If you looked at the slides I linked to in my previous post, you'll notice that I said a few things about both angels AND VCs in Canada.

Let me be clear: there are great angels, and great VCs here in town and elsewhere in Canada. We're even lucky enough to have one of the best VC's behind us. That said, there's still a lot of stupidity when it comes to financing a Canadian software startup, and I think it actually starts with angels...

At Ambient, we were lucky: our first angel money came from one of my former bosses. He skimmed our slide deck, and wrote me a cheque. The legals on the deal were about 3 pages. Months later, over coffee one day he said, "You know, you probably need some more money." We walked back to his house, printed out the legals on the first deal, changed the dates, and he wrote me a cheque for the same amount.

There are stories of the Google founders getting money from an angel who quickly wrote a $100,000 cheque to "Google, Inc." The gents realized they had to quickly incorporate, and get a bank account to cash the cheque! (Not dissimilar from our situation... why did we choose the bank we did? Why at that bank's main branch? Because our first angel's cheque was drawn on an account there, and we figured this would speed up the cheque clearing process. Honestly!)

We got really lucky with our angel money.

What normally happens in Canada? Well... I've had members of one angel group suggest in the early days that they'd invest maybe a half million dollars, valuing our company at about $400,000.

"Um... so you want me to give you 55% of the company, in the first round, before VC money, for a half million dollars? Um. No. Thanks for coming out."

I've heard angels say to myself and others, "Why would we invest now, when we can invest along the VCs at a later round when the risk is lower?". Excuse me? You're going to invest alongside the VCs? Maybe the whole notion of angel money being there to help get companies TO those later stages was unclear.

Now, my favourite story: I was talking recently to a principal at a startup that's raised several hundred thousand dollars from a group of angels in Toronto. These angels actually asked for preference shares in the company. What does that mean? Well, in practical terms, it means a whole lot more money given to the lawyers in the early stages of a company, to draft complicated investment instruments that give angels a whole bunch of rights they wouldn't otherwise have as common-share holders. Why is this so funny? Well, most venture capitalists are going to want pref-shares when they invest, and they're not going to want to deal with the structure that the angels before them have put in place (good rule of thumb: new money carries a whole lot more weight than old in any negotiation).

So what's the practical outcome of all this? All the money that the company had to spend to give the angels pref shares gets thrown away as the new structure is put in place by the VCs. There's a tonne of animosity between the angels, the founders and the VCs because of this process, and ultimately nobody feels like they've come out ahead.

My advice? Avoid this like the plague. If you're seed funding your company from angels, friends/family, etc. either pick a valuation and issue them common shares, or use a simple, clean convertible debt structure to take the money. If the legals are more than 10 pages, be careful, more than 20, and just avoid it altogether. If you're confronted by a group of angels that wants to take you down the pref- share structure, run (don't walk) away. We got this advice time and time again, and we followed it... and we've been tremendously grateful that we did.

Oliver over at Mobilecrunch was kind enough to play around with Nakama for a bit and write a review.

Head on over to check it out!

I was invited to give a presentation at U of T today, to the Masters of Engineering in Telecom's Advisory Board. A group of terrific people including friends Bob Myers and Brian Collie (founders of Chantry Networks, a wifi company that was sold to Siemens) happen to be organizers or on the board.

Also there was Tim Lee, a terrific VC over at GrowthWorks. The MET board asked us to think about the answers to a few questions, as people building startups:

1- Why do you believe in your idea?

2- What's the value of your idea?

3- What are the challenges of building a startup in Canada?

4- What are your thoughts on Canadian competitiveness in technology?

Anyway, I thought I'd give you a link to the slides I presented this morning... hopefully it's good reading :-) The slides are here.

All comments are greatly appreciated.

Alright, so we launched Nakama ... woot :-) Finally we can get some real feedback on Nakama, and how we make it do the things you'd like it to.

We're pretty excited, so if you'd like to head over to Nakama.ca you can sign up and start using Nakama now. All you need is a cellphone. If it's a cameraphone, even better, and you'll be able to not only watch other people's pictures and videos, but publish yours up too.

We've been pretty focused on creating the best user experience... from super-simple upload of pictures and videos, from any phone, with any carrier, to being able to view pictures and videos (c'mon, you know you get bored on the train :-), also on any phone, on any carrier... we think we've got something that'll both help you, and help entertain you, and we'd love to have you take a look.

Now, with all the great stuff that's happened around our launch, what's been the one massive thorn in our sides?

Well, we've got Nakama.ca, but we wanted to register Nakama.mobi. In fact we have registered Nakama.mobi. The .mobi domain just opened up this morning. It was SUPPOSED to open up last week, but the cadre of genius (yes, that's sarcasm) that is dot-Mobi managed to screw that up. David's got a post on this dot-mobi debacle over here.

What's worse? The way the whole thing got assigned. We originally pre-registered the domain with EuroDNS. My advice? Don't ever use them unless you absolutely have to. Their service is terrible, and you can expect to wait several days for them to get back on customer service emails.

We ended up registering the nakama.mobi domain with a few other registrar's, including GoDaddy, and Dotster. Remember that we pre-registered with EuroDNS over a month ago. Which registrar managed to get us the domain? Dotster. Unbelievable. To their credit, the GoDaddy folks even gave us a phone call, told us that we didn't get the domain (heheheh), and asked if there was another name we wanted. After spending 15+ mns on hold with Dotster to find out what was going on, and days waiting for EuroDNS to reply to an email, we were amazed by Godaddy. Next time we need a domain, we're choosing them for sure.

Anyway, enough of me... go sign up for Nakama :-)

It's a bit of a pushed weekend here at Ambient. We're getting ready to launch Nakama to the world on Monday. That's right. We're opening it up... which means a whole lot of last-minute "are we ready?", "how does this scale?", "did you fix that help page?" discussions are running around.

That said, we're also pretty excited. We're about to launch to the world, and get real feedback... good, bad, ugly (really, we're hoping for the good, but would really appreciate the "hey, guys, fix these 3 things..." kind of notes).

No, we're not doing a bit-splash launch... yet... that's why we're looking to hire the right marketing lead to help us create the buzz and splash we want later... right now, we want real use, and tonnes of feedback.

It's strange, though, and we can tell we've grown a lot as a company over the last few months. When we launched our closed beta, there was a lot of lost sleep in the days leading up to our launch date. Right now, things are silently humming along, and while there's still a mix of stress and anticipation, there's also a sense of knowing calm... there's a lot of work to be done, but it's a known quantity, and that makes a huge difference.

I can't get the WiFi working on my Nokia E61, and it was too slow with my Mac to really find out if it was working or not. Anyone else had a different experience?

Anyone who's ever wondered why I'm not convinced WiFi/WiMax is going to replace good-ole-cellular-wireless-data for 5+ years? This is why.

I pop my SIM card into a phone and I get EDGE/UMTS/HSDPA/whatever...

I try to get this WiFi stuff working... and... well... it hasn't.

Yippee.

Anyway, back to work :)

So I'm finally back in Toronto... oh how I've missed it. After a week in Los Angeles, seeing a horizon that isn't a greyish-brown makes me happy (it's the little things, I guess :-). It was a great week, and I met a tonne of terrific people from operators, potential partners, like-minded wireless folks, generally cool people that happened to be down at CTIA, and even hung out with some competitors... (c'mon, they're not all bad :-)

As soon as I got back to Toronto, though, it was off to Niagara (yeah, poor me, I know :-). Actually, I had dinner at the fantastic Wellington Court on Friday, and then on Saturday noticed that one of the couples I noticed on Friday over dinner happened to be sitting right next to me at lunch at Henry of Pelham... which was enough of a reason to strike up a conversation. It turns out that it was Marilyn Bodogh and her husband.

She's a former competitive athlete (Curling), who's now running for the Mayor of St. Catharines.

What's interesting to me is that she had somewhat similar gripes about St. Catharines as I do about Toronto... similar, but different :-) Marilyn mentioned that St. Catharine's has a lot going for it: Brock University, great people, wineries, etc. and yet it's (generally speaking) a dying city... the best and brightest tend to leave before or after going to university. I'm not sure what her plans necessarily are to solve some of these issues, but I like the notion of trying to exploit the strengths that are already there to make the city stronger.

My similar gripe about Toronto? Between the University of Toronto, Waterloo, and York University, we've got a bunch of good schools in the neighborhood. So why isn't there a strong tech cluster here? (I'm a geek, my bias is tech, sorry :) A Silicon Valley VC once asked me, "Can you get really great talent in Toronto?" I was taken aback and replied, "Sure... Waterloo and U of T are key recruiting grounds for Amazon, Microsoft and Google... there's terrific engineering talent here." (Notwithstanding that we're looking to fill our lead-engineer role so let us know if you've got anyone in mind :).

Anyway, just another friendly tip: talk to strangers... sometimes you'll meet really interesting people... personally, it's refreshing to meet a politician I really enjoyed speaking to... :-)

Peter Dawson sent me a link to an interesting Harvard Business School article about interdisciplinary work in universities. It talks about the benefits that arise when you put students and reseachers across a variety of disciplines together. Similar to The Medici Effect, a book written by a former HBS student, about why innovation tends to spring forth when you bring together a bunch of people with wildly different focuses/worldviews.

Worth a read!

Also just got off the phone with our board (yeah, I was an idiot and didn't realize I'd be out of town when we scheduled it). One more reason to build a board? Sanity checks. We think we've made a lot of progress over the last 30 days... and we think we're going to make some great progress over the NEXT 30 ... but maybe not as much as we'd thought. After some discussion, it's clear that some of our initial targets were pretty unrealistic. It's okay... we naturally try to stretch pretty far, and sometimes don't realize that we're stretching even farther than is realistic. No big deal: the discussion with the board made this crystal clear. Sanity checks... another great reason to have open, frequent, honest discussions with your board. I love it. :)