Roger Ehrenberg just wrote a post entitled: “The Pyramid Principle: Venture Investment in a Capital-Efficient World”  I think it’s very much worth reading if you’re as passionate about making Vancouver a world class tech center as we are.

It will require a culture that pushes rapid assessment and admission of mistakes, rewards innovation and compensates heavily for successes that can be broadly applied. Most large venture firms find this activity too time-consuming and capital inefficient to warrant much attention. In the future I believe that getting the base right will be the key to success in the large-scale venture field.

Bootup Labs is the base of the Pyramid.  We live to serve the rest of the Venture Capitalists who don’t feel like changing their model or letting go of their management fees.  Help us, help you.

I’ve been watching and reading CNBC, Bloomberg, New York Times, Paul Kedrosky and everything else I can get my eyes on.  And I think I’ve figured it out!!  NOBODY knows what’s going to happen with the economy.  It’s a very unsettling time.  I actually feel like I’m staying up to date with developments of the bailout, the elections and the extreme depth of the problems the world faces as a result, but they’re not providing me with any conclusions.

I do, however, have two fundamental beliefs:

1. The economy will recover at some point (1-5 years)
2. Investors make the most money when they buy low and sell high.

So am I making is this just too simple?  Is the “Buy low and sell high” doctrine just too obvious to really work?  With the dow closing at 9447 today, I think we can all agree, that we’re in a buyers market.  Take Warren Buffet and JP Morgan for example.  A New York Times article, Like J.P. Morgan, Warren E. Buffett Braves a Crisis, calls Warren a “Profitable Patriot”.  The biggest fortunes in the world’s history have been made in times like these. But investors are also human, and fear does often override this basic common sense logic.  The smartest investors are the ones who can put their fears aside, and invest long in companies now, when valuations are low.  By the time these companies are ready for a liquidation event, the markets will have returned.  I still find it very puzzling how some long term investors (like Angels and VCs investing in private startups) make investment decisions based on short term indicators.  Ron Conway is one of the more respected Angel investors, and I take the message that he’s sending out to entrepreneurs as a pragmatic warning of my very point.

“I would tell (entrepreneurs) to keep their day job until they got one year of funding, and if they couldn’t get that, then they’re not meant to start that company right now…. My advice to (start ups that don’t have a year’s worth of money in the bank) would be to raise money by reducing your own spending. If you can’t raise more money, you have to cut costs. And that’s what I’m harping on to my companies.”

Vancouver’s own Lyal Avery had some pretty insightful words to say in the comments:

“With all respect to Mr. Conway, I think it’s dangerous advice to tell people behind startups to “not quit their day job.” In my opinion, economic downturns are the perfect time to get started - the conditions are better than during a boom. Labour is cheap, distractions are minimized, and a lack of over-abundant investment means the business models produced can weather future storms. “

Disclaimer: I’m going off of memory, so I apologize in advance to anyone or organization I forgot.  Please leave your link in the comments and I’ll make sure to add it the list.  Please note that I purposely left out Bio-tech and Clean-tech because we don’t work in those areas.  And, I realize that my video gaming links are weak, so I could use some help there if anyone has any good online resources or funds (Paul Lee?).

Networking Events

• VEF
• BarCamp
• DemoCamp
• Launch Party
• VC RoadTrip
• Canadian Financing Forum
• New Ventures BC
• Founders and Funders
• VidFest
• Northern Voice
• Massive Tech Show

Online resources

Local VCs

• Growthworks
• Ventures West
• BDC
• Lions Capital (BC Advantage Fund)*
• Pender Financial*
• Yaletown Venture Partners
• Discovery Capital*
• W Media Ventures
• VenCorps

Renaissance Capital Fund VCs

• ARCH Venture Partners
• Celtic House Venture Partners
• Kearny Venture Partners
• VantagePoint Venture Partners
• Ventures West Management Inc.
• Walden Venture Capital

Eastcoast VCs

• Rho
• JLA

Angel Networks and Angel Funds

* These have been granted tax credits by the government under the Venture Capital Corporation “VCC” or Eligible Business Corporations “EBC” program.  If you’re an investor and you invest in a VCC or EBC, you’re entitled to a 30% refund from the government of BC.  You can amplify those savings by using investing in VCCs or EBCs using money from your RRSP.

In a strategy to spark more early stage innovation in the province, the BC government has set up a fund called the BC Renaissance Capital Fund (BCRCF). This fund is being managed by 6 venture capital funds. Some in the US and some in Canada

• Kearny Venture Partners
• Ventures West
• VantagePoint Venture Partners
• Celtic House Venture Partners
• ARCH Venture Partners
• Walden Venture Capital

I personally think this is a very smart strategic move for the government to do and I think many in the tech startup industry would agree. According to a response from my twitter post this morning by Brent Holliday “Finally, a non-tax driven strategy to attract capital… The US has been doing it this way for 30 years. Hopefully this is a big shot in the arm for BC technology companies.”

Despite Todd Tessier’s secretive selection process, I have to sincerely thank him for all the hard work I know it must have been to drive this to closure. Thanks Todd! And thanks Sam for getting me invited to the announcement this morning. I’m not sure why it was so exclusive; I couldn’t even get Boris or Parveen in past the tight security. What was it again?… something to do with the fire marshal? Anyway, this is all good news and I’m planning on a good portion of this money being funneled into Bootup Labs companies in the future