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Real Ventures is here

After a long journey which started in 2007 with the creation of Montreal Startup, Real Ventures, a $45M seed fund, is finally here.

For those of you who don’t know, Montreal Startup is a $5M seed fund that was founded by John Stokes, Daniel Drouet, Alan MacIntosh, Austin Hill, and yours truly. Mark MacLeod has since joined the team for Real Ventures. We invested in 15 web, mobile and software companies between February 2008 and March 2010, including Beyond The Rack, Status.net, Whatsnexx, Vanilla Forums, Recoset, mConcierge, Oneeko and SocialGrapes. For the majority of our investments, we were the first money in, acting as the lead investor. We hold board seats in most companies. Montreal Startup was created for two reasons. First, we all shared a passion for entrepreneurship. I for one love entrepreneurs. I believe they are the driving force of change, innovation and evolution, our modern day conquerors that are making our future. They are are future leaders. Participating in the shaping of these men and women and supporting them in the building of their respective empires is a fulfilling and gratifying experience. We also started Montreal Startup to take advantage of what we believed was a disruption in how technology companies were being built and financed. In fact, we set up the fund to test the following assumptions which are now some of the pillars of Real Ventures’ investment strategy:

1- The cost of getting a company from idea to the validation of the business model is now 10X less than what it was 5-10 years ago and is no more than a few hundred thousands $ for consumer Internet companies and less than $1M for companies targeting the enterprise:
a) The evolution of opensource platforms and development frameworks means that software or web services that used to take a team of 6 people over a year to build now takes 2 people less than 3 months. In addition, software infrastructure costs are zero (operating systems, databases, etc.)
b) Because of the cloud, hardware costs (servers, storage, bandwidth) are now directly proportional to utilization, meaning that startups can get started for less than $100 per month;
c) There are now many platforms with more than 100 million active users that are seamlessly accessible to third party apps, software and web services providers including Facebook (500M +), Twitter (200M+), Iphone and ipod touch (more 250M+), Android (250K new activations per day), Google search and adwords, Google Apps, Gmail, Salesforce AppExchange, Amazon, etc. These platforms allow companies to transact with their customers with one click in many cases. Combined with a blog and media industry dedicated to technology, it now costs very little for a startup with a good product to get access to customers.

2- M&A is the new R&D and talent recruitment: The IT market is maturing. To maintain historical growth rates, midsize and large companies have to diversify their service offering. These companies have all been built under a different development and innovation model and cannot innovate at the speed that is required today. In addition, mobile and the web are now important parts of every consumer facing company’s business but they can’t recruit the young talent that would rather work in startups. They have to resort to M&A to acquire new product lines and talent through smaller acquisitions in the $5M-$100M range. Google alone has made more than 20 this year. Mark Zuckerberg, the CEO of Facebook, stated in an interview with GigaOM they have only made talent acquisitions so far in their short history.

3- The access/proximity to capital is not a competitive advantage anymore. Now that startup costs are getting close to zero, being in the valley and having access to capital is not a condition to success. What companies need is enough capital to get to market validation from people who can help connect them to funding, business development and corporate networks. This is what we do. Although most of the seed funding activity has come from the San Francisco-Silicon Valley area, other pockets such as New York, Boulder, Chicago, Seattle, Research Triangle, London, etc. have emerged. In Canada, Montreal, Vancouver and to a certain extent Toronto are booming.

4- The rise of the Super Angels is having the effect of increasing the size of the seed rounds in the US and drive Series A and B valuations to stratospheric heights. I believe this will have the effect of increasing the number of US VC funds that come to Canada for early stage investment opportunities.

Real Ventures will invest in web, mobile, software, digital media, social and casual gaming startups run by driven entrepreneurs. Like Montreal Startup, we invest at the seed level, between conceptualization and the validation of the business model, for companies that can get there with less than $1M, but preferably less than $500K. We’re based in Montreal, the best city in the world to start and run a startup, and as such, will spend most of our time looking at investment opportunities in a 250KM radius. We are working on setting up an accelerator for Montreal called Founderfuel that we hope to launch in the spring, so stay tuned.

We invest in entrepreneurs. We put entrepreneurs first. As entrepreneurs ourselves, we are active investors, helping the entrepreneurs we invest in get to validation and grow as individuals and business leaders. We provide entrepreneurs with the support structure of a VC firm but with the flexibility and personal touch of an angel. We believe in capital efficiency. Raising the right amount of capital forces entrepreneurs to focus on the minimum viable product and gives them more strategy and exit flexibility every step of the way. To me, it’s all about the alignment of interest.

I have spend the past few years looking for the project that would allow me to earn a good living while making the world a better place. Give more than I take. Real Ventures is this project. I get to meet and work with hundreds of entrepreneurs, exceptional individuals out to change the world. I get to support and participate in their success. It’s a very challenging but fulfilling profession.

Real Ventures is here and open for business so don’t be shy, it’s never too early to talk to us.

37 comments ↓

#1 Nadim on 10.26.10 at 9:45 am

Congratulations, you’ve won the paper work battle :P
Yes sir! We’ve been waiting for this, almost as much as you did ;)

Encore Bravo!

#2 David Nault on 10.26.10 at 10:33 am

Congratulations to you and your team. This will be an asset to the high tech and entrepreneurial community.

#3 Alexis Smirnov on 10.26.10 at 12:49 pm

What a great day for Montreal startup community! You and your partners deserve big thanks for all your work of putting this fund together.

Why I think this fund is a big deal? Because it comes at the right time when we face tremendous shift in computing that creates huge opportunities. It comes with the right investment strategy that recognizes the changing needs of startups. It comes with the right focus – on people, on doers and makers.

#4 Martin Dufort on 10.26.10 at 1:39 pm

Time to rock’n roll the Montreal startup scene. Congrats to the team !!!

#5 » Real Ventures closes | StartupNorth on 10.26.10 at 2:31 pm

[...] well at least Quebec until additional funds close. Real Ventures has launched today. With both JS Cournoyer and Mark MacLeod writing about the close of approximately $40MM of money that must be invested in [...]

#6 Technology news - Techvibes.com on 10.26.10 at 2:44 pm

[...] the full blog post here. [...]

#7 Shahir Guindi on 10.26.10 at 3:39 pm

Great entry JS! You have so elegantly explained the rationale for this great project. Congratulations to you and the whole team!

#8 Robert Saric on 10.26.10 at 8:47 pm

This is great news for Canadian entrepreneurs and the Montreal startup community. Big congrats!

#9 Real Ventures Launches – New Early Stage Venture Fund on 10.26.10 at 9:05 pm

[...] a placeholder, but announcements were made by two of the fund’s partners: Mark MacLeod and JS Cournoyer. JS goes into fairly extensive details on the fund’s investment strategy, which will be to [...]

#10 Should entrepreneurs raise a seed round? — JS Cournoyer on 10.27.10 at 10:09 am

[...] ← Real Ventures is here [...]

#11 JS on 10.27.10 at 10:16 am

Thanks Robert, greatly appreciated.

#12 JS on 10.27.10 at 10:19 am

Thanks Shahir, greatly appreciated, and thanks for the support.

#13 JS on 10.27.10 at 10:20 am

merci Martin, fort apprécié. Are you ready for us?

#14 JS on 10.27.10 at 10:22 am

Hi Alexis, thank you for the kind words. We’re grateful for the opportunity and will do everything we can to help as many entrepreneurs as possible achieve success.

#15 JS on 10.27.10 at 10:23 am

Hi bud, thanks for the comment. We’ll do our best. Cheers

#16 JS on 10.27.10 at 10:24 am

Thanks Nadim. We’re just getting started.

#17 Josh Nursing on 10.27.10 at 11:34 am

Congrats. It’s good to see some familiar names of the local Tech/Business scene joining forces.

#18 JS on 10.27.10 at 11:46 am

Hi Josh, thanks for the comment. I love you background and blog.

#19 Howard Gwin on 10.27.10 at 1:08 pm

JS – I love it – fantastic for you and the guys – look forward to working together downstream

#20 Twitted by jtoeman on 10.27.10 at 1:31 pm

[...] This post was Twitted by jtoeman [...]

#21 David Dufresne on 10.27.10 at 1:38 pm

Major congrats guys. Much needed in Montreal and an all-star team to make it happen. Looking forward to seeing the companies that will get built. Exciting times.

#22 Canada Gets Real About Seed Investing With New $45 Million Fund | Geek News and Musings on 10.27.10 at 1:41 pm

[...] increasingly, New York. You can learn more about Real Ventures and its investing philosophy in this blog post. CrunchBase Information Real Ventures Montreal Start Up Information provided by [...]

#23 Roger Ehrenberg on 10.27.10 at 1:49 pm

JS, I agree with most of the elements of your thesis and look forward to your success. Seed stage investing, done smartly and with a disciplined approach, is an exciting and profitable place to be. Congratulations.

Roger

#24 Ibrahim Ali on 10.27.10 at 1:54 pm

Congrats, JS. I was wondering if you were making any exceptions for startups outside of Montreal (or the 250 km radius)?

#25 Sam on 10.27.10 at 2:52 pm

How do we get in contact with you to show off our warez? Let me know, thanks JS.

#26 Daniel Giguère on 10.27.10 at 11:48 pm

Congratulations!! Just made a presentation on Montreal Start Up & Real Ventures 3 hours ago at ETS. Now building our business plan for the next presentation.

#27 JS on 10.27.10 at 11:52 pm

Hi Daniel, thanks for the comment. You don’t need a business plan. just a deck that describes what you intend to do. Would welcome the opportunity to come spend time with the students of ETS and talk startups. Cheers

#28 JS on 10.27.10 at 11:55 pm

Hey Sam, email works. js at realventures dot com. Looking forward to it.

#29 JS on 10.28.10 at 12:01 am

Hi Roger, thanks for the note, greatly appreciated. Would welcome the opportunity to compare notes and work on something together. Looking at your profile, we have a company in the first fund that is using NLP to match twitter sentiment to stock movement that could be of interest. Let me know if you want to learn more. Cheers

#30 JS on 10.28.10 at 12:01 am

Thanks David, greatly appreciated

#31 JS on 10.28.10 at 12:06 am

Hi Howard, thanks for the kind words. Cheers.

#32 JS on 10.28.10 at 12:13 am

Hi Ibrahim, thanks for the comment. Rules are meant to be broken, but the bar is high. Would welcome the opportunity to learn more.

#33 Sebastian Bulzak on 10.28.10 at 7:22 am

Great news for Montreal’s startup scene. Keep it up!

#34 JS on 10.28.10 at 7:40 am

Hi Sebastien, thanks for comment. Are you working on a project we should be looking at? Cheers

#35 Matthias Morel on 11.05.10 at 2:43 pm

This is awesome news. Will you still be taking board seats at most of the companies or doing more Dave Mcclure style investments and letting someone else take the lead? Also, what would attract you outside the 250km radius? Look forward to hearing more and congratulations.

#36 Steve L on 11.12.10 at 7:04 pm

Great blog , thanks for the post!

#37 Montreal, the best city in the Whole Wide World — JS Cournoyer on 11.19.10 at 9:08 am

[...] companies, up to 80% of R&D spending) and government support for the venture capital industry. Real Ventures just closed a $50M seed fund that will invest in 50-60 startups over the next 3-4 years. Montreal has a 60 member strong angel [...]

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