toronto to Montreal. The pair of rookie entrepreneurs had recently been accepted into FounderFuel, a Montrealbased startup accelerator. The duo would spend the next three months in that city, receiving mentoring, cash and access to angel investors.
It was a move with clear benefits for their oneyear-old startup, Epilogger, which helps public relations agencies and event planners collect, organize and archive all the social media activity generated by their events.
“Up until FounderFuel this was an eveningsand-weekends project for me,” Mr. Brooker recalled. “We all wanted it to be more, but we didn’t have the know-how or experience needed to turn it into a full-time job.”
Yet the decision to enrol in FounderFuel was also a “huge” risk for Mr. Brooker: his wife was then six months pregnant with their first child. “Leaving her for three months to go live in startup world was hard,” he said. “But it was a decision we came to together, and it worked out really well.”
Epilogger has since raised $350,000 and recently launched its product in the United States. It’s early days but Mr. Brooker is optimistic. “We’ve been out of FounderFuel for a year and we are still around,” he said with a laugh.
FounderFuel, which accepted its first cohort of companies in 2011, is run by Real Ventures, a $50-million early-stage venture fund that invests in Web and mobile startups.
The accelerator typically runs two 12-week sessions a year, each comprised of 10 startups. Those teams, selected from hundreds of applicants, gain access to a slew of startup veterans, angel investors, venture capitalists and experts on topics ranging from marketing to startup legal issues.
Before entering, each company must give Real Ventures a 9% equity stake, in exchange for $50,000.
Considering what each startup receives in return, it’s a fair trade, said Ian Jeffrey, FounderFuel’s general manager. For instance, he points to the accelerator’s vast network of industry contacts.
“We’re within one email or phone call from anybody at Twitter, Foursquare, Facebook, RIM or Google,” he said. “We have connections to all those companies.”
Each cohort ends its time in FounderFuel with Demo Day, where the teams pitch their product or service to a crowd of about 800, including investors from all over North America.
Upon exiting, most teams in the program are offered a $150,000-convertible note from BDC Venture Capital. (Business Development Bank of Canada’s equity stake is determined by each startup’s valuation by outside investors).
“Typically they come in here with no money in the bank, and they leave with $200,000,” said Mr. Jeffrey, a Montreal-born entrepreneur who spent four years in Silicon Valley before returning home to join Real Ventures. “We get them where they need to go faster, in terms of product development, business development, marketing — all aspects of building a startup.”
Founder Fuel is headquartered in Montreal’s Notman House, a historic 19th-century building that has been transformed into a hub of tech startup offices and meeting spaces. An adjoining section of the building — a former hospital — is being renovated to house additional offices.
Despite its Montreal base, FounderFuel has accepted startups from as far away as Newfoundland, Vancouver, the U.S., Europe, and Argentina.
Tw e n ty - eight startups have exited the program thus far; one has been sold and two are out of business, Mr. Jeffrey said. Sixty per cent of the graduating teams have raised additional seed money, typically in the range of $500,000 to $2-million.
Christian Painchaud, a cofounder at MyCustomizer, was part of FounderFuel’s fall 2012 cohort. Mr. Painchaud and his three co-founders had developed software that allows for the easy customizing of consumer products. But the rookie entrepreneurs were unsure of how to turn their software into a “viable business,” so they applied to FounderFuel.
“In FounderFuel you’re always being asked the difficult questions, such as ‘ Why are you doing this?’ and ‘ How are you going to succeed?’ ” he said. One of the hardest questions posed to the MyCustomizer team was this: “How is your business model defensible?”
“We didn’t have a real answer to that,” Mr. Painchaud admitted. “But by the end of the program we were pretty confident in our competitive advantage.
“Their goal was to accelerate our business and that’s what happened. We gained a lot of momentum.”
Fo r Mr. Brooker, the president of Epilogger, the Founder Fuel experience helped exorcise demons within the company.
“We had quite a few large fights during FounderFuel,” he admitted. The team quarreled over a range of issues, from the direction of the company to how to make money. Egos also played a role, he said. “The mentorship was fantastic. It really helped us figure out how we were going to work together. We got through all that and we’ve been very strong ever since.”